Manila, Philippines (BBN) – The Asian Development Bank (ADB) and Sri Lankan government have forged a new Country Partnership Strategy (CPS) 2009-2011 designed to help improve the investment climate, unclog infrastructure bottlenecks, and ensure all segments of society benefit from the nation’s solid economic growth.
Sri Lanka has posted an average economic growth of 5 per cent per year over the past 30 years, putting it on the point of becoming a middle-income country.
However, it has failed to reach its full potential because of civil conflict, weak infrastructure, and high public debt. Recent high global oil and food prices, a surge in inflation, and worsening prospects for the global economy also pose a threat to future growth and poverty reduction efforts, an ADB press statement said on Friday.
The partnership strategy has a twin focus. Firstly, ADB will continue to back stronger fiscal management to improve the macroeconomic environment and will step up support for infrastructure development, particularly in power and transport, and public-private investment partnerships.
Currently, many private sector investors are reluctant to plough significant funds into the economy because of poor infrastructure, high taxes, policy uncertainty, civil conflict, and high financing costs.
Secondly, the ADB will target better delivery of power, water, transport and other essential services in poorer provinces to make sure the fruits of development reach those most in need.
To help achieve this, it will also seek to increase the capacity of provincial councils and local authorities to improve public service delivery. By strengthening rural infrastructure, ADB’s support will also help boost agricultural efficiency which has become increasingly important with the spike in global food prices.
Under the new three-year CPS, the ADB is committing $630 million in loans for public sector operations, while overall assistance is expected to be higher with additional funds raised through private sector operations, public private investment partnerships, and co-financing.
BBN/AN/SI/AD-24October08-9:57 PM (BST)