Sri Lanka has unveiled a transformative framework to align Official Development Assistance (ODA) with its national development and climate resilience agenda. The new National Climate Finance Strategy 2025–2030, launched by the Ministry of Finance, Planning and Economic Development with support from the United Nations Development Programme (UNDP), aims to channel foreign aid toward climate adaptation, sustainable infrastructure, and inclusive growth.
Treasury Secretary Dr. Harshana Suriyapperuma said the strategy marks “a critical step in turning climate policy into tangible results,” noting it would strengthen financial accountability and transparency. “It allows us to build resilience, cut emissions, and protect vulnerable communities while ensuring value for every dollar of public spending,” he added.
From 2021 to 2024, Sri Lanka received more than USD 2 billion annually in ODA, mostly directed to renewable energy, transport, water management, and health projects. Over the past five years, total ODA inflows amounted to USD 10.9 billion, including USD 10.7 billion in concessional loans and USD 147.9 million in grants. Following Sri Lanka’s recent reclassification from IBRD to IDA status, the country is refocusing aid utilization to support long-term development goals instead of fragmented, donor-led projects.
Under the new framework, the Department of External Resources (ERD) will act as the central coordination hub for all ODA-related activities. The ERD will streamline project approvals, align foreign-funded initiatives with national priorities, and monitor outcomes through a centralized digital reporting system that enables public access to performance data and transparency in donor-funded projects.
A core component of the initiative is the close integration of ODA with Sri Lanka’s climate finance strategy. The plan prioritizes renewable energy, water resource management, and climate adaptation, while introducing innovative tools such as green bonds, blended finance, disaster-risk insurance, and carbon trading to attract private capital alongside donor funding.
International partners including Japan, the World Bank, the Asian Development Bank (ADB), and the UK-funded Climate Finance Network have already shown interest by extending concessional financing and technical support for renewable energy and coastal protection programs. Officials emphasized that the new model focuses on outcome-based partnerships rather than traditional aid transfers.
However, challenges remain. Building the institutional and technical capacity to design and manage complex, multi-donor projects will require sustained effort. Coordination among ministries and partners with diverse goals is another obstacle. Yet, policymakers are optimistic that the framework provides the structure to overcome these hurdles and deliver visible results.
With climate-related losses estimated at over 2% of GDP annually, the strategy envisions annual investments of nearly USD 500 million for climate-resilient infrastructure and ecosystem restoration. If effectively implemented, it could redefine Sri Lanka’s relationship with foreign partners turning ODA from a temporary economic buffer into a catalyst for sustainable growth and national renewal.
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