Report and Recommendation of the President

to the Board of Directors

Project Number: 55085-001

June 2021

Proposed Loans
Democratic Socialist Republic of Sri Lanka:
Responsive COVID-19 Vaccines for Recovery
Project under the Asia Pacific Vaccine Access
Facility

Distribution of this document is restricted until it has been approved by the Board of Directors.
Following such approval, ADB will disclose the document to the public in accordance with ADB’s
Access to Information Policy after excluding information that is subject to exceptions to disclosure
set forth in the policy.
 CURRENCY EQUIVALENTS
(as of 1 June 2021)

Currency unit – Sri Lanka rupee/s (SLRe/SLRs)

SLRe1.00 = $0.00506
$1.00 = SLRs197.76

ABBREVIATIONS

ADB – Asian Development Bank

APVAX – Asia Pacific Vaccine Access
CBSL – Central Bank of Sri Lanka
COVAX – COVID-19 Vaccines Global Access
COVID-19 – coronavirus disease
GDP – gross domestic product
HPB – Health Promotion Bureau
IMF – International Monetary Fund
MOH – Ministry of Health
MSD – Medical Supplies Division
NCD – noncommunicable disease
NDVP – National Deployment and Vaccination Plan for COVID-19
Vaccines
NMRA – National Medicines Regulatory Authority
PAM – project administration manual
PIC – project investment component
PMU – project management unit
RRC – rapid response component
SPC – State Pharmaceuticals Corporation of Sri Lanka
UNICEF – United Nations Children’s Fund
WHO – World Health Organization

NOTE

In this report, “$” refers to United States dollars.

Vice-President Shixin Chen, Operations 1
Director General Kenichi Yokoyama, South Asia Department (SARD)
Director Sungsup Ra, Human and Social Development Division (SAHS),
SARD

Team leaders Brian Chin, Senior Health Specialist, Social Sector Division,
Central and West Asia Department
Herathbanda Jayasundara, Social Development Officer, Sri Lanka
Resident Mission (SLRM), SARD
Team members Mikael Andersson, Financial Management Specialist; Portfolio,
Results and Quality Control Unit (SAOD-PR); SARD
Ricardo Carlos Barba, Principal Safeguards Specialist, SAOD-PR,
SARD
Robert A. Boothe, Senior Planning and Policy Economist; Strategy,
Policy and Business Process Division; Strategy, Policy and
Partnerships Department
Arup Kumar Chatterjee, Principal Financial Sector Specialist,
Finance Sector Group, Sustainable Development and Climate
Change Department (SDCC)
Dai-Ling Chen, Young Professional, SAHS, SARD
Amer A. Chowdhury, Senior Public–Private Partnership Specialist,
Advisory Division 1, Office of Public–Private Partnership
Nelly Elza Defo, Financial Control Specialist, Loan and Grant
Disbursement Section, Controller’s Department
Veronica L. Dela Cruz, Portfolio Management Officer, SAOD-PR,
SARD
Haidy S. Ear-Dupuy, Senior Social Development Specialist (Core
Labor Standards), Safeguards Division (SDSS), SDCC
Coral Fernandez Illescas, Principal Water Resources Specialist,
Water Sector Group, SDCC
Anna M. Fink, Economist (Regional Cooperation), Regional
Cooperation and Integration Thematic Group, SDCC
Saranga Gajasinghe, Safeguards Officer, SLRM, SARD
Puri Philina O. Gamon, Associate Social Development Officer,
SAOD-PR, SARD
Zaruhi Hayrapetyan, Social Development Specialist (Safeguards),
SDSS, SDCC
Michelle J. Hernaez, Operations Assistant, SAHS, SARD
Sudarshana Anojan Jayasundara, Senior Social Development
Officer (Gender), SLRM, SARD
Maria Joao Kaizeler, Senior Financial Management Specialist,
Public Financial Management Division; Procurement, Portfolio
and Financial Management Department (PPFD)
Michiko Katagami, Principal Natural Resources and Agriculture
Specialist, Rural Development and Food Security (Agriculture)
Thematic Group, SDCC
Sonalini Khetrapal, Social Sector Specialist, SAHS, SARD
Utsav Kumar, Senior Country Economist, SLRM, SARD
Aiko Kikkawa Takenaka, Economist, Economic Analysis and
Operational Support Division, Economic Research and
Regional Cooperation Department
Stella Leonora S. Labayen, Project Analyst, SAHS, SARD
 Roberto Leva, Investment Specialist, Private Sector Financial
Institutions Division, Private Sector Operations Department
(PSOD)
Rui Liu, Health Specialist, Health Sector Group, SDCC
Taisuke Miyao, Senior Procurement Specialist, Procurement
Division 1, PPFD
R. K. D. T. L. Molligoda, Senior Investment Officer, Office of the
Director General (OPSD), PSOD
Christopher I. Morris, Principal Social Development Specialist,
NGO and Civil Society Center, SDCC
Yasodarran Narayanatheva, Procurement Officer, SLRM, SARD
Keiko Nowacka, Senior Social Development Specialist (Gender
and Development), Gender Equity Thematic Group, SDCC
Felix Oku, Senior Social Development Specialist (Safeguards),
SDSS, SDCC
Patrick Osewe, Chief, Health Sector Group, SDCC
Lalinka Yana M. Padrinao, Associate Environment Officer, SAOD-
PR, SARD
Aniruddha V. Patil, Principal Investment Specialist, OPSD, PSOD
Douglas A. Perkins, Principal Counsel, Office of the General
Counsel
Faithful A. Ramirez, Senior Operations Assistant, Transport and
Communications Division, SARD
Indunil Kumari Ranatunge, Associate Financial Management
Officer, SLRM, SARD
M. Shahadat H. Russell, Unit Head, Project Administration, SAHS,
SARD
Rachana Shrestha, Public Management Specialist, Governance
Thematic Group, SDCC
Gi Soon Song, Principal Social Sector Specialist, SAHS, SARD
Lei Lei Song, Regional Economic Advisor, Office of the Director
General (SAOD), SARD
Rayhalda D. Susulan, Associate Safeguards Officer
(Resettlement), SAOD, SARD
Sayaka Takahashi, Senior Integrity Specialist, Prevention and
Compliance Division, Office of Anticorruption and Integrity
Francesco Tornieri, Principal Social Development Specialist
(Gender and Development), SAOD-PR, SARD
Marie Antoinette G. Virtucio, Senior Environment Officer, SDSS,
SDCC
Meredith Wyse, Senior Social Development Specialist (Elderly
Care), Social Development Thematic Group, SDCC
Seok Yong Yoon, Principal Public Management Specialist (e-
Governance), Digital Technology for Development Unit, SDCC
Liping Zheng, Advisor, SAOD, SARD

