ADB wants reforms to overcome SL’s “very low” GDP, FDI
The Asian Development Bank (ADB) on Thursday asserted that the government needs to improve its economic position by engaging in structural reforms to overcome the current “very low” rate of growth and Foreign Direct Investment (FDI).
The FDI and the GDP is “very low” and in this regard, the government must stick to structural reforms and tax reforms, managing external debt which are some of the challenges the government is currently facing, the ADB visiting Vice President Operations 1 Wencai Zhang said at a media briefing in Colombo.
Concluding his visit to the country following tours to the South where he had a look at some of the ADB projects providing vocational training for youth, he noted that the reforms carried out through Enterprise Sri Lanka will mobilize more private sector investment and increase SME financing.
In comparison to its neighbouring states, Sri Lanka needs to improve much with public sector investments and reliance on private sector investments as well.
The ADB will be coming up with their future projections for Sri Lanka by September and he pointed out that the country has a “very low growth rate.”
However, Mr. Zhang pointed out that the country has the potential for stronger growth and had discussed with Prime Minister Ranil Wickremesinghe during his meeting that morning on how to provide for increased SME financing that would prove good for Sri Lanka in the future.
Meanwhile, the visiting official explained that Sri Lanka would be given a grant of US$1 billion each for the next three years and in 2018 alone there would be nine projects undertaken by the ADB.
ADB is involved in projects in sectors like transport, ports, railways, energy, urban infrastructure, rural development and social development. In addition, vocational training, SME financing and capital market development.
Sri Lanka would lose its ability to obtain soft loans from the ADB from January 1, 2019 as the country graduates from access from the Asian Development Fund, Country Director Sri Widowati said. As a result Sri Lanka would be eligible for regular ordinary capital resources lending only.
She also noted that the contract between the ADB and the Sri Lanka Ports Authority (SLPA) for advisory assistance to the East Container Terminal (ECT) had lapsed in February, 2018 and had not been renewed by the authorities.
Ms. Widowati noted that it was understood that authorities were looking at the possibility of running the operations of the ECT by the state itself.
However, the ADB is involved in the drafting of the Master Plan for all ports in Sri Lanka and this is scheduled to be released this year, the Country Director said.
She pointed out that they hope Sri Lanka would lay more emphasis on the Trincomalee port in terms of its development and use since there has been direct Japanese government involvement in the project in relation to all other ports in the country.
The government is also being assisted by the ADB in its development of the three cities coming under the Colombo – Trincomalee economic corridor.
The ADB is also working on a future plan of action titled 2030 Strategy that would involve technological support for Sri Lankan projects and transfer and promotion of innovative technology with more integrated solutions worked out.