Sri Lanka Regional Empowerment through Vibrant, Inclusive, and Viable Economies

pipeline

Prospective

Sri Lanka faces significant spatial disparities that hinder equitable and balanced growth opportunities, particularly in the Northern and Eastern provinces. These provinces struggle with low GDP contributions (only 4.1% and 5.1%, respectively) and high poverty rates (23.8% and 18.6%) compared to the national average of 14.3%. Unemployment rates in districts like Jaffna, Kilinochchi, Ampara, and Batticaloa exceed 7%, well above the national average of 4.7%. Despite the strong potential of key productive sectors such as tourism, fisheries, and agriculture, resources and assets remain largely underutilized. This is compounded by critical gaps in enabling infrastructure—including weak connectivity, inadequate water supply, poor solid waste management, and limited productive facilities—as well as the absence of comprehensive regional development strategies and insufficient support for priority economic value chains. To address these challenges, the proposed operation adopts a programmatic and phased approach, with an emphasis on spatially targeted investments in selected clusters. Project interventions comprise a set of inter-linked components and activities, aimed at: (i) improving regional economic planning, while building institutional capacity for sustained development; (ii) financing catalytic public infrastructure investments with a view to attract private investments in the selected clusters; and (iii) supporting local enterprises in the selected clusters through business development and skills enhancement to strengthen the value chains and stimulate private sector.The project comprises two main components: Component 1 will establish the strategic foundation for long-term regional development by financing technical assistance, consultancy services, goods, and equipment to strengthen regional planning capacity and guide long-term economic development in the Northern and Eastern Provinces. The component will enhance the institutional capacity of national and provincial entities to manage integrated, climate-resilient, and private-sector-responsive development. Component 2 will finance civil works, consultancy services, feasibility studies, detailed designs, management and supervision of works for infrastructure investments in five priority clusters, with the aim of activating the private sector and promoting economic growth. Investments will improve tourism and fisheries infrastructure, enhance basic urban services, and upgrade public spaces to strengthen the competitiveness and livability of key economic areas. The five priority clusters supported under Component 2 are: (i) Jaffna Fort Revival, focusing on heritage-led urban regeneration through site restoration, public space upgrades, and complementary tourism amenities; (ii) Guru Nagar Fisheries Town & Culinary Hub, enhancing landing, market, and waste management facilities while creating new tourism and culinary livelihood opportunities; (iii) Cod Bay Harbor, upgrading onshore fisheries infrastructure within the existing harbor footprint to improve quality standards, reduce post-harvest losses, and increase value addition; (iv) Passikudah Tourism Development, improving beach access, visitor facilities, waste management, and local retail spaces to support sustainable tourism and extend visitor stays; and (v) Arugam Bay Tourism Corridor, upgrading tourism infrastructure, service delivery, and public spaces along the beachfront and road corridor to diversify activities, strengthen sustainability, and promote inclusive local economic development.

World Bank Group

Project

Road, Water Supply and Storage, Biomass, Seaport, Hotel, Commercial, Raw Materials, Waste Processing and Treatment, Government