Feb 19, 2016 (LBO) – The Asian Development Bank will lend 505 million dollars to Sri Lanka in 2016 and focus on new areas like private sector development, knowledge solutions, and development of advanced infrastructure, a new report said.
“ADB will continue to support Sri Lanka in new areas such as private sector development, knowledge solutions, and development of advanced infrastructure as the country transforms into an upper-middle-income country,” the newly launched ADB Sri Lanka Development Effectiveness Brief said.
“Sri Lanka has emerged in recent years as one of the most dynamic countries in South Asia. With a sophisticated work force, and a strategic location that links Asia to Europe, the country is well positioned for strong economic growth for years to come.”
The report says Sri Lanka has moved beyond being a place to find low-cost labor to manufacture goods for export.
“The country achieved middle-income status in the mid-2000s and could become an upper middle-income country in a few years.”
It says that this steady march out of poverty puts Sri Lanka in an enviable position, but also creates challenges for the country.
“Sri Lanka can no longer compete as effectively with low-cost labor countries. Therefore, it must develop expertise, products, and services, and increase the productivity of workers to compete with the world’s innovators in high-income countries.”
ADB is expecting to lend 739 million dollar in 2017 and 2018 increase it to 1.2 billion.
Analysts say that in order for the island nation to achieve a higher middle income status the country needs to invest in physical and financial infrastructure and move towards a knowledge based skills and education system.
Sri Lanka is also in talks with the International Monetary Fund for balance of payments support as it looks at ways to repay an estimated US 5 billion dollars in debt later this year.