Cabinet Approves US$100 Million ADB Financing for Sri Lanka’s Water Sector Reforms
COLOMBO, October 13, 2026 — Sri Lanka’s Cabinet has approved a US$100 million policy-based financing facility from the Asian Development Bank (ADB) to advance the second sub-programme of the country’s Water Supply and Sanitation Reform Programme, supporting efforts to address structural weaknesses and improve the sector’s operational and financial performance.
The approval paves the way for the Government to enter into a financing agreement with the ADB, securing funds for reforms aimed at strengthening water resource management, improving service delivery and enhancing the sector’s resilience to climate-related risks.
The funding forms part of a broader US$620 million policy-based loan facility approved by the ADB Board of Directors to support Sri Lanka’s reform agenda in line with the International Monetary Fund’s (IMF) Extended Fund Facility programme.
Financing split between regular and concessional resources
The proposed US$100 million allocation will comprise US$50 million from the ADB’s regular general capital resources and a further US$50 million from its concessional general capital resources.
The financing is intended to support the implementation of the programme’s second sub-programme, which focuses on addressing persistent institutional and operational challenges within Sri Lanka’s water supply and sanitation sector.
Reforms target financial efficiency and climate resilience
The programme seeks to help the Government tackle several challenges affecting the sector, including weaknesses in water resource management, operational and financial inefficiencies, and increasing exposure to climate risks.
It also aims to address gaps in social inclusion and improve coordination among the various stakeholders involved in water supply and sanitation services.
These reforms are expected to strengthen the institutional framework governing the sector and support more effective management of water-related resources and services.
Cabinet approval advances financing process
The Cabinet approved the proposal submitted by President Anura Kumara Dissanayake in his capacity as Minister of Finance, Planning and Economic Development to enter into an agreement with the ADB for the financing facility.
The approval represents a step towards securing the funding required to implement the second phase of the reform programme.
The initiative forms part of Sri Lanka’s broader economic reform efforts, with the ADB financing aligned with the country’s IMF-supported reform agenda. Its implementation will focus on addressing structural challenges in water management while strengthening the efficiency, inclusiveness and resilience of water supply and sanitation services.
