Government signs US$100 million ADB loan for water sector reforms

The government yesterday signed a US$100 million policy-based loan agreement with the Asian Development Bank for the second phase of the water sector reform programme. The funds will go directly to the budget against agreed policy actions, rather than to pipes or construction.

Treasury Secretary Dr Harshana Suriyapperuma signed the agreement on behalf of the government at a ceremony held at the General Treasury in Colombo. Shannon Cowlin, country director of the ADB's Sri Lanka resident mission, signed for the bank.

The amount under the Water Supply and Sanitation Reform Program's subprogramme 2 consists of a US$50 million concessional loan and US$50 million from the bank's ordinary capital resources. The programme supports reforms in water resource management, drinking water safety, sanitation management, tariffs and financial sustainability, private sector participation and climate financing.

This is the first policy-based lending operation in the water sector. The first subprogramme, also worth US$100 million, was completed in 2024 and established policy, regulatory and institutional foundations; the second phase implements and deepens them. The Ministry of Health, Construction and Water Supply is the executing agency, working with the Prime Minister's Office and the National Water Supply and Drainage Board.