In preparing any country program or strategy, financing any project, or by making any designation
of or reference to a particular territory or geographic area in this document, the Asian
Development Bank does not intend to make any judgments as to the legal or other status of any
territory or area.
 CONTENTS
Page
PROJECT AT A GLANCE
I. THE PROPOSAL 1
II. THE PROJECT 2
A. Rationale 2
B. Project Description 7
C. Summary Cost Estimates and Financing Plan 9
D. Implementation Arrangements 11
III. DUE DILIGENCE 12
A. Economic and Financial 12
B. Governance and Anticorruption 13
C. Environment and Social Safeguards 13
D. Poverty, Social, and Gender 14
E. Financial Due Diligence 15
F. Procurement 15
G. Summary of Risk Assessment and Risk Management Plan 15
IV. ASSURANCES AND CONDITIONS 16
V. RECOMMENDATION 16

APPENDIXES
1. Design and Monitoring Framework 17
2. List of Linked Documents 20
 Project Classification Information Status: Complete

PROJECT AT A GLANCE

1. Basic Data Project Number: 55085-001

Project Name Responsive COVID-19 Vaccines for Department/Division SARD/SAHS
Recovery Project under the Asia Pacific
Vaccine Access Facility
Country Sri Lanka Executing Agency Ministry of Health
Borrower Democratic Socialist Republic of Sri Lanka

Country Economic https://www.adb.org/Documents/LinkedDocs/

Indicators ?id=55085-001-CEI
Portfolio at a Glance https://www.adb.org/Documents/LinkedDocs/
?id=55085-001-PortAtaGlance

2. Sector Subsector(s) ADB Financing ($ million)

Health Disease control of communicable disease 150.00
Total 150.00
3. Operational Priorities Climate Change Information
Addressing remaining poverty and reducing inequalities GHG reductions (tons per annum) 264.200
Accelerating progress in gender equality Climate Change impact on the Medium
Tackling climate change, building climate and disaster resilience, and Project
enhancing environmental sustainability
Strengthening governance and institutional capacity ADB Financing
Fostering regional cooperation and integration Adaptation ($ million) 2.48
Mitigation ($ million) 0.37

Cofinancing
Adaptation ($ million) 0.00
Mitigation ($ million) 0.00
Sustainable Development Goals Gender Equity and Mainstreaming
SDG 3.3, 3.8 Effective gender mainstreaming (EGM)
SDG 12.5
SDG 13.a Poverty Targeting
General Intervention on Poverty
4. Risk Categorization: Complex
.

5. Safeguard Categorization Environment: B Involuntary Resettlement: C Indigenous Peoples: C

.

6. Financing
Modality and Sources Amount ($ million)
ADB 150.00
Sovereign Asia Pacific Vaccine Access Facility (Regular Loan): Ordinary 150.00
capital resources
Cofinancing 0.00
None 0.00
Counterpart 11.85
Government 11.85
Total 161.85

Currency of ADB Financing: US Dollar

Source: Asian Development Bank

This document must only be generated in eOps. 05062021215626886549 Generated Date: 09-Jun-2021 17:18:00 PM
 I. THE PROPOSAL

1. I submit for your approval the following report and recommendation on the proposed loans
to the Democratic Socialist Republic of Sri Lanka for the Responsive COVID-19 Vaccines for
Recovery Project under the Asia Pacific Vaccine Access Facility (APVAX). The project will provide
the Government of Sri Lanka with immediate and flexible financing to support the national
coronavirus disease (COVID-19) vaccination program through APVAX and from the regular
country allocation.1 The APVAX allocation comprises a rapid response component (RRC) to
support the purchase of Asian Development Bank (ADB) eligible COVID-19 vaccines, while the
project investment component (PIC) financed by the regular country allocation will support
strengthening of the vaccination information dissemination and monitoring systems, vaccine
transportation capacity, and vaccine-related medical waste management. The project is aligned
with ADB’s Strategy 2030 vision for achieving a prosperous, inclusive, resilient, and sustainable
Asia and the Pacific.2 The project contributes to addressing remaining nonincome and income
poverty and to reducing inequalities, accelerating progress in gender equality, strengthening
governance and institutional capacity, fostering regional cooperation and integration, tackling
disaster resilience, and enhancing environmental sustainability in Sri Lanka.

2. Sri Lanka has met all APVAX access criteria (Table 1).

Table 1: Compliance with Access Criteria of the Asia Pacific Vaccine Access Facility
Access Criteria ADB Staff Assessment
Demonstrated adverse The pandemic has negatively affected the social, health, and economic sectors, mainly
impact of COVID-19 because of the interventions taken to curtail the pandemic. The economic growth rate for
2020 was –3.6%. At the end of the first wave of the pandemic, as many as 78% of the
sample population were completely affected with loss of income. Among them, 44% lost
their jobs while 11% reported loss of their livelihood capital resources. Thirty percent of
the surveyed population could not access health services, while as many as 47% could
not get services related to maternal and child health.
Completed needs The government assessed the vaccine logistics and cold-chain maintenance, vaccine
assessment information management system, public communications, and safety surveillance.
National vaccination The NDVP was approved by the Presidential Task Force for COVID-19 Vaccination
allocation plan Program in January 2021. The plan details financing and implementation steps for
vaccinating up to 50% of the population (11 million people) in 2021. It includes a
prioritization plan that puts health workers and the elderly first, and is aligned with the
values framework for COVID-19 vaccine allocation of the WHO Strategic Advisory Group
of Experts on Immunization.
Incremental medical The MOH issued guidelines for COVID-19-related medical waste management on 20
waste management March 2020 and developed a medical waste management plan for managing COVID-19-
plan related waste (including vaccination waste) in February 2021.
Governor’s letter The governor’s letter confirming the government’s commitment to implement its NDVP
and compliance with the APVAX eligibility criteria for ADB financing was received on 20
May 2021.
Effective development The development partners, including ADB, work collaboratively, coordinate, and share
partner coordination experiences via the Development Partners Secretariat. The External Resources
mechanism with clear Department of the Ministry of Finance coordinates this secretariat, and ADB is
ADB role recognized as one of the primary financing partners in Sri Lanka.
ADB = Asian Development Bank, APVAX = Asia Pacific Vaccine Access Facility, COVID-19 = coronavirus disease,
MOH = Ministry of Health, NDVP = National Deployment and Vaccination Plan for COVID-19 Vaccines, WHO = World
Health Organization.
Source: Asian Development Bank.

