Sri Lanka is a multi-ethnic, multilingual and multi-religious island nation with a population of 21 million spread over a land area of 65,610 km squared. The country has made significant strides in its socio-economic and human development indicators that led it to graduate to lower middle-income country status in 2010. However, remittances and tourism revenues were greatly impacted by the 2018 constitutional crisis, the Easter bomb attacks in 2019 and the COVID-19 fallout in 2020 and 2021.
In addition, since early 2022, Sri Lanka has been facing its worst economic crisis since independence, deepened by increasing risk of food insecurity following reduced production over several harvest seasons. Food and energy price shocks in early 2022 resulted in a debt and balance of payments crisis. This led to the country’s first sovereign debt default in May 2022. The shortages of fuel, cooking gas, electricity, medicines and agricultural inputs, coupled with inflation and skyrocketing food prices, have severely affected the most vulnerable groups, leading economic activities to come to a standstill.
Beyond the immediate economic and food crises, addressing the underlying causes of the 26 year-long civil war and the long-standing grievances of the population affected by the war remains one of the most important political challenges.
Since 2015, there has been a renewal of relations between the EU and Sri Lanka with the establishment of a structural dialogue with annual meetings. Dialogue takes place under the Joint Commission structure, including Working Groups on Human Rights, Good Governance and the Rule of Law; Trade; and Development Cooperation as well as the GSP+ monitoring mechanism.
The basis for programming is a joint framework document between the European Union and its Member States, which also takes into account Sri Lanka’s national policy document “Vistas of Prosperity and Splendour”. Based on the shared priorities of the EU and Sri Lanka, the following 2 priority areas of cooperation were agreed on
- green recovery
- an inclusive and peaceful society
The Multiannual Indicative Programme (MIP) for Sri Lanka amounts to €60 million until 2024, when a mid-term review will take place.
Green recovery for Sri Lanka
Sri Lanka is highly vulnerable to the impact of climate change. With EU support, the country has the potential to adopt more low-carbon, resource-efficient, sustainable and circular models for its economy, population while promoting the conservation of biodiversity. This would be achieved by further developing sustainable production and consumption patterns, improving food waste management and use of plastics, promoting ecological innovations, providing access to finance for key green investments and developing a comprehensive disaster risk reduction strategy.
An inclusive and peaceful society
Due to its history, the state of social cohesion in Sri Lanka is precarious. Over a decade after the end of the civil war, mutual grievances and feelings of injustice remain strong among the country’s ethnic groups, which are divided along religious and linguistic differences.
Programming in this area further enhances socio-economic inclusion and partnerships with a focus on the most disadvantaged, marginalised and religiously diverse communities while strengthening institutions and opportunities for social harmony across communities. Actions will support Sri Lanka in enhancing social cohesion and social protection, and reducing intercommunal tensions while simultaneously addressing geographical, economic and gender inequalities.
Measures in favour of civil society
Following the establishment of the new EU Roadmap for engagement with civil society 2021-2024, a dedicated facility to support capacity building of local civil society actors and protect their space will be integrated into the Cooperation Facility for Sri Lanka.