Sri Lanka’s Cabinet has approved a 100 million US dollar loan agreement with the Asian Development Bank (ADB) to support a macro-recovery programme, Cabinet Spokesman Nalinda Jayatissa said on Tuesday.
The loan has two parts: a 50 million dollar policy-based loan and a 50 million dollar investment loan, both from the ADB’s ordinary capital resources. The Department of External Resources has completed formal loan negotiations with the bank.
Cabinet then 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 financing is part of a larger 620 million dollar policy-based lending package approved earlier. According to the Government, that package supports Sri Lanka’s reform agenda under the International Monetary Fund’s Extended Fund Facility programme.
The Macro-Recovery Sector Development Programme was approved by Cabinet on 7 September 2026, using part of the 620 million dollar package. It is intended to support reforms that improve economic stability and resilience and widen inclusive economic opportunities.
Background
The Cabinet gave its first approval for the 620 million dollar policy-based loan, to be taken under five sub-programmes, at a meeting held in March 2026. It also authorised negotiations with the lending institution at that time. The 100 million dollars approved on Tuesday is the amount set aside from that package for the Macro-Recovery Sector Development Programme.
Policy-based loans differ from project loans. They are paid to the Government as budget support once agreed reforms are carried out, rather than being tied to the building of a specific project. An investment loan, the second component here, is normally used to finance specific activities under a programme.
Sri Lanka has been implementing an IMF-backed reform programme under the Extended Fund Facility, and the Government has said multilateral lenders such as the ADB are expected to support those reforms with financing.
What it means
Cabinet approval clears the way for the Government to sign the agreement with the ADB. The Government has not said when the funds are expected to be disbursed or what specific reforms they depend on.
For the public, funds of this kind are intended to support the budget and economic stability, including the Government’s ability to meet its financing needs without relying on additional borrowing on the domestic market. The Government has described the programme as aimed at strengthening resilience and expanding inclusive economic opportunities.