1 The proposed project was prepared under the One ADB approach following streamlined business processes outlined
in the APVAX policy paper. Asian Development Bank (ADB). 2020. ADB’s Support to Enhance COVID-19 Vaccine
Access. Manila.
2 ADB. 2018. Strategy 2030: Achieving a Prosperous, Inclusive, Resilient, and Sustainable Asia and the Pacific.
Manila.
2

II. THE PROJECT

A. Rationale

3. Background. Sri Lanka is an island with a population of 21.9 million.3 The country stands
on the cusp of being an upper middle-income country. It was reclassified as a lower middle-
income country in July 2020 after being an upper middle-income country for a year based on its
classification as of July 2019.4 The economy entered the global COVID-19 pandemic in 2020 after
suffering a series of shocks that slowed growth. The onset of the pandemic came less than 12
months after the April 2019 Easter Sunday terror attacks that severely impacted tourism and
growth. Prior to that, a constitutional crisis in late 2018 and droughts in 2016 and 2017 also
weighed heavily on the economy. Sri Lanka’s gross domestic product (GDP) growth has shown
a recent downward trend and averaged 3.7% during 2015–2019 compared to 6.8% during 2010–
2014 on the back of a peace dividend and rehabilitation after the end of the civil conflict in 2009
(footnote 3). The GDP per capita for 2020 was $3,682, down from $3,852 in 2019 (footnote 3).

4. The country has made significant progress in the last few decades on socioeconomic and
human development indicators in ensuring access to health services for all. Maternal mortality
had fallen to 32.0 per 100,000 live births in 2018 and infant mortality to 10.1 per 1,000 live births
in 2019.5 Sri Lanka’s population is rapidly aging, and as much as 16% of the population is over
the age of 60 years.6 The communicable disease burden has been well controlled, with most of
the vaccine-preventable diseases (e.g., polio, neonatal tetanus, rubella, and diphtheria)
eliminated or nearly eliminated with immunization coverage of the majority of vaccines at more
than 99%.7 Some vector-borne diseases like malaria and filaria have been eliminated, while
diseases like dengue and leptospirosis are endemic. The noncommunicable disease (NCD)
burden is significant, however, accounting for as many as 75% of all deaths, and 20% of these
are people less than 60 years old. NCDs are a serious economic and public health issue in Sri
Lanka, with a large proportion of the population exposed to risk factors (e.g., tobacco use,
unhealthy diet, harmful use of alcohol, and physical inactivity) with inadequate quality and
coverage for early detection and management of NCDs.

5. Status of the pandemic. COVID-19 cases were first reported in Sri Lanka in January
2020 and the first wave of COVID-19 was during March–June 2020, the second wave was during
September 2020–March 2021, and the ongoing third wave has been going on since 25 April 2021.
As of 2 June 2021, Sri Lanka had reported 192,547 confirmed cases and 1,566 deaths.8 The third
wave continues to bring an unprecedented and exponential number of COVID-19 patients to
health facilities, with the effective reproduction rate increasing from 0.85 on 1 October 2020 to
1.08 on 2 June 2021. In that period, the number of daily new confirmed cases increased from
0.33 per million people to 135.23 per million people.9 The reported spread of the new coronavirus
variants which are known to be more infectious add to this increasing trend.

3 Central Bank of Sri Lanka (CBSL). 2021. Annual Report 2020 (Special Statistical Appendix). Colombo.
4 Country classification for Sri Lanka in July of any given year is based on data as of the end of December of the
previous year. Serajuddin, U. and N. Hamadeh. New World Bank Country Classifications by Income Level: 2020–
2021. Washington, DC. (accessed 11 April 2021).
5 Family Health Bureau, Ministry of Health. National Statistics. Colombo.
6 ADB. 2019. Growing old before becoming rich. Challenges of an ageing population in Sri Lanka. Manila.
7 Medical Statistics Unit, Ministry of Health. 2020. Annual Health Bulletin 2018. Colombo.
8 Government of Sri Lanka, Epidemiology Unit, Ministry of Health. COVID-19 Situation Reports.
9 Our World in Data. Effective reproduction rate (average number of new infections caused by a single infected person,
7-day rolling average) and Daily new confirmed cases per million population (7-day rolling average).
 3

6. Measures introduced by the government to control the pandemic. The government

has introduced many measures since the reporting of the first COVID-19 positive case in Sri
Lanka. Travel restrictions were introduced, the capacity of molecular biology testing was
increased, all schools were closed, and personal hygiene measures on handwashing and social
distancing have been enforced since March 2020. A nationwide curfew was imposed on 20 March
2020, which continued until 11 May 2020, and a night-time curfew continued until 28 June 2020.
With the increasing number of cases because of the second wave since early October 2020,
travel restrictions were imposed, selected areas were locked down, intensive contact tracing
measures were put in place, and suspected cases were quarantined, but the interventions were
much less restrictive given the need to re-open the economy. As the economy is largely tourism
dependent, the government has placed the highest priority on vaccines for economic recovery.
The COVID-19 vaccination rollout based on the National Deployment and Vaccination Plan for
COVID-19 Vaccines (NDVP) was initiated on 29 January 2021 and is ongoing.10

7. Cost for the economy. GDP contracted by 3.6% in 2020 because of the impact of the
COVID-19 pandemic as the economy was hit early with a 1.8% contraction in the first quarter of
2020 and then contracted sharply by 16.4% in the second quarter of 2020 as COVID-19 measures
restricted mobility and slowed economic activity considerably.11 Real GDP for 2020 was $51.4
billion, an estimated $3.8 billion lower than what it would have been without COVID-19.12 The
economy was adversely impacted by the simultaneous demand and supply shocks coming from
the global pandemic, which affected most of the major sectors of the economy, with the impact
being particularly severe in the second quarter of 2020. As tourism remained shuttered for most
of 2020, foreign exchange earnings were affected, which along with an outflow of capital put
pressure on the exchange rate and reserves. Containment measures severely affected the
services sector, in particular the tourism sector, which contributed on average 10.4% of the GDP
during 2015–2019.13 Exports suffered because of demand shock in major export markets and as
a new wave of the pandemic in the last quarter of 2020 affected hubs of manufacturing activity.
Remittances grew by 5.8% in 2020, which supported consumption and buttressed foreign exchange
reserves, which were $5.7 billion in December 2020 (equivalent to 4.2 months of imports).14
Economic recovery remains subdued, with a 1.3% growth rate in the fourth quarter of 2020.

