Growing International Confidence In Lanka's Economic Recovery

(MENAFN- NewsIn) By Sugeeswara Senadhira/Daily News

Colombo, February 23: In recent weeks, several top foreign delegates, including senior ministers, heads of the most important United Nations development agencies, as well as top officials of country-specific institutions, visited Sri Lanka, underscoring the rapidly growing confidence in the Island Nation's economic recovery and potential for growth. The discussions held by these delegations in Colombo will pave the way for the resumption of the implementation of some of the essential infrastructure projects and development programmes.

Iranian Foreign Affairs Minister Hossein Amir-Abdollahian called on Prime Minister Dinesh Gunawardena on Tuesday to stress Iran's willingness to expand close bilateral ties and development cooperation, trade, and investment. He said Iran could assist in new hydroelectricity and irrigation projects similar to the one at Uma Oya, which was just completed.

The Uma Oya hydro-electricity project will add an additional 120 Megawatts of power to the electricity grid. The Uma Oya Project, in addition to the generation of electricity, provides 145 million cubic meters of water to irrigate 50,000 acres of dry land. Iranian President Sayyid Ebrahim Raisolsadati is expected to attend the opening of the Uma Oya electricity generation in 2 to 3 onths' time.

Financial Restructuring

Another major project, the construction of the second terminal of the Katunayake International Airport, which was halted for the last few years, will be resumed shortly. Japan International Cooperation Agency (JICA) Chairman Akihiko Tanaka said since Sri Lanka's economy is showing growth once again, they will support the construction of the KIA second terminal after the financial restructuring process is implemented by the International Monetary Fund (IMF).

The KIA second terminal construction began in 2020 with an estimated cost of Rs. 145 billion under the JICA soft loan scheme. However, it was stopped two years later due to the economic recession in the country by March 2022. When Sri Lanka was declared bankrupt, the concessional loan programme by JICA for the second terminal project was stopped. Following which, the construction of essential components of the second terminal was abandoned by the contractors. However, the construction of essential components was completed using the financial allocation of the airport company.

It has now been estimated that, in addition to the JICA loan, another provision of about USD 450 million is required because of the cost escalation of goods and equipment. JICA officials observed the construction work currently being done at the second terminal of Katunayake Airport prior to the discussion about the resumption of the construction of the second phase. During a discussion with Prime Minister Dinesh Gunawardena, JICA President Dr. Tanaka Akihito described Sri Lanka as a centre of gravity for global economic development and confirmed that JICA would continuously assist the development and reforms agenda of Sri Lanka.

World Economic Growth

“The global growth has shifted to the Asia Pacific region, and in this, Sri Lanka is a centre of gravity in world economic growth,” he said and added that JICA would continue to be a partner in this process. He stressed the need for speeding up the KIA second terminal construction as it would help the country to attract more tourists and also for Sri Lanka to be an important aviation hub. Dr. Akihito made a lighthearted comment,“In 2025, when the KIA second terminal becomes operative, I'll visit Sri Lanka as a tourist.”

On Monday, the Cabinet of Ministers passed a proposal to increase the contribution of large-scale renewable energy projects. It was stated that a feasibility study undertaken by the World Bank has identified North, West, and Southeast regions as prime locations for renewable energy. Sri Lanka is poised to develop offshore wind potential in stages through private sector investments, with the goal of achieving economies of scale.

Cabinet Co-Spokesman and Minister Bandula Gunawardhana said that the decision marks a significant step forward in Sri Lanka's efforts to diversify its energy sources and reduce its reliance on fossil fuels. By tapping into offshore wind power, the country aims to enhance its renewable energy capacity and contribute to global efforts to combat climate change. Furthermore, the decision to pursue offshore wind power aligns with Sri Lanka's broader commitment to transitioning towards a greener and more sustainable energy sector.

Rapid Economic Recovery

The collaboration between the United States and India to finance a project is another indication of confidence in Sri Lanka's rapid economic recovery. The US plans to provide $553 million in financing for a port terminal in Sri Lanka's capital being developed by Indian billionaire Gautam Adani. The financing from the International Development Finance Corp. (DFC) for the deepwater West Container Terminal in Colombo is the US government agency's largest infrastructure investment in Asia and among its biggest globally. It will bolster Sri Lanka's economic growth and“its regional economic integration, including with India, a key partner to both countries,” DFC said in a statement.

Adani Group is also considering a US$750 million investment in Sri Lanka to set up wind projects that will generate 500 megawatts. Last year, Gautam Adani met with President Ranil Wickremesinghe to discuss the port project and the development of a 500-megawatt wind farm during the latter's visit to India. Adani Green Energy was issued provisional approval for two wind projects of 286 MW in Sri Lanka's northwestern Mannar and 234 MW in northern Pooneryn. The Adani wind power deal is one of the key projects granted to India. The Adani project is directly supported by the Indian government, which has agreed to buy excess power generated by Sri Lanka.

Heads of international agencies who visited Sri Lanka in the first 6 weeks of 2024 expressed satisfaction over Sri Lanka's quick economic recovery and assured continuous support. UN Under Secretary-General Armida Alisjahbana, who is the Director of ESCAP, called on the Prime Minister to congratulate Sri Lanka's quick recovery and assured fullest support for the country's efforts to achieve Sustainable Development Goals (SDGs).

International Water Management Institute (IWMI) and international partner CGIAR, which is dedicated to reducing poverty, enhancing food and nutrition security, and improving natural resources, will launch a new programme this year in Sri Lanka to mark the 40th anniversary of a productive partnership. CGIAR Executive Managing Director Ismahane Elouafi and IWMI Director General Dr. Mark Smith, who called on the Prime Minister at the Temple Trees earlier this month, agreed to look into the Prime Minister's request to support agriculture production, fisheries, and poultry to enhance exports as well as the nutrition intake of the rural population.

Another UN body, the International Labour Organisation (ILO), agreed to assist the government's initiative to introduce a dispute prevention and resolution mechanism to the public service. This was announced when ILO Country Director Joni Simpson called on the Prime Minister together with United Nations Resident Coordinator Marc-André Franche.

On Wednesday (February 21), visiting Vietnam Minister of Agriculture and Rural Development Minh Hoan Le offered to share Vietnam's experience on the modernisation of agriculture. He said that Vietnam considers Sri Lanka as a special friend, and his country could share expertise in digital agriculture and smart agriculture. It is a continuous flow of foreign dignitaries visiting Sri Lanka to express confidence in the country's economic revival and offering to be partners of progress for mutual benefit.

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