Sri Lanka yesterday signed three agreements to obtain credit amounting to US $ 187 million from the World Bank Group to carry out economic reforms, tackle climate-related risks and protect the country’s ecosystems.
Accordingly, the World Bank Group’s concessionary lending arm, the International Development Association (IDA), will lend US $ 100 million to Sri Lanka to support the government’s economic reform programme, while US $ 45 million will be lent by the IDA to help protect Sri Lanka’s natural habitats and resources from degradation and over-exploitation.
The credit for this project comes with a maturity of 25 years, including a five-year grace period. The Mahaweli Development and Environment Ministry will lead the implementation in close partnership with the Sustainable Development and Wildlife Ministry.
Meanwhile, another US $ 42 million World Bank credit will be extended to protect the people and infrastructure from climate-related risks and support the government in responding effectively to disasters.
This financing comes as additional financing for the ongoing Climate Resilience Improvement Project (CRIP) approved in April 2014, to scale up the repair and disaster proofing of irrigation and flood control infrastructure and road infrastructure, which are damaged by the recent extreme weather events.
According to the World Bank, Sri Lanka has been making steady progress in economic reforms, with the government aiming to create one million new jobs through a reform package focused on improving the country’s competitiveness, transparency and macroeconomic stability.
The Sri Lanka Competitiveness, Transparency and Fiscal Sustainability Development Policy Financing (DPF), which is only the second DPF to Sri Lanka in a decade, aims to support the government’s reform agenda by reducing obstacles to private sector competitiveness, establishing transparent and well-managed public institutions and improving fiscal sustainability.
“It is the aspiration of all Sri Lankans to move up the income ladder. To make this a reality, the government is faced with the challenge of balancing the implementation of critical reforms aimed at sustaining growth while creating jobs,” said World Bank Country Director for Sri Lanka and the Maldives Idah Pswarayi-Riddihough.
“Improving fiscal sustainability while creating the fiscal space for improved service delivery, social spending and capital investment, are all priorities to make Sri Lanka more competitive. Ensuring success from reforms is not a one-time activity and the government will continue to use a number of instruments to make sure that outcomes achieved are sustained,” Pswarayi-Riddihough further emphasized.
The DPF operations provide untied financial support directly to the treasury to distribute through its regular budgeting mechanisms upon completion of a package of policy and institutional reforms.
The World Bank Group provides technical assistance to the government in support of its reform efforts under this programme at no cost to the government.