8. Impact on poor and vulnerable groups. COVID-19 and control measures have made
more people vulnerable to poverty. Poverty rates and the number of poor people in Sri Lanka
increased during the COVID-19 pandemic, which reverses the trend of reduction in poverty in
recent years. The average unemployment rate rose to 5.5% in 2020 from 4.8% in 2019.15 The
poverty rate is estimated to have increased from 9.2% in 2019 to 11.7% in 2020 (at $3.2 in 2011
purchasing power parity) and from 38.6% in 2019 to 42.3% in 2020 (at $5.5 in 2011 purchasing
power parity).16 Of the daily wage-earner households sampled, 65% in April 2020 reported that
their income had stopped completely relative to February 2020.17 Over the medium-term, a slow
economic recovery risks raising unemployment levels and suppressing earnings in the informal

10 Summary of National Deployment and Vaccination Plan (accessible from the list of linked documents in Appendix 2).
11 Department of Census and Statistics. National Account Estimates of Sri Lanka: Gross Domestic Product and Other
Macroeconomic Indicators—Provisional Estimates for the Four Quarters (Q1 to Q4) of 2020. Colombo (accessed 11
April 2021).
12 ADB staff estimates.
13 World Travel and Tourism Council. 2020. Travel and Tourism Economic Impact 2020: Sri Lanka. London.
14 CBSL. 2021. Annual Report 2020 (Statistical Appendix). Colombo; and CBSL. 2021. Annual Report 2020 (Chapter

5). Colombo.
15 CBSL. Special Data Dissemination Standard: National Summary Data Page (Unemployment Rate). Colombo.
16 World Bank. 2021. South Asia Economic Focus Spring 2021, South Asia Vaccinates. Washington, DC.
17 United Nations Children's Fund (UNICEF) and United Nations Development Programme Sri Lanka. 2020. Telephone

surveys on the impact of COVID-19 on households in Sri Lanka. Colombo.

4

sector. The impacts on family well-being will be significant. At least 30% of the households
reported that their food consumption had fallen by early May 2020.18

9. Impact on gender. Women’s well-being and safety worsened with increased care
responsibilities and enforced lockdowns. Some women have had to be confined with their abusers
with limited access to helplines and support. While 24-hour helplines were available, not all
women are aware of these services, are able to make a call, or make the call for various reasons.19
Before COVID-19 lockdowns and curfews were imposed, about 250 patients were admitted daily
to the accident ward of the National Hospital of Sri Lanka for gender-based violence. However,
during the lockdown period, this decreased to 66 admissions, including females sexually
assaulted by their husbands.20 Of all women who are gainfully employed, about 51.1% work in
the informal sector (compared to 60.8% of all employed men).21 Because of restricted mobility
and the increased (unpaid) care burden, women’s earning capacity and productive time,
livelihood, and economic activities have been adversely affected.

10. Impact on the health system. With the reporting of COVID-19 cases in Sri Lanka, the
government reorganized mainly the secondary health care services to manage the increasing
COVID-19 patients to minimize the effects on other services. In addition to the National Infectious
Diseases Hospital, six other secondary health care facilities initially were converted to COVID-19
treatment hospitals and many more facilities became quarantine centers. In addition, dedicated
staff were provided with required personal protective equipment and infection prevention and
control training and support. Laboratory services were also scaled up to provide polymerase chain
reaction testing for COVID-19. In March 2020, only the Medical Research Institute and a few
university research laboratories were capable of testing for COVID-19. There are 38 laboratories
(including 27 public ones), which had an initial capacity of 18,000 tests per day but this has
increased to more than 28,000 tests per day since the start of the third wave in late April 2021.

11. The first wave of interventions, which introduced frequent handwashing, social distancing,
and better personal hygiene practices, indirectly reduced ill-health episodes requiring outpatient
care services. But the interventions which controlled population movement—curfew and travel
restrictions—severely disrupted the long-term clinic care of approximately 2.5 million mainly NCD
patients who seek care at government health facilities each month. While emergency care
services were always available and the monthly drug quotas to clinic patients were dispatched
via regular mail services, elective surgeries, dental care, eye care, and other treatment options
for inpatient services were reduced. Access to regular routine services was also curtailed because
of COVID-19-related restrictions, with more than 30% of families reporting that they could not
access health services and 47% of families with children under 5 years could not access services
because of transport and access restrictions during the first wave of the pandemic.22

12. COVID-19 vaccine needs assessment. Based on the Vaccine Introduction Readiness
Assessment Tool and Vaccine Readiness Assessment Framework assessments completed for
Sri Lanka in January 2021 by the World Health Organization (WHO), it was identified that only
relatively small gaps in investments need to be filled to carry out a mass vaccination program to
cover the eligible population. This includes the need to further expand vaccine-related medical
waste disposal services and enhance transport facilities to strengthen cold-chain transport

18 UNICEF Sri Lanka. 2020. Tackling the COVID-19 economic crisis in Sri Lanka: Providing universal, lifecycle social
protection transfers to protect lives and bolster economic recovery. Colombo.
19 United Nations Population Fund Sri Lanka. 2020. Bringing the shadow pandemic to light. Colombo.
20 Mallawaarachchi, A. 2020. Spike in domestic violence cases. Daily News. 23 March.
21 Department of Census and Statistics. 2019. Sri Lanka Labour Force Survey. Colombo.
22 World Vision Sri Lanka. 2020. Impact of COVID-19 Health Emergency Rapid Assessment. Colombo.
 5

services for deployment of vaccines from central to regional stores and from regional stores to
divisional and vaccination centers.

