Sri Lanka signs US$200 Million ADB loans for skills and water reforms
The Government of Sri Lanka signed loan agreements worth a total of US$200 million with the Asian Development Bank (ADB) today (November 6, 2026) to improve vocational education and training and strengthen the country’s water and sanitation sector.
The agreements were signed at the General Treasury in Colombo by Dr. Harshana Suriyapperuma, Secretary to the Ministry of Finance, Planning and Economic Development, on behalf of the Government of Sri Lanka, and Shannon Cowlin, ADB Country Director for Sri Lanka, on behalf of the Asian Development Bank.
Of the total financing, US$100 million will be provided for the Skills Development System Transformation Programme, while the remaining US$100 million will support Subprogramme 2 of the Water Supply and Sanitation Reform Programme.
The Skills Development System Transformation Programme, which will be implemented from 2027 to 2031 through a results-based financing mechanism, aims to modernise Sri Lanka’s technical and vocational education and training (TVET) sector.
The programme will strengthen skills development at the secondary education level, expand quality vocational training focused on employment, increase the involvement of industries and the private sector, and improve management and governance in the TVET sector.
As part of the programme, the existing Automobile Engineering Training Institute will be upgraded into a Centre of Excellence for automotive technology, while nine TVET centres will be transformed into regional training hubs.
Facilities at another 40 training centres will also be improved to provide better learning opportunities and expand access to quality vocational training.
In addition, 200 National Competency Standards, along with related curricula and learning materials, will be updated to meet the changing needs of the labour market.
New training courses will be introduced in priority occupations and sectors to address emerging skills needs. Standards will also be established for workplace-based training, while competency-based professional development programmes will be introduced to improve the skills of TVET teachers.
The programme will also introduce policy, financial and digital reforms to improve the efficiency, quality and accessibility of vocational education and training.
Financial support will be provided through programmes designed to help private training providers expand their services.
Under the digital transformation initiatives, an e-learning platform and an integrated training management information system will be developed. The system will be linked to labour market information systems and school management information systems.
These initiatives will also strengthen skills development pathways at the secondary education level and provide career guidance services to help students make informed decisions about their training options.
Meanwhile, the US$100 million financing facility for Subprogramme 2 of the Water Supply and Sanitation Reform Programme will be provided under a policy-based lending mechanism.
The programme aims to improve water security, strengthen the country’s ability to respond to climate change, protect the environment, improve service quality and ensure the financial stability of the water sector.
It will address several challenges, including weaknesses in water resource management, operational and financial inefficiencies, climate-related risks, gaps in access and inclusion among different social groups, and poor coordination among institutions involved in the sector.
The reforms under Subprogramme 2 will focus on strengthening water resource governance, improving drinking water safety, improving wastewater and sanitation management, and promoting water conservation.
The programme will also improve water tariff policies and financial sustainability, encourage greater private sector participation and expand access to climate financing.
The Water Supply and Sanitation Reform Programme is Sri Lanka’s first programmatic policy-based lending facility for the water sector and consists of two subprogrammes.
Subprogramme 1, which received US$100 million in financing, was successfully completed in 2024. It established the necessary policy, regulatory and institutional foundations to improve water governance, climate resilience, service delivery and financial sustainability.
Subprogramme 2 will build on these achievements by implementing the reforms and introducing further improvements to establish a sustainable and climate-resilient water and sanitation service system that benefits all communities.
The US$100 million financing package for Subprogramme 2 consists of a US$50 million concessional loan and a US$50 million regular loan, both provided through ADB’s ordinary capital resources.
The financing is also expected to provide essential budget support to Sri Lanka as the country continues its economic recovery and works to meet its development financing needs, while supporting important structural reforms in the water and sanitation sector.
The Ministry of Housing, Construction and Water Supply will serve as both the executing agency and an implementing agency for the programme, while the Prime Minister’s Office and the National Water Supply and Drainage Board will serve as the other implementing agencies.