JBIC Signs ODA Loan Agreement with Sri Lanka --Towards Economic and Social Development through Poverty Reduction and Reduction in Regional Disparities--
1. Japan Bank for International Cooperation (JBIC; Governor: Kyosuke Shinozawa) signed on March 28 ODA loan agreements with the aggregate total of up to 39,233 million yen for three projects with the Government of the Democratic Socialist Republic of Sri Lanka.
2. In the Development Forum held in Sri Lanka last January, the participants from the Sri Lankan government and donors discussed strategic directions and policies for social and economic development in the context of the 10-year development framework, Mahinda Chintana, issued by the Sri Lankan government. The framework, which aimed to accelerate growth, while maintaining macroeconomic stability, placed priority on building infrastructure across the country, including road networks and water supply and sewerage systems, and on reducing poverty and pursuing growth-oriented development in an effort to achieve the Millennium Development Goals (MDGs). In addition, the framework seeks to develop North and East regions where development is lagging due to the 20-year conflict.
3. This year's ODA loan package for Sri Lanka addresses major development challenges cited in the framework. Highlights of the package are as follows: (1) Developing Road Infrastructure Based on Local Needs in Predominantly Poor Regions, including Eastern Province where Development is Lagging Due to Conflict Regional disparities have been increasing every year in Sri Lanka. The poverty ratio, while declining in urban areas, remains high or is even increasing in rural areas. There is also a distinct gap in infrastructure development between urban and rural areas, which is one factor behind income disparities. Thus, to reduce poverty in rural areas with higher incomes and living standards, it is essential to increase the access to markets and social services through road infrastructure development. In the "Pro-Poor Rural Development Project", road development in the regions that include Eastern Province will increase access to markets and social services, thereby reducing poverty and regional disparities. Project sites and sub-projects were selected based on regional needs and priorities, after taking into account the poverty ratio and the regional and ethnic balance, and listening to voices in the targeted provinces, districts, sub-districts and villages. The project component also includes training for capacity development of the staff of local authorities, including provincial councils, on project management, monitoring and supervision of implementation, and operation and maintenance (O&M).
(2) Mitigating Congestion in Greater Colombo and Improving Regional Disparities Road transport plays a significant role in economic and social activities in Sri Lanka. However, a road network linking Greater Colombo and key regional cities is not well-developed, and road development is not catching up with the steadily increasing traffic volume. Therefore, there is chronic congestion in Greater Colombo where economic activity is concentrated, posing a bottleneck to freight transport and hindering economic growth. The "Greater Colombo Urban Transport Development Project" aims to relieve road congestion around Colombo, the capital city, and improve connections among regions by building an outer circular highway in the outskirts of Colombo. The project will thereby strengthen the nation's economic underpinnings and improve regional disparities.
(3) Improving the Living Environment in Sri Lanka's Two Major Cities The rate of the population with access to water remains low at 30% (2005) in Sri Lanka. In particular, the capacity of existing water supply systems in Greater Colombo and Greater Kandy is not catching up with the sharply increasing demand for water from the growing population. There is therefore an urgent necessity to fill this demand-supply gap. While increasing the water supply enlarges the amount of water discharged, a sewerage system exists only in Greater Colombo (less than 3% of the population is served with sewerage systems). In other regions, untreated sewage is discharged into rivers and the sea. The "Water Sector Development Project", will support the construction of water supply facilities in Greater Colombo and Greater Kandy, and the basic design of a sewerage system in Greater Kandy. The project will help to expand the water supply and sewerage/sanitation facilities and contribute to improving the living environment.