The Asian Development Bank (ADB) is poised to extend significant financial support to Sri Lanka, with potential assistance totaling $500 million in 2024, contingent upon the progress of policy reforms, according to Takafumi Kadono, Country Director of the Manila-based lender.
Kadono revealed that the ADB is slated to present a $100 million power sector loan proposal to its Board around March or April, subject to the approval of a revised electricity reform bill by the cabinet of ministers. Additionally, a $100 million loan to bolster Small and Medium Enterprises (SMEs) could receive approval in the early part of the year, coinciding with Sri Lanka's establishment of a credit guarantee agency aimed at facilitating credit for small firms.
Further financial aid includes a $200 million credit earmarked for the financial sector, with the first tranche of a financial sector policy loan already disbursed late last year. Additionally, a $100 million loan intended for the water sector may be approved later in the year.
The assistance is expected to be disbursed primarily at concessional rates, with Sri Lanka potentially receiving between $200 to $300 million annually at a concessional ordinary capital resources (COL) rate of 2 percent.
The remaining balance would be provided at the ordinary capital resource rate linked to the Secured Overnight Financing Rate (SOFR).
Moreover, the ADB has initiated the development of a 'Country Partnership Strategy' for Sri Lanka spanning the period 2024-2028, aiming to outline the framework for collaborative efforts and assistance over the coming years, as highlighted by Kadono.
