| Project Detail |
This technical assistance (TA) will assist the government enhance the competitiveness of Sri Lankan firms and contribute to job creation by: (i) supporting the development of institutional structures and associated legal and regulatory frameworks of agencies governing economic zones and enterprise development to accelerate trade, investment and economic transformation; (ii) assisting development of an economic zone strategy to attract private investment, including foreign direct investment (FDI), foster exports, and encourage beneficial spillover effects on local economies; (iii) strengthening the enabling environment for small and medium enterprises(SMEs); and; (iv) proposing more effective programs to support SMEs improve productivity, integrate with supply chains, and diversify into new markets and products. The TA outputs are designed to aid economic recovery, enhance Sri Lankas growth trajectory and make the country more inclusive and resilient to shocks. Project Name Supporting the Development of Economic Zones and SME Dynamism to Boost Competitiveness and Jobs Project Number 56093-001 Country / Economy Sri Lanka Project Status Approved Project Type / Modality of Assistance Technical Assistance This technical assistance (TA) will assist the government enhance the competitiveness of Sri Lankan firms and contribute to job creation by: (i) supporting the development of institutional structures and associated legal and regulatory frameworks of agencies governing economic zones and enterprise development to accelerate trade, investment and economic transformation; (ii) assisting development of an economic zone strategy to attract private investment, including foreign direct investment (FDI), foster exports, and encourage beneficial spillover effects on local economies; (iii) strengthening the enabling environment for small and medium enterprises(SMEs); and; (iv) proposing more effective programs to support SMEs improve productivity, integrate with supply chains, and diversify into new markets and products. The TA outputs are designed to aid economic recovery, enhance Sri Lankas growth trajectory and make the country more inclusive and resilient to shocks. Project Rationale and Linkage to Country/Regional Strategy Sri Lankas economy has contracted sharply in recent years, reversing its transition to an upper middle-income country in 2016 to a lower middle-income country in 2020. Economic growth slowed from 8.5% during 20102012 to 2.3% in 2019, and pandemic restrictions and various policy missteps led to further contraction of the economy by 7.8% in 2022, resulting in a rise in the poverty rate from 14.3% (2019) to 25.6% (2022). Sri Lanka is experiencing an economic crisis comprising an unsustainable debt, substantial balance of payments challenges, job and income losses, and food and energy shortages. However, the economy is showing signs of stabilizing and modest gross domestic product (GDP) growth (1.3%) is projected for 2024 (footnote 2). From a longer term perspective, Sri Lankas trade to GDP ratio declined from an average of 84.0% of GDP during 20002002 to 41.4% in 20202022; foreign direct investment (FDI) remained weak, averaging 1.2% of the GDP in 20102019 and only 0.8% of the GDP in 20202022; and exports declined from 33.0% of GDP in 2000 to 11.1% in 2020. Prior to the current crisis, Sri Lanka ranked 141 out of 142 economies in the 2019 global competitiveness index ranking and 99 out of 190 economies in the Doing Business Indicators. Impact Global competitiveness of Sri Lankan firms strengthened |
