ADB ready to help SL amidst forex crisis
View(s):The Asian Development Bank (ADB) is ready to assist Sri Lanka in “relevant policy areas” to enhance foreign currency earnings, in particular tourism and trade and investment, according to ADB President Masatsugu Asakawa.
In an exclusive emailed interview with the Business Times this week, coinciding with his visit to the island on March 10-11, he also said some of the macroeconomic issues the government is facing particularly fiscal and balance of payment deficits are challenging and need to be addressed in due course.
“We see 2022 as a year where the government would be able to lay the foundations of more robust growth, backed by efforts towards greater diversification of Sri Lanka’s production structure and exports and an investment climate conducive for both SMEs as well as large enterprises with close linkages to the global economy,” he said.
Extracts of the Q&E interview:
What is the quantum of assistance to Sri Lanka proposed for 2022 and what was the amount disbursed in 2021, and in what priority areas of development finance? The past two years have been unique and deeply challenging for many economies in Asia and the Pacific. I know this is the case here in Sri Lanka as well. I would like to first commend the people of Sri Lanka and the government for their swift actions to contain the pandemic and for the rapid progress of the national vaccination programme.
ADB is proud to have supported these response efforts in 2021 with $460 million in new assistance to procure 12 million doses of COVID-19 vaccines, strengthen health care services in some underserved provinces, and improve rural road connectivity to boost access to jobs, incomes, and social services.
Complementing this sovereign assistance, ADB’s private sector window committed an equity investment of up to $80 million in John Keells Holdings PLC to boost the country’s food value chain and promote economic growth and job creation. Sri Lanka is also very active in ADB’s Trade and Supply Chain Finance Program, which fills market gaps by providing guarantees and loans through partner banks in support of trade. In 2021, along with financing 6 per cent of Sri Lanka’s import, this programme supported the import of $160 million worth of COVID-19 vaccines.
Our 2021 disbursements totaled $684 million. These funds supported ongoing projects in hydro, solar, and wind power generation; rural connectivity; building small and medium-sized enterprises (SMEs); education; irrigation; and primary health care, including for the COVID-19 response.
Our priorities for this year include further support for rural connectivity, building vocational skills, and projects in water supply, renewable energy, and SMEs. Before the pandemic, ADB’s annual lending commitment was around $800 million. We will work with the government to see how the assistance in 2022 and beyond can be adjusted to an appropriate level.
Assistance to support
Sri Lanka’s current economic crisis?
Sri Lanka is a founding member of ADB, and we have worked together now for 55 years. In that time, ADB has supported Sri Lanka’s development through many transitions. The most prominent task for now is to speed up the post-COVID-19 recovery. COVID-19 has seriously affected all developing member countries of ADB, including Sri Lanka, which was heavily hit by reduced tourism and other economic activities as well as revenue.
More broadly, ADB will continue to support the country’s evolving development needs. We are now developing a new country partnership strategy for Sri Lanka, which will guide our programme from 2023 to 2027. We intend to focus on three priority areas. First is sound macroeconomic management and private sector development as the basis of rapid and inclusive economic transformation. Second is to promote balanced, green, and resilient rural–urban development. And third, is to enhance human capital. Across our work, ADB will continue to address broader issues such as climate change, gender equality, digitization, governance, capacity development, and regional cooperation and integration.
Any special COVID-19-related funding that Sri Lanka would get from ADB this year?
During the past two years just over $650 million was mobilised or repurposed from ongoing projects to support the government’s health, education, economic, and SME response. Our support started immediately after the onset of pandemic, with the provision of $4 million to procure medical supplies and materials to increase screening and testing capacity across the country.
In 2022, we expect substantial progress in these COVID-19 projects approved last year. In fact, I had a chance during this trip to visit the polymerase chain reaction lab facility at Colombo East Base Hospital that was set up with ADB assistance. It was an excellent opportunity to see the Sri Lanka–ADB partnership in action and to interact with some of the brave frontline health care workers making a critical contribution to the country’s recovery.
What is the ADB prognosis of Sri Lanka’s economy this year?
COVID-19 has adversely affected Sri Lanka’s economy. It has also complicated the task of managing macroeconomic policies. A revival in tourism and global recovery should support economic activity in 2022.
Key focus of the ADB annual meeting in Sri Lanka?
We are very grateful for Sri Lanka’s offer to host the 55th Annual Meeting of the ADB Board of Governors this year. In view of the ongoing challenges posed by COVID-19, the government and ADB have decided to hold this year’s annual meeting in two stages. The first stage will comprise a virtual, reduced-scale meeting of the Board of Governors on May 5 to conduct several matters of official business required by our institution. The second stage in September will include a series of seminars and knowledge sharing events under the theme “Positioning Climate Resilient Green Recovery for the Post-COVID-19 World.” These sessions will focus on ways to safely reopen and stimulate economies after COVID-19, while ensuring that future growth is both green and sustainable. The programme will discuss tourism, digital transformation, blue economy and finance, gender equality and greening of the economy, including the region’s response to climate change, among others.
| ADB President reaffirms support for Sri Lanka’s recovery | |
 The ADB President with frontline workers at the PCR lab. Asian Development Bank (ADB) President Masatsugu Asakawa and Sri Lanka President Gotabaya Rajapaksa met in Colombo on Thursday and reaffirmed ADB’s support for Sri Lanka’s recovery path from the COVID-19 pandemic. Mr. Asakawa commended the government’s rapid vaccination drive, which has been critical to managing the spread of COVID-19 and kick-starting economic activities amid social, fiscal, and debt challenges, according to a media release issued by the ADB. “Sri Lanka is managing a number of complex challenges raised during the COVID-19 pandemic, including through necessary efforts to restore fiscal and external balances while containing inflation,” Mr. Asakawa said. “ADB is committed to supporting the government in addressing the present challenges and striding toward green, resilient, and inclusive growth as well as sustainable energy transition.” Together with ADB Director General for South Asia Kenichi Yokoyama and ADB Secretary Muhammad Ehsan Khan, Mr. Asakawa reviewed preparations for the 55th Annual Meeting of the ADB Board of Governors to be hosted by Sri Lanka in September 2022 with the theme of “Positioning Climate Resilient Green Economy for the Post COVID-19 World”. |
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