President Ranil Wickremesinghe presided over the annual meeting of the ADB Board of Governors on September 29 which was held at the ADB headquarters in Manila, Philippines and attended by Governors and official Government delegations.
Following is the full statement made by the President at this meeting;
Fellow Governors, President Asakawa, delegates, ladies and gentlemen
It is my privilege to address you today, as the chair of the 55th Annual Meeting of the Asian Development Bank. Today, member countries of ADB have gathered in-person, after three years, here, in this dynamic city of Manila for the Second Stage of the ADB Annual Meeting. First of all, let me express my sincere appreciation to the Asian Development Bank (ADB) and the Government of Philippines for organising this prestigious event. Amidst an unprecedented economic crisis that Sri Lanka is currently undergoing, we missed the opportunity to host the second stage of the Annual Meeting in Colombo. However, we are eagerly looking forward to welcoming you all in Colombo in the near future.
The ADB has made a very positive impact, which is being profoundly felt across the entire region. In 2021, the ADB committed US$22.8 billion to member countries, and has mobilised an additional US$12.9 billion in co-financing through partnerships with other sources. The ADB’s strategy 2030 seeks to respond to global challenges, including climate change and natural disasters, food and energy insecurity, whilst also embracing opportunities in the digital economy, sustainable energy, and leveraging technology for inclusive education and healthcare. Thus, the ADB has a crucial role in helping to shape and finance policies that improve people’s lives and livelihoods across Asia and the Pacific.
Covid-19 pandemic
The supply chain shocks created by the Covid-19 pandemic is compounded with the prices of global commodities mainly food, fuel and fertiliser skyrocketing due to the Ukraine war.
Higher food and energy prices are leading to stuttering the growth of middle class and has resulted in further insecurity amongst the vulnerable communities in the Indian Ocean region.
As a result of these shocks, there has been a spike in sovereign debt distress across emerging markets. The growth targets, both in East Asia and South Asia, have been revised downward. If this is not promptly addressed, it risks creating contagion of debt distress that threatens growth and financial stability across all economies.
Countries with pre-existing economic vulnerabilities, including Sri Lanka, are the most affected. Therefore, creditors and debtor nations must work collectively in an equitable manner to ensure economic and financial stability across the region and indeed the world.
The developments on the global stage have further aggravated the self-inflected economic crisis in Sri Lanka resulting in a political outburst that led to a change in Government.
Today, we have stabilised the economy and many countries and stakeholders are keenly monitoring how we resolve this crisis. Many nations are keenly watching developments in Sri Lanka to see how we work with all stakeholders to resolve this crisis. We are well aware that the evolution of Sri Lanka’s economic crisis includes both domestic policy elements as well as external shocks. It follows that the resolution of the crisis also requires both domestic efforts and the support of external partners.
It is incumbent upon Sri Lanka and our creditors and partners to set an example of how collaborative and good faith action can result in sustainable and equitable solutions to sovereign debt issues.
Towards this end, we have already undertaken major macroeconomic policy reform measures. I am pleased to inform you that we have now reached a Staff Level Agreement with the International Monetary Fund on a four-year program supported by the Extended Fund Facility. The program is aligned with the commitment of the Government to implement an ambitious and comprehensive package of reforms that will help restore the sustainability of our public finances, addressing external imbalances, and restarting our growth engine through structural reforms and improvements in governance.
Commitment
Amidst major economic stress, Sri Lanka is undertaking an unprecedented fiscal effort as part of our commitment to restoring the country’s debt sustainability.
It is our hope and expectation that Sri Lanka’s creditors, and all stakeholders, will support us in these efforts to restore our debt sustainability and help put the country back on the path of inclusive and sustainable economic growth.
Whilst Sri Lanka undertakes these deep and often painful reforms, we are experiencing rising unemployment and reduction in purchasing power of the consumers. The Government is cognizant of the adverse impacts on the most vulnerable members of society. Accordingly, every effort has been taken to allocate greater financing and resources towards targeted support for social protection.
Asia has still to overcome the present global economic crisis. Unlike the financial crisis of 2008, in this instance, the economic levers alone are insufficient to stimulate global economic recovery.
The factors underlining the main crisis is not only of economic origin but are also the consequences of evolving geopolitics. The result being the absence of cooperation amongst the G20 unlike the earlier crisis.
The Ukraine war on one side and the US-China rivalry, spurred on by military, trade and political differences, on the other side, are key contributors to this breakdown in cooperation. Added to this geopolitical rivalry are the droughts, floods and pandemic which are still present in Asia.
All these challenges are compounded by the absence of global leadership - a time when the global economy is stuttering. As this global rivalry intensifies into a new cold war, which will determine a new global power balance by 2050, the inability of the major countries to give leadership to the mitigation of the global climate change crisis is becoming more apparent.
Developing Asia is facing a bleak future. Surging inflation, tighter monetary policies, decline in European output, weakening of exports is leading to weaker economic prospects for South Asia and East Asia as highlighted in our Asia Development Outlook 2022.
Furthermore, we are witnessing new alliances cutting across the geopolitical rivalries to respond to the mitigation of global climate change further highlighting the absence of a common approach on this subject that is vital for our existence.
Geopolitical rivalry
The geopolitical rivalry to determine the contours of the Asian power balance by the mid-century has resulted in the inability of the major countries to give leadership to overcoming the key crises that are threatening the prosperity of the region. The resolution of these major economic and environmental issues is unfortunately interwoven with the global geopolitical crisis.
As they say in many of our countries, when the elephants fight, it is the grass that is crushed. This is the predicament of many of our member countries. Therefore, we must overcome the geopolitical rivalries to address the major threats to our existence, otherwise we will all fail leading to instability in our region reminiscent of Europe after World War I. On the other hand, our ability to successfully meet these challenges will lead to remarkable progress in raising the living standards of our people through the rise of the economies of our member countries.
Before concluding, let me express my sincere gratitude to President Marcos and the people of Philippines for the outstanding hospitality and the excellent arrangements in organising the ADB Annual Meeting.