ADB’s Sri Lanka lending hit by shifting policies and conflict

Oct 05, 2007 (LBO) – Asian Development Bank (ADB), the second largest lender to Sri Lanka, says two decades of aid has mixed results and the relevance of its current 5-year lending program has 'diminished' due to conflict and shifting government policy. Asian Development Bank’s (ADB) policy supporting loans, conflict assistance and agriculture sector lending have been less than successful or borders unsuccessful according to an evaluation of 90 loans worth 3.3 billion dollars granted over two decades.

The bank has been giving low interest loans to Sri Lanka since 1968 but 90 percent of the 3.7 billion total lending came after 1986.

"One of the findings was that with program or reform loans perhaps both sides were too ambitious," says Johanna Boestel a country economist at the ADB Colombo office.

"The ADB missions came and thought that things can be done quickly and the government, in its enthusiasm, also agreed to theses reform loans. Perhaps both sides were too ambitious.

Partly Successful

Program loans support broad economic reforms while ones targeting an identified project like constructing a school building or a road are called project loans.

For analyzing lending to Sri Lanka, which is on