30 May 2023 12:01 am Views - 171
The Asian Development Bank (ADB) yesterday approved a US $ 350 million special policy-based loan to provide budget support to Sri Lanka for economic stabilisation.
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ADB President Masatsuga Asakawa |
“The programme is part of a broader package of financial assistance anchored by the International Monetary Fund’s (IMF) Extended Fund Facility (EFF) for the country, which aims to stabilise the economy and lay the foundation for economic recovery and sustained growth,” the ADB said in a statement.
Sri Lanka is facing a severe and unprecedented economic crisis. High inflation has eroded purchasing power, livelihoods have been affected and past development gains have been reversed.
“The ADB is concerned about the deep crisis in the country and its impact on the people of Sri Lanka, especially the poor and vulnerable, particularly women,” said ADB President Masatsugu Asakawa.
“The ADB is committed to standing with Sri Lanka as it addresses its present challenges and strides toward economic stabilisation, sustainable recovery and inclusive growth,” he added.
Sri Lanka has embarked on bold reforms to address the causes of both internal and external imbalances and return to a sustainable debt trajectory.
“The country faces a long road to recovery and must remain steadfast in the implementation of necessary reforms, which include enhancing tax revenue collection, strengthening public financial management, improving performance of state-owned enterprises, ensuring autonomy and independence of the Central Bank, safeguarding financial sector stability and bolstering governance frameworks.
As these measures are implemented, it is essential to ensure that adequate social protection is provided. Implementing governance reforms and anticorruption measures will be critical,” the ADB said.
“Transparency and open communication will be crucial in building agreement around the reforms. The ADB will proactively engage with the government, other stakeholders and development partners to help address structural impediments and plan future support,” it added.
The ADB has supported Sri Lanka’s response throughout the crisis. In 2022, in close coordination with development partners, the ADB provided emergency assistance to support the basic services and sustain livelihoods.
The ADB repurposed US $ 334 million of existing loans as emergency response to support the import of essential items such as fertiliser, medicines, chemicals for water treatment, working capital for small and medium-sized enterprises and cash transfers to the most poor and vulnerable.
Trade finance lines through the ADB Trade and Supply Chain Finance Programme supported the import of essential items during the crisis.