Asian Development Bank Plans Further Support For Sri Lanka

Asian Development Bank President-elect Masatsugu Asakawa speaks during an interview with Reuters in Tokyo, Reuters.

The Asian Development Bank (ADB) is prepared to offer more financial help to Sri Lanka, a senior official said on Tuesday.

“As a key long-term partner, the ADB stands ready to provide further support,” the bank’s president, Masatsugu Asakawa, told reporters at its annual gathering.

“After the IMF programme is completed, we will consider to join another, by providing additional financial resources to join other rescue packages for Sri Lanka,” said Asakawa.

$200 Million Emergency Loan

The remarks came after an ADB pact this month for an emergency loan of $200 million to ensure access to food and protect livelihoods in Sri Lanka which is suffering its worst economic crisis in more than seven decades.

Sri Lanka’s economy has contracted and is dealing with high inflation which has severely affected living standards, Asakawa said. The annual inflation figure exceeded 70% in August.

“We are working closely with the government in supporting the country in this challenging time,” he added.

Asakawa said he was confident Colombo was working to finalise a staff-level agreement with the International Monetary Fund (IMF) for a loan of about $2.9 billion, by seeking financing assurances from creditors, among other steps.

Currency Concern

Asakawa pointed to the risks of abrupt capital outflows from Asia and the prospect of a very sharp currency depreciation continuing for some time, as the US central bank tightens its monetary policy aggressively.

However, Asia has become more resilient against financial turmoil, with an improved current account balance and a sufficient accumulation of foreign reserves, than it was during the Asian financial crisis of the late 1990s, he added.

Yet portfolio capital movement is very fast and volatile, Asakawa warned.

“It’s always a good thing to be very vigilant on this broader capital movement,” he added.

“I’m also trying to enhance our regional financial co-operation efforts, including that of ASEAN+3,” he said, referring to a grouping of China, Japan and South Korea with Southeast Asian nations.

Reuters, with additional editing from Alfie Habershon

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Alfie Habershon

Alfie is a Reporter at Asia Financial. He previously lived in Mumbai reporting on India's economy and healthcare for data journalism initiative IndiaSpend, as well as having worked for London based Tortoise Media.