COLOMBO The Asian Development Bank on Monday approved a $350 million special policy-based loan to provide budget support to Sri Lanka for economic stabilization, the ADB said in a press release.
The plan is part of a larger package of financial assistance,anchored by the International Monetary Fund's Extended Fund Facility for the country, which aims to stabilize the economy and lay the foundation for economic recovery and sustained growth.
The first tranche of the IMF's bailout has been received by Sri Lanka.
Sri Lanka is experiencing a severe and unprecedented economic crisis, and high inflation has impacted purchasing power, livelihoods have been affected, and past development gains have been reversed, according to the ADB.
The ADB is concerned about the deep crisis in Sri Lanka and its impact on the people of Sri Lanka, especially the poor and the vulnerable, especially women, said Masatsugu Asakawa, ADB President.
The bank is committed to standing with Sri Lanka as it addresses its current challenges and strides toward economic stabilization, sustainable recovery, and inclusive growth, he said.
The ADB said Sri Lanka's government has embarked on bold reforms to address both internal and external imbalances and return to a sustainable debt trajectory.
The country faces a long recovery and must remain steadfast in the implementation of necessary reforms, such as improving tax revenue collection, improving public financial management, improving performance of state-owned enterprises, safeguarding financial sector stability, and enhancing governance frameworks, the ADB said.
As these measures are implemented, it is essential to ensure that adequate social protection is provided, and implementing governance reforms and anti-corruption measures will be critical, the ADB said.
In 2022, in close collaboration with development partners, the ADB repurposed 334 million dollars of existing loans as an emergency response to support the import of essential items like fertilizers, medicines, chemicals for water treatment, working capital for small and medium-sized enterprises, and cash transfers to the poorest and the most vulnerable.