Overview
Sri Lanka, a diverse country characterised by its multi-ethnic and multi-religious society, stands as a lower middle-income country in South Asia, strategically positioned in the Indian Ocean and home to over 22 million people.
The country is gradually emerging from its most severe economic downturn subsequent to a historic debt default. In March 2023, the International Monetary Fund (IMF) endorsed a USD 3 billion Extended Fund Facility (EFF) spanning four years, aimed at bolstering Sri Lanka's economic policies and reform initiatives. This financial support is expected to act as a catalyst for attracting additional external funding.
Our partnership
In alignment with the EU’s Strategy for Cooperation in the Indo-Pacific and the Sustainable Development Goals (SDGs), the European Union and Sri Lanka are focusing on two key priority areas: “Green Recovery” and “Inclusive and Peaceful Society”. Within this strategic framework, the EU has allocated EUR 60 million in grant funding to its partnership with Sri Lanka for the period 2021-2024 and a further EUR 32 million for the 2025-2027 period.
The implementation of the key priority areas is implementing the EU Global Gateway Strategy regarding both investments, for example in renewable energy, and an enabling environment for investments, for instance regarding the rule of law and national integration to promote peace. EU Member States are participating in the effort, notably Germany and France, in a Team Europe approach. The European Investment Bank (EIB) is engaged as well with guarantees and blended finance provided by the EU.
The EU-Sri Lanka Partnership documents can be found in the 'Related documents' section below for further details.
Our key initiatives
- Green recovery
The EU and Sri Lanka’s green recovery projects cover a wide range of initiatives in circular economy, biodiversity protection, renewable energy sustainable trade and other. Specifically, our cooperation is:
- Investing in rooftop solar panels and a new, renewable energy-powered wastewater system
- Promoting a circular economy by enhancing green value chains, business development, access to green finance, and more
- Improving biodiversity, natural resource protection and waste management
- Boosting smallholder farmers’ production, incomes, and investments in their businesses
- Improving Sri Lanka’s access to high-value agricultural markets
- Accelerating the private sector’s response to climate change by helping them reduce energy use and costs, favouring renewable energy
- Supporting Sri Lanka’s green trade competitiveness and fostering trade connectivity between EU and Sri Lanka, through policy reforms and integration of EU standards and regulations for Sri Lankan exports
- Good and inclusive governance
Good and inclusive governance covers a wide range of issues from Sri Lankan resilience against violence to more inclusive economic growth. The EU and Sri Lanka are specifically working together on:
- Strengthening social cohesion and inter-communal peace and collaboration, as well as effective dispute resolution mechanisms
- Enhancing access to justice and strengthen the rule of law
- Supporting sound public finance management
- Supporting civil society organisations who advocate for human and civil rights or have roles in local development and governance
- Boosting women’s political participation in leadership and decision-making processes
