ADB Approves $100 Million to Boost Sri Lanka’s Sustainable Tourism Growth

The Asian Development Bank (ADB) has approved a $100 million financing package to revitalize and transform Sri Lanka's tourism sector, supporting strategic reforms and targeted investments aimed at making the industry more resilient, inclusive, and environmentally sustainable. The initiative aligns with the National Tourism Policy of Sri Lanka and is expected to serve as a cornerstone for long-term economic recovery and sustainable development.

A Lifeline for Sri Lanka's Tourism Industry

Tourism has long been a key pillar of Sri Lanka's economy, contributing significantly to foreign exchange earnings, employment, and regional development. However, the industry suffered severe setbacks due to the COVID-19 pandemic, the 2019 Easter attacks, and the country's economic crisis in 2022. Although tourist arrivals in 2025 have rebounded to 2018 levels, revenue generation remains well below pre-pandemic figures, highlighting the need for structural and policy reforms.

"The tourism sector's recovery is encouraging but uneven," said Takafumi Kadono, ADB's Country Director for Sri Lanka. "Through appropriate policy and institutional reforms, infrastructure enhancements, and improved sector resilience against internal and external shocks, tourism can become the engine of inclusive economic growth."

A Two-Pronged Financing Approach

The ADB's Sustainable Tourism Sector Development Program will be financed through a $70 million concessional loan and a $30 million regular loan, reflecting the Bank's commitment to both developmental and fiscal sustainability. The program aims to strengthen Sri Lanka's ability to attract high-value tourists while ensuring that tourism benefits are shared equitably across communities, including women and small businesses.

The financing package is part of ADB's broader strategy to support Sri Lanka's post-crisis economic recovery, focusing on job creation, foreign investment, and export diversification. Tourism—one of the island's largest service exports—is seen as a key driver for rebuilding the country's balance of payments and supporting local livelihoods.

Policy Reforms and Institutional Strengthening

At the policy level, the program will support comprehensive governance reforms across the tourism ecosystem. This includes strengthening institutional coordination between national and regional tourism bodies, enhancing public–private partnerships, and improving asset management for state-owned tourism properties.

Reforms will also target tourism promotion and destination branding, helping Sri Lanka reposition itself as a premium, sustainable destination in South Asia. The program will invest in digital marketing campaigns, data-driven tourism analytics, and the adoption of smart technologies to enhance visitor experiences and competitiveness.

Catalytic Investments in Key Destinations

The ADB project will finance catalytic investments in two major destinations: Dambulla (including the UNESCO World Heritage site Sigiriya) and Trincomalee, a fast-emerging coastal hub on the island's eastern seaboard.

In Dambulla–Sigiriya, the focus will be on cultural preservation, eco-friendly infrastructure, and sustainable visitor management, ensuring that tourism growth does not compromise heritage conservation. In Trincomalee, the investments will emphasize marine and coastal tourism, urban beautification, and resilient infrastructure development, particularly in water supply, waste management, and transport connectivity.

These interventions are expected to improve livability, attract private investment, and create a more cohesive urban environment that integrates tourism with community development.

Empowering Communities and Expanding Opportunities

A major pillar of the program is inclusivity and social equity. The ADB aims to foster greater participation of women and local entrepreneurs in tourism through training, capacity building, and financial support mechanisms. The initiative will also strengthen skills development for youth and hospitality workers, improving employability and service quality across the sector.

The program further seeks to diversify Sri Lanka's tourism portfolio by tapping into underdeveloped segments such as marine tourism, adventure tourism, wellness tourism, and eco-tourism. By opening up new destinations and experiences, ADB expects to increase tourist stay duration and spending, thereby stimulating local economies.

Building a Sustainable and Resilient Future

Sustainability is at the heart of ADB's tourism development model. The program integrates climate resilience, environmental safeguards, and digital transformation to ensure that growth does not come at the cost of ecological degradation. Efforts will also be made to align tourism policies with the United Nations Sustainable Development Goals (SDGs), particularly SDG 8 (Decent Work and Economic Growth), SDG 12 (Responsible Consumption and Production), and SDG 13 (Climate Action).

Kadono emphasised that resilience against shocks—whether economic, environmental, or geopolitical—is critical for the future of Sri Lanka's tourism industry. "By modernising policies, strengthening institutions, and investing in sustainable destinations, this program will help Sri Lanka build a tourism sector that is not only globally competitive but also inclusive and environmentally responsible," he said.

A Pathway to Inclusive Recovery

Sri Lanka's government has welcomed the ADB initiative as a key step in restoring investor confidence and improving the country's global tourism image. The Ministry of Tourism and Lands has pledged to work closely with the private sector and development partners to ensure transparent implementation and measurable outcomes.

As tourism slowly reclaims its role as a cornerstone of the national economy, the ADB's $100 million program is expected to lay the foundation for long-term, inclusive, and sustainable growth—one that balances economic opportunity with cultural preservation and environmental stewardship.

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