13. National Deployment and Vaccination Plan for COVID-19 Vaccines. The Ministry of
Health (MOH) convened the National Coordination Committee for COVID-19 vaccines in
November 2020 to work with advisory groups and technical subcommittees on (i) COVID-19
vaccines, prioritization, and targeting; (ii) logistics for COVID-19 vaccination; and (iii) costing for
COVID-19 vaccination. The committee developed the NDVP on 18 January 2021, which was
based on WHO Strategic Advisory Group of Experts on Immunization (SAGE)
recommendations.23 In 2021, the government intends to make vaccines available, free of charge
to all, to cover at the minimum 50% of the population including all frontline workers, comorbid
population, working adults, and people over the age of 60 years. By 2023, the government
anticipates providing vaccination to 80% of the population.

14. The MOH holds the overall responsibility for oversight, coordination, and implementation
of the national COVID-19 vaccination program. Under the MOH, all nine provincial and 26 regional
directors of health services covering 354 medical officers of health units across the country are
involved in administering vaccines to the population. The MOH is supported by technical units: (i)
the Epidemiology Unit for vaccine transportation, vaccination, and monitoring; (ii) the Health
Promotion Bureau for public communications; (iii) the Environment Unit for medical waste
management; (iv) the Health Information Unit for information systems; and (v) the Medical
Supplies Division (MSD) for storage and cold-chain logistics.

15. The National Medicines Regulatory Authority (NMRA) approves and registers new
medicines and medical products including vaccines through the NMRA Act No 5 of 2015. The
State Pharmaceuticals Corporation of Sri Lanka (SPC), the mandated procurement agency of the
MOH, will procure vaccines from bilaterally negotiated contracts with vaccine manufacturers and
related consumables (syringes, safety boxes, etc.) from suppliers. The government also has other
options to procure vaccines from the COVID-19 Vaccines Global Access (COVAX) Advance
Market Commitment mechanism and United Nations Children’s Fund (UNICEF).

16. The MSD-managed Medical Supplies Management Information System closely monitors
the cold-chain system for the routine immunization program throughout the country at each level
for all cold rooms and ice-lined refrigerators storing vaccine at the central stores, the 26 regional
medical supplies divisions, and at all 354 medical officer of health areas. Based on the cold-chain
capacity assessments, the government has adequate capacity to store approximately 8 million
doses of COVID-19 vaccines at 2o–8o Celsius (C) and about 2 million doses at ultra-cold
temperature (–70oC). This is in addition to the routine vaccines.

17. In March 2021, the government issued updated guidelines for managing the vaccination
program in the country.24 At each field vaccination center, a minimum of seven health staff are
expected to manage the vaccination and 98 people are to be vaccinated in 1 day across 2,000
vaccination centers, and over a 3-week period the MOH is ready to vaccinate 4.1 million people
(20% of the country’s population). With the vaccination, a separate communication strategy to
reduce hesitancy, manage urgency, and to inform of the probable adverse effects and of
vaccination sites will be initiated via UNICEF using the World Bank funds in close collaboration
with the Health Promotion Bureau (HPB). The vaccination information will be reported via the
routine system using the e-National Immunization Program and via the newly introduced COVID-

23 WHO. 2020. WHO SAGE Roadmap For Prioritizing Uses Of COVID-19 Vaccines In The Context Of Limited Supply.
24 MOH. 2021. Guidelines for COVISHIELD Covid-19 Vaccination Campaign 2021, issued March 2021.
6

19 Immunization Tracker. The guidelines that are routinely used—on the adverse effects following
immunization and the adverse effects of special interest—will also be used for the COVID-19
vaccination. Relevant staff are continuously trained and updated with new information on adverse
effects following immunization and adverse effects of special interest as required, and updated
circulars to this effect are continuously issued.25 The government instructed all health facilities to
follow the medical waste management plan used for infectious waste to dispose of COVID-19-
related waste.

18. Access to vaccines. Even though Sri Lanka was unable to secure advance bookings of
COVID-19 vaccines in 2020 because of resource constraints, arrangements are now under way
to have sufficient financing upfront to vaccinate the population and be prepared to mitigate the
risks from highly contagious variants and future waves to facilitate the reopening of the economy.
The government received a donation of 500,000 doses of COVID-19 vaccines from the
Government of India (AstraZeneca–Oxford University vaccine manufactured by the Serum
Institute of India) on 28 January 2021 and a donation of 600,000 doses of Sinopharm vaccine
from the Government of the People’s Republic of China on 31 March 2021. From 29 January
2021, the government successfully vaccinated more than 80% of frontline workers with the first
dose in less than 3 weeks, and second dose vaccinations were completed by mid-May 2021 for
all frontline workers.

19. Vaccine financing needs. Sri Lanka is a small, open economy highly dependent on the
services sector and tourism, and the government is putting the highest priority on protecting its
people with COVID-19 vaccination as a key strategy for economic recovery. Based on the NDVP
approved in January 2021, the cost estimate for reaching COVID-19 vaccination coverage of 80%
of the population is estimated at $270 million, which includes only the purchase of vaccines,
additional cold-chain equipment, and operational costs.26 It excludes around $28 million for
strengthening the information system, expanding cold-chain transportation facilities, staff mobility
during the vaccination campaign, and vaccine waste disposal. The proposed project and the
World Bank project intend to provide support of $231 million to meet a substantial part of these
needs. The government is monitoring the pandemic situation and the vaccine deployment
progress to decide the next stage of financing. If required, further external assistance may be
sought in the future, including additional financing from APVAX, or cofinancing.27

20. Development partner coordination. ADB closely coordinates with other development
partners through the United Nations-hosted Development Partners Secretariat, which coordinates
all development assistance. In addition, ADB is also a regular partner of the development partner
discussions coordinated by the MOH. A development partner coordination committee for COVID-
19 vaccination was established with WHO, UNICEF, ADB, and the World Bank as members. The
committee conducts regular meetings and shares the contributions to the NDVP by each
development partner for effective use of financing.

