ADB extends US $ 100mn support to deepen fiscal reforms, transparency in SL

The Asian Development Bank (ADB) has approved a US $ 100 million financing package to strengthen Sri Lanka’s macroeconomic resilience and reinforce its reform momentum as the country continues its recovery from the 2022 economic crisis.
The support comes at a critical juncture when the government is striving to sustain fiscal stability while pushing ahead with governance and structural reforms to create a more predictable and transparent investment climate.
“Sri Lanka has made commendable progress in restoring fiscal and debt sustainability following an unprecedented economic crisis,” said ADB Country Director for Sri Lanka Takafumi Kadono. 
“We will work closely with the government to restore macroeconomic stability and promote inclusive, sustainable growth by strengthening Sri Lanka’s fiscal governance and build a more efficient, accountable and resilient public sector.”
According to the ADB, the programme will focus on strengthening fiscal governance by improving the credibility and execution of public expenditure, enhancing domestic revenue mobilisation and fostering private sector participation in national development.
The initiative takes a comprehensive approach to improving efficiency and transparency in public expenditure management. It aims to streamline budgetary processes, optimise resource allocation and ensure public funds are effectively utilised.
In parallel, the programme will boost revenue generation through stronger domestic and international tax compliance, including the rollout of a multiyear tax compliance improvement strategy and deeper cooperation with global partners. This follows Sri Lanka’s recent membership in the Global Forum on Transparency and Exchange of Information for Tax Purposes.
The ADB’s support also extends to helping the government create a more enabling environment for private sector participation. This includes developing a legal framework for public-private partnerships (PPP) aligned with international best practices, mobilising climate finance and strengthening the transparency and accountability of state-owned enterprises (SOEs).
Significantly, the programme introduces several first-time initiatives to Sri Lanka’s reform landscape, among them are a comprehensive Fiscal Risk Statement, a climate finance strategy aimed at attracting private capital and a draft PPP law. It also addresses gender gaps through Sustainable Development Goals budget tagging, a gender-sensitive Nationally Determined Contribution and public procurement reforms that enhance inclusivity and development impact.
“These innovations, together with the newly established institutional mechanisms, such as the SOE credit risk framework and specialised monitoring units, lay the foundation for sustained impact,” the ADB noted.