Bank Group Contribution
The Sri Lanka portfolio is healthy with no problem projects or projects at risk, and 100% proactivity. Following the recent approval of the Second Health Sector Development Project, the portfolio is comprised of 16 projects with a total net commitment of $1.49 billion. In addition, the Bank supervises a portfolio of $21 million spread across six recipient executed trust funds covering agricultural financing, nutrition, people with disabilities, water and sanitation. The current portfolio consists primarily of IDA-funded projects, with IBRD having been used to date for one project - the Metro Colombo Urban Development Project. As of FY15, Sri Lanka will be an IBRD-only country.
The International Finance Corporation (IFC’s) country strategy for Sri Lanka for FY13-15 focuses on (i) Inclusive growth by increasing access to services for the underserved; and (ii) Global integration by enhancing growth and competitiveness of priority sectors. Priority areas under this strategy include access to finance, infrastructure, tourism, and agribusiness, with a focus on lagging regions and communities. IFC expects to commit $200mn in 2013.
IFC also provides advisory services to promote sustainable growth among small and medium enterprises by facilitating access to finance, and by offering capacity-building and training opportunities. SME related work accounts for approximately 73% of IFC’s active advisory portfolio in Sri Lanka.
In addition, IFC is developing the implementation plan for a project in 4 districts in the North and East provinces. The project is aimed at supporting the transition from recovery to development in these districts and bridging the gap with the more developed areas of the country.
The foreign aid profile in Sri Lanka has changed considerably in recent years. With Sri Lanka graduating to the middle income level, the government of Sri Lanka has broadened its options for foreign financing for public investment, in a mix of less to non-concessional financing together with the available concessional financing.
The 2005 to 2010 period saw a marked increase of total foreign financing commitments, from US$1,311 billion in 2006 to $3.261 billion in 2010, representing about a 150% increase. The total Foreign Finance Commitments declined in 2011compared to previous years, as the financing of some key lead projects was secured the previous years. It nevertheless reached $2.076 billion.
Commitments from China, Japan, ADB and the World Bank accounted for $1.757 billion, amounting to 84% of the total commitment in 2011. Sri Lanka also secured US$131 million of grants, a 6 % increase over the previous year, and provided largely (approximately 70%) by UN Agencies. In 2011, total foreign aid disbursement reached $1.901 billion.
While the largest traditional donors/lenders have historically been the ADB, World Bank and Japan, China has now emerged as the largest lender, with involvement primarily in the road sector. Concessional assistance from western bilateral partners in general has diminished whilst financing in the form of export credits has increased.
The World Bank Group will support government efforts to improve the investment climate, strengthen governance and reduce the inefficiencies of the public sector. The World Bank Group will deepen its assistance to the knowledge-based economy with investments in skills, research and innovation. In addition, support for the development of infrastructure projects needed for sustainable urban development and better linkages within Sri Lanka will be enhanced. The Bank Group also stands ready to support government efforts to promote environmental sustainability and climate change adaptation. The World Bank Group will continue to support improvements in living standards and social inclusion in order to ensure that the benefits of rapid growth and higher quality services are broadly shared.
Sri Lanka is an IDA-IBRD blend country as of FY12. An indicative lending program for IDA and IBRD combined for the first two years of the CPS is $300 million in FY13 and $727 million in FY14. Sri Lanka’s eligibility for IDA will likely end with the IDA 16 cycle. The government is interested in IBRD lending of up to $500 million annually during FY15 and FY16, which would, however, depend on the macroeconomic environment in Sri Lanka, overall demand for IBRD resources from other clients, IBRD financial capacity and global economic developments.
42-year-old Sivakulendran, Jayaleela’s husband died in 1994 while he was fishing out at sea. Ever since, she has been raising and providing for their daughter single-handedly. In September 2009, Jayaleela and her daughter returned home to find their retail shop partially damaged in the war. With the Rs.30,000 loan she received from the Reawakening Project, Jayaleela has reopened her business. Already 615 individuals in Vadmarachchi East DS Division have obtained loans to establish viable income generating activities.
Ramachandran Umaranjani is among a group of 42 individuals from Chempiyanpattu South that is currently undergoing skills and capacity building training aimed at enhancing their income earning abilities. After receiving initial training, Umaranjani and a few other women from her village are now making various crafts using locally available palmyrah leaves.
A significant part of the World Bank’s assistance has also channeled toward building vital community and institutional infrastructures. This has enhanced the ability of service providers to respond to increasing service related demands of the resettled communities.
The World Bank’s financial assistance has empowered thousands of returnee families not only to establish themselves in their homes and villages in war-affected Northern districts, but more importantly, to lead independent, productive and dignified lives, once again.