21. The project will collaborate with WHO and UNICEF in terms of technical assistance to
support strengthening of immunization tracker systems, cold chains, and logistics. ADB has also
been closely coordinating with the World Bank to provide coordinated assistance and to synergize

25 MOH. 2021. Reporting of hospital admissions after vaccination, issued 19 March 2021; and MOH. 2021. Guidance
on information to be given to COVID-19 vaccine recipients, issued 26 March 2021.
26 As of 18 May 2021, COVAX vaccines were delayed and with no certainty of arrival. The government had procured

33.5 million doses through bilateral arrangements at a cost of around $311 million. The NDVP costing scenario from
January 2021 was based on $7 per dose. Since then the situation has changed, where the cost is now around $10
per dose, and the situation may continue to change.
27 The Asian Infrastructure Investment Bank has initiated discussions with the government for possible cofinancing.
 7

the results and outcomes. A detailed development partner matrix is included in the development
coordination linked document accessible from the list of linked documents in Appendix 2.

B. Project Description

22. The proposed project will support the Government of Sri Lanka to ensure COVID-19
vaccine access to the population to curtail the pandemic, minimize the socioeconomic and health
effects that result from it, and initiate the robust economic recovery process. The project is
targeting the entire country across all 26 health districts in all nine provinces while ensuring that
the geographically, socially, and economically deprived populations are protected from COVID-
19 and its effects. The beneficiary population of the project is the total population of 22 million.28

23. Impact and outcome. The expected project impact will be the enhancement of the
resilience and responsiveness of the health system to curtail the COVID-19 virus spread; reduce
morbidity and mortality; and reduce the negative health, social, and economic effects of the
COVID-19 pandemic in Sri Lanka.29 The outcome will be priority populations of Sri Lanka
vaccinated against COVID-19 as per the NDVP without compromising routine vaccine services
and other health services. This outcome will be achieved through the following four outputs.

24. Output 1: COVID-19 vaccines delivered. Through the rapid response component (RRC),
output 1 will finance procurement of safe and effective COVID-19 vaccines to cover 18.2% of the
population (4 million population).30 By 2021, the government intends to cover at least 50% of the
adult population including all frontline workers, comorbid population, working adults, and people
over the age of 60. The output will support the government in reaching 80% COVID-19 vaccine
coverage by 2023, with data disaggregated by sex, age, and geography.31 The vaccination
campaign has already started following the NDVP and COVID-19 vaccination protocols.

25. Output 2: Vaccination information dissemination and monitoring systems

strengthened. Through the project investment component (PIC), output 2 will support the
Epidemiology Unit in the MOH to improve and enhance the electronic National Immunization
Program (e-NIP) and its electronic adverse effects following immunization system under the
routine vaccination program to include the COVID-19 vaccination program. This output will also
support the Health Information Unit in the MOH to introduce a COVID-19 immunization tracker
that will provide real-time individual beneficiary data and will help monitor the COVID-19 vaccine
deployment. Although aggregate information is available from e-NIP, the new interoperable
systems will enable real-time data on both routine and COVID-19 vaccination coverage by age,
sex, and geographic area. Surveillance data will be shared with global and regional partners to

28 22 million beneficiaries from all four project outputs (not only the 4 million vaccine beneficiaries under output 1).
29 Government of Sri Lanka. 2020. Sri Lanka Preparedness & Response Plan COVID-19. Colombo; Government of Sri
Lanka. 2021. National Deployment and Vaccination Plan for COVID-19 Vaccines. Colombo; and ADB. 2020. ADB’s
Support to Enhance COVID-19 Vaccine Access. Manila.
30 ADB will finance expenditures in relation to the procurement of COVID-19 vaccines that meet the APVAX eligibility

criteria stated in para. 29 (including footnotes 28, 29, and 30) of the APVAX policy paper (ADB. 2020. ADB’s Support
to Enhance COVID-19 Vaccine Access. Manila; ADB. 2021. Amendment to ADB’s Support to Enhance COVID-19
Vaccine Access. Manila). The project will be guided by the Indicative Master List of Eligible Items, and Agreed List
of Acceptable Expenditure Items (‘Positive List’), for ADB-financing under the Rapid Response Component
(accessible from the list of linked documents in Appendix 2).
31 In addition, the Government of Sri Lanka has requested $80.5 million from the World Bank to meet the cost of

vaccines and the rollout of the program for 13.6% of the total population, while the COVAX facility will provide
vaccines for 20% of the total population; Government of India in-kind donation for 1.1% of the total population; and
Government of the People’s Republic of China in-kind donation for 1.3% of the total population.
8

support a collective response to the pandemic.32 Under the output, it is therefore intended to
purchase and supply laptop computers and tablets to all medical officer of health units (354 units
currently, each health unit will receive two laptop computers, eight tablets, and five routers) and
provide training for managing the real-time data entry.

26. Output 2 will also support the MSD to purchase the required consumables, supplies, and
essential equipment to roll out the vaccination program as described in the NDVP. This output
also provides support to the MSD to improve the logistics, regulatory capacity, and procurement
capacity by enhancing the existing Medical Supplies Management Information System for
managing and tracking all drugs, vaccines, and consumables in the public health system. In
addition, this output will support the MSD to collaborate with the Ministry of Finance to initiate e-
procurement practices in the health sector. This includes upgrading software programs,
purchasing computers, establishing internet connectivity, training, and networking hospitals and
related institutions.

27. Furthermore, support is provided to the HPB of the MOH to promote gender equality and
social inclusion in access to the COVID-19 vaccination. Activities will include training community
groups in reaching out to women and other vulnerable population groups with information on
vaccinations (including specific information for pregnant and lactating women, or women with
preexisting conditions and disabilities) and providing direct support to vulnerable groups to access
the vaccination and related services in the respective medical officer of health areas. Finally,
output 2 provides the management and technical support required to implement the project. This
includes hiring experts for project management services like finance, procurement, engineering,
information technology, and monitoring and evaluation for the project management unit (PMU) of
the ongoing ADB-financed Health System Enhancement Project (HSEP).33 In addition, the
relevant MOH technical units (Epidemiology, MSD, HPB, Environment, and Health Information)
will each appoint a focal point to oversee respective components of the project.

