The Cabinet of Ministers has approved a loan agreement with the Asian Development Bank (ADB) for US$100 million to fund the Macro-Recovery Sector Development Program.
The programme is aimed at promoting resilience and inclusive economic opportunities in Sri Lanka, according to the Cabinet decision.
The package has two equal parts: US$50 million in policy-based financing and US$50 million in investment financing. Both will be provided through the ADB’s regular general capital resources.
The Department of External Resources has concluded formal loan negotiations with the ADB. The Cabinet approved a proposal submitted by President Anura Kumara Dissanayake in his capacity as Minister of Finance, Planning and Economic Development to sign the agreement.
The decision follows two earlier Cabinet approvals this year. On 16 March 2026 the Cabinet approved obtaining a US$620 million policy-based loan from the ADB under five sub-programmes, and authorised loan negotiations. On 7 September 2026 it approved using US$100 million of that proposed financing to implement the Macro-Recovery Sector Development Program.
Background
The March approval tied the ADB financing to Sri Lanka’s reform agenda under the International Monetary Fund (IMF) Extended Fund Facility programme. That programme was approved in 2023 following Sri Lanka’s sovereign debt default and balance of payments crisis in 2022, and it sets conditions on revenue, spending and institutional reforms.
Policy-based financing is a form of budget support. A lender releases it when the government completes agreed policy reforms, rather than for a specific construction project. Investment financing, in contrast, pays for particular projects or activities under a programme.
The ADB’s regular general capital resources are the bank’s ordinary lending funds. Loans from them are repaid by the borrower with interest under terms set in each loan agreement.
What it means
The US$100 million is a loan, not a grant, so it adds to Sri Lanka’s external debt and will have to be repaid. The Cabinet statement did not give the interest rate, repayment period or the date on which the agreement will be signed.
For households and businesses, the policy-based half supports the government budget while reforms continue, and the investment half is meant to finance activities under the programme. The Cabinet statement did not list individual projects. The remainder of the US$620 million facility approved in March is a separate matter that the statement did not address.
