News Today: ADB loans to Sri Lanka 2025 boost growth

The Asian Development Bank (ADB) expects to extend loans totaling USD 790 million and an additional grant of USD 6.9 million to Sri Lanka in 2025. These funds are subject to approval by ADB’s Board of Directors and contingent upon the government meeting policy requirements, especially for Policy-Based Loans (PBLs).

Under the policy-based loan category, which provides direct budget support, Sri Lanka is set to receive:

• USD 100 million for the Financial Sector Stability and Reforms Program – SP 3

• USD 100 million for the Power Sector Reforms and Financial Sustainability Program

• USD 100 million for the Strengthening Macroeconomic Resilience and Transparency – SP 1

• USD 70 million for the Sustainable Tourism Sector Development Program – SP 1

In addition, USD 420 million has been earmarked as investment project loans to strengthen core sectors:

• USD 100 million for health sector development

• USD 200 million for agriculture and irrigation projects

• USD 90 million for transport and road infrastructure

• USD 30 million for sustainable tourism initiatives

Policy-based loans are coordinated with the International Monetary Fund (IMF) and serve to bridge Sri Lanka’s financing gap. Some reforms (financial stability, energy, and public-sector management) align with the IMF’s Extended Fund Facility (EFF) structural benchmarks, while others (tourism, water sector) target long-term resilience.

ADB’s ongoing commitment to Sri Lanka will continue until at least 2027, in parallel with the IMF program. The Sri Lankan government and IMF together expect budget support of nearly USD 2 billion over 2023–2027. Future ADB loan support will also cover subprograms in power, macroeconomic resilience, water and sanitation, and tourism development.

These efforts are designed to address policy, legal, and regulatory weaknesses while improving transparency, governance, efficiency, productivity, and competitiveness. With this robust financial support, Sri Lanka is expected to accelerate inclusive and sustainable economic growth.