28. Output 3: Capacity of vaccine transport systems expanded. Through the PIC, output
3 will support enhancement of the capacity of the vaccine transport system from central to regional
levels and the vaccine distribution system from regional drug stores to the vaccination centers.
When vaccines arrive in the country, they are stored in the central cold rooms managed by the
Epidemiology Unit of the MOH. The Epidemiology Unit practices a push-out system; regularly
trains its staff, including drivers, on cold-chain maintenance; maintains its vehicles; and delivers
the vaccines in adequate quantities to each of the 26 regional drug stores in Sri Lanka. The
regional drug stores deliver vaccines to the divisional stores for the routine system, but for COVID-
19 vaccination program, as it is managed as a campaign, vaccines are delivered to the vaccination
centers directly. This requires adequate cold-chain transport facilities for safe and timely delivery
of vaccines. Therefore, this output will support the purchase of a small refrigerated truck for each
of the 26 regional drug stores and 10 large trucks for the MOH. In addition, to maintain the routine
vaccination program alongside the rollout of the COVID-19 vaccination program, transport
facilities will be provided to ensure adequate human resources are mobilized for regional stores,
divisional offices, vaccination centers, and regional offices for program supervision and
management. This output will also provide transport facilities to enable vulnerable women and
people with a disability to access vaccination centers.

32 The Epidemiology Unit reports daily on its website (www.epid.gov.lk) the relevant data and, from March 2021, has
expanded the sentinel surveillance sites for tracking COVID-19 cases by testing all COVID-19 suspected patients at
all secondary and tertiary care hospitals. The government is expected to share data updates with WHO, South Asian
Association for Regional Cooperation (SAARC), and other regional and global entities in the long term.
33 ADB. 2018. Report and Recommendation of the President to the Board of Directors: Proposed Loan and Grant to

the Democratic Socialist Republic of Sri Lanka: Health System Enhancement Project. Manila.
 9

29. Output 4: Vaccine-related medical waste management strengthened. Through the

PIC, output 4 will support the implementation of the Medical Waste Management Plan of the MOH.
With the expanded COVID-19 vaccination, as many as 32.0 million syringes and nearly 3.2 million
vials will need to be discarded. The large number of polymerase chain reaction tests carried out
(nearly 2 million) add to the volume of COVID-19 waste. In addition, with the establishment and
conversion of secondary care hospitals into COVID-19 managed hospitals, many of these
hospitals require well-designed sewerage management for appropriate infection prevention and
control. This output will support the establishment of a sewerage system in 26 of the 87 (30%) of
the secondary care hospitals in all nine provinces that require such systems.

30. Output 4 will also support improved medical waste management arrangements in six of
the nine provinces in the country.34 Based on the Medical Waste Management Plan of the MOH,
in the six provinces of Northern, Eastern, North Central, North Western, Uva, and Sabaragamuwa,
the MOH will establish satellite waste management centers in identified secondary and tertiary
care hospitals in each of the districts. This output will support the establishment of incinerators
and waste segregation at 12 satellite hospitals representing the six provinces.

31. Value addition. The project is developed in close collaboration with the government, the
World Bank, WHO, and UNICEF. ADB supports the government’s commitment to ensure the
national vaccination program covers all parts of the country including geographically and
economically disadvantaged areas such as post-conflict-affected areas and plantations. The
project is also supporting the strengthening of the monitoring system, the cold-chain transport
system, and medical waste management related to COVID-19, which helps address all aspects
of the vaccination program. Ongoing technical assistance will also help strengthen the vaccine
delivery system.35 The medical waste management component of the project will benefit six
provinces which contain a large number of disadvantaged and remote areas. The project is
supporting a novel immunization tracker which aims to provide disaggregated data in real time.
The ongoing HSEP is supporting the health sector including COVID-19 response activities. The
experienced HSEP PMU provides a solid foundation for effective implementation of the APVAX
project. Most importantly, vaccination across the country supported by this project is critical for
economic recovery and to restore economic growth, especially for tourism and other services
sectors. Without vaccination, economic growth will be much lower than currently expected.

C. Summary Cost Estimates and Financing Plan

32. The project is estimated to cost $161.85 million (Table 2), inclusive of taxes and duties,
physical and price contingencies, interest, and other charges during implementation. Detailed
cost estimates by expenditure category for each output are included in the project administration
manual (PAM) in the linked documents in Appendix 2.36

33. The government has requested (i) a regular loan of $84 million from ADB’s ordinary capital
resources under the RRC financed by APVAX and (ii) a regular loan of $66 million from ADB’s
ordinary capital resources under the PIC financed by the regular country allocation.37 The loan
under the RRC will have a 10-year term including a grace period of 3 years, while the loan under

34 Medical waste management activities in the three provinces of Western, Southern, and Central (nine districts of
Colombo, Gampaha, Kalutara, Kandy, Nuwera Eliya, Matale, Galle, Matara, and Hambantota) are currently managed
by a private firm under a contract with the MOH. All medical waste from these provinces is taken by the firm and
disposed at a state-of-the-art facility managed by the firm.
35 ADB. 2020. Technical Assistance to Sri Lanka for the Support for Human Capital Development Initiative. Manila.
36 Project Administration Manual (accessible from the list of linked documents in Appendix 2).
37 The project will use available space in the country programming and no project in the pipeline will be deferred.
 10

the PIC will have a 29-year term, including a grace period of 8 years. Both loans will have an
annual interest rate determined in accordance with ADB’s London interbank offered rate (LIBOR)-
based lending facility, a commitment charge of 0.15% per annum, and such other terms and
conditions set forth in the draft loan agreements. The government has made its own independent
decision to borrow under ADB’s LIBOR-based lending facility.

Table 2: Summary Cost Estimates

Amount Cost Share
Item Description ($ million)a (%)
A. Base costb
1. COVID-19 vaccines delivered 84.00 51.9
2. Vaccination information dissemination and monitoring 34.37 21.2
systems strengthened
3. Capacity of vaccine transport systems expanded 3.28 2.0
4. Vaccine-related medical waste management strengthened 26.39 16.3
Subtotal (A) 148.04 91.4
B. Contingenciesc
1. Physical contingencies 7.40 4.6
2. Price contingencies 5.18 3.2
Subtotal (B) 12.58 7.8
C. Financing charges during implementation
1. Interest during implementation 0.99 0.6
2. Commitment charges 0.24 0.2
Subtotal (C) 1.23 0.8
Total Cost (A+B+C) 161.85 100.0
COVID-19 = coronavirus disease.
a In May 2021 prices; $1 = SLRs196.67 is used.
b The project costs are inclusive of taxes and duties ($11.85 million) to be financed in cash by the government.
c Includes physical and price contingencies and a provision for exchange rate fluctuation.

