Sri Lanka seals USD100mn credit from World Bank for economic reforms

Sep 05, 2016 (LBO) – Sri Lanka signed a 100 million US dollar credit from the International Development Association (IDA), an arm of the World Bank, today to support economic reforms in the island.

“This program will support the Sri Lankan Government’s commitment to unleash the potential of Sri Lankan enterprises to grow, become more competitive and better integrate with the global economy,”said Emanuel Salinas Munoz, program leader for growth and competitiveness of the World Bank.

“Improving a country’s competitiveness and creating more and better jobs require a number of factors to be in place, from stable macroeconomic environment and good governance to predictable policies, adequate access to finance, and an efficient regulatory environment that minimizes the cost of doing business.”

The Ministry of National Policies and Economic Affairs will be responsible for the overall implementation and coordination of the proposed operation.

Other agencies involved include the Ministry of Development Strategies and International Trade, the Ministry of Finance, the Ministry of Parliamentary Reforms and Mass Media, the Auditor General’s Department, the Board of Investment and the Central Bank of Sri Lanka.

Sri Lanka has been making steady progress on 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 Bank said in a statement.

A recent World Bank study, the Systematic Country Diagnostic, highlighted the need for Sri Lanka to move from a largely inward looking and public sector driven economy to one that is capable of unleashing the potential of the private sector – leading to post-conflict economic growth and creating more and better jobs for Sri Lankans.

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 Idah Pswarayi-Riddihough, World Bank Country Director for Sri Lanka and the Maldives.

“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.

DPF operations provide untied financial support directly to the treasury to distribute through their 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 program at no cost to the Government.

Meanwhile, the World Bank is giving a 45 million US dollar credit for a project that will involve 15,000 residents, 30 percent of them women, living near protected habitats improve their livelihoods and develop income streams such as eco-tourism.

“Sri Lanka is blessed with a rich endowment of eco-systems,” Riddihough said in a another statement.

“Striking a fair balance between economy and ecology is crucial, not only for the preservation of the ecosystem but also for helping people emerge from poverty.”

Managing this natural heritage is the responsibility of all Sri Lankans. Benefits of well managed eco-systems include, improved national economy as well as addressing challenges such as human wild life conflicts and climate change effects, he said.

The project will also will develop human-elephant co-existence mechanisms and protect watersheds to boost agricultural productivity.