World Bank Approves Its First IBRD Loan of $213 Million to Sri Lanka to Support the Colombo Urban Development Project

March 15, 2012

WASHINGTON, March 15, 2012 — Today the World Bank approved its first IBRD loan of US $ 213 million to Sri Lanka for the Metro Colombo Urban Development Project (MCUDP) to assist develop the Colombo Metropolitan Area as the environmentally sustainable, modern capital of a middle income country, by rehabilitating, improving and maintaining critical infrastructure and services in order to position the city as a competitive hub by 2016.

The project will be implemented within a five-year period, with the clear objectives to reduce flooding in the catchment of the Colombo Water Basin, while also strengthening the capacity of local authorities in the Colombo Metropolitan Area (CMA) to rehabilitate, improve and maintain local infrastructure and services through selected demonstration investments.

“The Government of Sri Lanka (GoSL) has launched an ambitious program of economic and physical regeneration for metropolitan Colombo in a bid to transform it into a modern, world-class capital. This program aims to improve the overall urban environment and attract private capital. The Bank’s responsiveness to this request for support by the GoSL will be reflected in the upcoming Country Partnership Strategy (CPS) and its renewed emphasis on urban development,” said Diarietou Gaye, Country Director, World Bank Sri Lanka.

Colombo City is the commercial and financial heart of the country and is the international gateway to Sri Lanka. It produces almost 50% of the GDP of the country, housing most of the country’s manufacturing facilities and services. As a Middle Income Country, Sri Lanka needs to tap the competitive advantages of the Colombo Metropolitan Region to accelerate growth and compete at international level. However, Colombo is also vulnerable to floods, which over the past two decades have been increasing in intensity and frequency due to climate changes, with imaginable negative impacts on the economy and productivity of the city.

The project has three components and involves both a number of key technical agencies and selected local authorities composing the Colombo Metropolitan Area. The Flood and Drainage Management component will support priority improvements to flood and drainage management infrastructure in the Colombo water basin and create long-term sustainability of the flood-mitigation investments by developing a modern integrated flood management system (IFMS). This component will also include complementary interventions, like parks and a sewer interceptor, to improve environment and recreational facilities along the water bodies. The second project component will focus on capacity building for Metro Colombo local authorities and on urban development, rehabilitation of infrastructure and improvement of urban spaces like parks, sidewalks and pedestrian connections. It will also strengthen strategic planning processes at the metropolitan level and support local authorities in the Colombo Metropolitan Area to rehabilitate and manage streets and drainage infrastructure, while improving local public facilities and other urban services. The third component is dedicated to implementation support and will provide assistance to implementation agencies in areas such as project management, monitoring and evaluation (M&E), procurement, financial management, and environmental and social safeguards; construction design and supervision; communications and public awareness.

“As the first Bank engagement in metropolitan Colombo and in the urban sector after more than a 15-year gap, the proposed project would focus on the critical priority of flood reduction, while also supporting the broader agenda of metropolitan development. As such, the project lays the foundations for a long-term partnership with the Government of Sri Lanka in the urban sector. Future collaborations in this sector will benefit from the experience of this project and scale up investment projects both in metropolitan Colombo and in secondary cities across the country, promoting environmentally sustainable solutions to urban development and involving the active participation of the citizens and other key stakeholders, like local authorities and the private sector,” said Rosanna Nitti, Task Team leader of MCUDP.

The loan, from the International Bank for Reconstruction and Development (IBRD), has a maturity of 25 years including a grace period of 5 years.

Media Contacts
In Washington
Alison Reeves
Tel : (202) 473-8955
In Colombo
Sandya Salgado
Tel : (94-11) 5561-323