By The Pulseline News Desk
Sri Lanka’s ability to draw down multilateral development financing is facing a significant implementation gap, with only 5.7% of the Asian Development Bank (ADB)’s expected 2026 disbursements released during the first half of the year, despite the ADB accounting for 31.5% of the country’s total planned multilateral disbursements.
The shortfall was highlighted by Committee on Public Finance (COPF) Chairperson Harsha de Silva during a committee meeting on Tuesday (22), raising questions over whether delays in project implementation and capital expenditure could prevent Sri Lanka from fully utilising funds available from international development partners.
“According to the annual disbursement plan here, the ADB’s share is to make 31.5% of total disbursements, the IMF 33.8%, and World Bank 18.1%,” de Silva has said.
He has pointed out that while the ADB was expected to account for nearly one-third of total multilateral disbursements for the year, only 5.7% had been released by the end of the first half.
“There is a significant gap” between the 5.7% achieved and the 31.5% annual expectation, he has noted.
Capital spending under scrutiny
The issue emerged during discussions on the Government’s utilisation of external financing and the progress of ADB-funded projects, particularly two proposed loan schemes that are to be channelled through private-sector banks.
However, representatives from the Department of Project Management and Monitoring were not present at the meeting, limiting the committee’s ability to assess whether capital expenditure on projects had progressed at the required pace during the first half of the year.
The concern is significant for Sri Lanka as the Government seeks to accelerate investment and development spending while maintaining fiscal discipline under its broader economic reform programme.
Development financing that remains undisbursed does not necessarily indicate a loss of funding, but delays can signal slow project implementation, difficulties in meeting loan conditions or administrative and procedural bottlenecks.
ADB support increased
The ADB has indicated an increased financing commitment to Sri Lanka for 2026, with the allocation rising from an initial US$380 million to US$480 million.
The increase included an additional US$100 million budget-support package approved in March, intended to help Sri Lanka respond to economic pressures arising from global supply shocks and the conflict in the Middle East.
Yet, the pace of disbursement has become a point of concern as the Government attempts to translate international financing commitments into actual spending on development projects.
According to figures cited, the ADB has accounted for approximately 33% of Sri Lanka’s total expected multilateral disbursements in 2023. The World Bank has accounted for 29%, while the IMF has represented 27%.
New projects await approval
The COPF has also examined two proposed ADB-funded projects involving support for the SME sector and agriculture value chains.
Public Debt Management Office Additional Director General Udeni Thilakarathne has said the ADB’s disbursement plan for the year was US$150 million but was unable to provide the committee with the amount actually disbursed so far in 2026.
Meanwhile, Manjula Hettiarachchi, who presented two resolutions seeking parliamentary approval for the projects, has said the proposed financing would be implemented over three years.
The SME sector development project and the agriculture value-chain project are expected to receive financing of US$100 million each, with approximately US$25 million for each project expected to be disbursed during the current year.
This would bring the expected 2026 disbursement under the two projects to around US$45 million, according to the figures presented at the meeting.
“We are yet to begin negotiations, which is why we are here seeking approval,” Hettiarachchi has said, adding that the projects were expected to begin disbursing funds this year.
From commitments to implementation
The discussion highlights a broader challenge facing Sri Lanka’s post-crisis economic recovery: securing international financing is only one part of the process, while ensuring that approved funds are converted into actual investment remains equally important.
Sri Lanka has been seeking to increase capital expenditure and attract greater external financing for infrastructure, agriculture, SMEs and other productive sectors.
However, delays in parliamentary approvals, negotiations, project preparation and implementation can slow the flow of funds even when international institutions have committed financing.
Leave a comment