ADB assures more support but not debt cancellation

By Ifham Nizam

Instead of offers on debt cancellation, the Asian Development Bank (ADB) President Masatsugu Asakawa assured that they would provide more support to Sri Lanka to get out of the economic crisis.The ADB chief was responding to Hemantha Withanage, who was representing the Centre for Environmental Justice (ECJ) on behalf of the NGO Forum on ADB and other civil society organizations.

Asakawa also promised to support Sri Lankan people to come out of the humanitarian crisis.Withanage during the meeting requested the ADB President to investigate ADB loans to Sri Lanka from the lens of development effectiveness and debt crisis, as they are paramount.

“We request ADB to run an IED –Internal Evaluation Department- to evaluate failed projects and loans in Sri Lanka.

He also raised the issue of Policy Loans having direct impact on people, livelihoods, and environment. “We demand new safeguards and clear binding language pertaining to holding policy loans accountable and should be subject to accountability mechanisms.”Withanage said as a regional bank, they also demanded cancelling ADB failed loans in Sri Lanka. It will give a signal to other lenders to cancel some other illegitimate debt, Withanage stressed adding on their part they would continue to push on those recommendations.

He also requested the ADB President to put an end to all forms of support to fossil fuel finance and coal finance through a Renewable Energy Development Master Action Plan or any indirect and direct financing.Sri Lanka is a founding member of the ADB. To date, ADB has committed 479 public sector loans, grants, and technical assistance totalling USD 11 billion to Sri Lanka.

A report prepared by the Centre for Poverty Analysis on behalf of the ADB in 2007 concluded that “Together with the success stories, there were several reversals and failures of the ADB policies in the agriculture sector and several inconsistencies between GOSL and ADB policies.Withanage added that although ADB extended more lending to transport, energy, and agriculture, these sectors failed us. The main sources of income in Sri Lanka become migration workers and tourism.

“When COVID impacted Sri Lanka, we lost both these incomes. Can the ADB still justify its role as a policy bank? ADB is repeating some of the failures. Even at present in an ongoing project in Sri Lanka in the Energy sector ADB depends on the coal promoters as consultants to produce the Renewable Energy Master plan, Withanage pointed out.

He added: “We know that Sri Lanka has continued borrowing from private creditors and China since 2005 until we lost our debt sustainability by September 2020. There are many infrastructure projects which have not benefited the country. Some are now becoming illegitimate debts.

“Sri Lanka is not the only country in our region facing a debt crisis. Bangladesh, Pakistan, and Nepal are also losing debt sustainability. In that case ADB should revisit its approach on the development financing.”