Source: Asian Development Bank.

34. The summary financing plan is in Table 3. The full amount of ADB financing for the RRC
($84 million) will finance expenditures in relation to vaccines, while the balance of ADB financing
for the PIC ($66 million) will finance vaccine consumables (syringes, safety boxes, etc.), services,
equipment, vehicles, and project administration. The government’s contribution will cover all
applicable direct local taxes (value-added tax).

Table 3: Summary Financing Plan

Amount Share of Total
Source ($ million) (%)
1. Asian Development Bank 2. 150.00 92.7
Ordinary capital resources (APVAX RRC loan)a 3. 84.00 51.9
Ordinary capital resources (APVAX PIC loan)b 4. 66.00 40.8
5. Government of Sri Lanka 6. 11.85 7.3
Total 161.85 100.0
APVAX = Asia Pacific Vaccine Access Facility, PIC = project investment component, RRC = rapid response component.
a Financed by APVAX.
b Financed by the regular country allocation.

Source: Asian Development Bank.

35. Climate change mitigation is estimated to cost $0.37 million and climate change adaptation
is estimated to cost $2.48 million. ADB will finance 100% of mitigation and adaptation costs ($2.85
million), excluding taxes and duties. Changes in rainfall may result in wetter or drier conditions that
 11

could contribute to landslides, flooding, or droughts. Details are described in the climate change
assessment in the linked documents in Appendix 2.

D. Implementation Arrangements

36. The MOH will be the executing and implementing agency. The project implementation
unit, the PMU, will be guided by the project’s National Steering Committee, which will be chaired
by the secretary of the MOH and have representation from all project stakeholders including the
Ministry of Finance. For both ADB and World Bank projects, there are respective PMUs that will
closely coordinate with the MOH and its relevant technical units (described in para. 14).
Implementation arrangements are summarized in Table 4 and described in detail in the PAM
(footnote 36).

37. Procurement will be undertaken in a manner consistent with simplified and expedient
procedures permitted under the ADB Procurement Policy (2017, as amended from time to time)
and Procurement Regulations for ADB Borrowers (2017, as amended from time to time).
Following the APVAX policy (footnote 1), ADB member country procurement eligibility restrictions
will be waived, and universal procurement will apply. The SPC, the mandated procurement
agency of the MOH, will conduct direct procurement of vaccines with vaccine manufacturers and
ancillary items with suppliers. The SPC is a state-owned entity established in 1971 under the
State Industrial Corporations Act Number 49 of 1957. Other goods and services will be procured
by the PMU. In addition, the government has other options of vaccine procurement, such as
COVAX Advance Market Commitment and UNICEF. Value for money in vaccine procurement will
be achieved through (i) selecting candidate vaccine types that are best suited to the domestic
logistics supply chain and distribution mechanisms; (ii) engaging with COVAX and manufacturers
that have advantageous vaccine availability and delivery timelines; and (iii) entering into
agreements on terms and conditions that are reasonable, noting the currently constrained market
for vaccines globally. Value for money in procurement of consumables associated with vaccines
and others will be achieved by selecting the most suitable procurement methods in terms of size
of procurement, consideration of market conditions of the items to be procured, and time allowed
for the process.

Table 4: Implementation Arrangements

Aspects Arrangements
Implementation period July 2021–June 2024
Estimated completion date 30 June 2024
Estimated loan closing date 31 December 2024
Management
(i) Oversight body National Steering Committee comprising all project stakeholders including
the Ministry of Finance
(ii) Executing agency Ministry of Health
(iii) Key implementing agency Ministry of Health
(iv) Implementation unit Project management unit
Procurement Direct contracting / OCB / RFQ Multiple contracts $133.7 million
Consulting services Individual consultant selection / Multiple contracts $1.0 million
firm recruitment (CQS)
Retroactive financing and advance Withdrawals from the loan account may be made for (i) advance financing
financing for up to 6 months of estimated eligible expenditures or 50% of the RRC
financing amount whichever is lower; and (ii) eligible expenditures in
relation to vaccine procurement incurred before loan effectiveness but not
more than 12 months before signing of the loan agreement, equivalent to a
maximum of 30% of the loan amount. The combined outstanding balance
of advance financing and the percentage approved for retroactive financing
should not, at any time, exceed 60% of the RRC financing amount, and the
12

Aspects Arrangements
advance financing and retroactive financing will not exceed their respective
ceilings. The government has been advised that the approval of retroactive
financing does not commit ADB to financing the project. Any advance
contracting and retroactive financing will be subject to the APVAX vaccine
eligibility criteria and other requirements being fully met.
Disbursement The loan proceeds of ADB will be disbursed following ADB's Loan
Disbursement Handbook (2017, as amended from time to time) and
detailed arrangements agreed between the government and ADB.
ADB = Asian Development Bank, APVAX = Asia Pacific Vaccine Access Facility, CQS = consultants’ qualifications
selection, OCB = open competitive bidding, RFQ = request for quotation, RRC = rapid response component.
Source: Asian Development Bank.

III. DUE DILIGENCE

A. Economic and Financial

38. Economic analysis. The COVID-19 pandemic is both a health and an economic crisis.
The proposed $150 million project is an integral part of and contributes to 50% of the
government’s $298 million national COVID-19 vaccination program to reach 80% population
coverage. With the support from the proposed project, the government can substantially avert the
cost of productivity and productive time lost; reduce public spending such as on testing,
hospitalization, and quarantine; and bring the economy back to normal by significantly easing the
COVID-19 disease burden through the national COVID-19 vaccination program. Accelerating the
access to COVID-19 vaccines and enabling a comprehensive, timely, and efficient vaccination
program with monitoring in place is considered the fundamental way to substantially reduce
mortality and morbidity and lead to a resumption of economic activities. Successful deployment
of vaccination is critical for tourism and for the overall economy to recover. Vaccine deployment
will also help the government better manage its fiscal and debt situation, as increased growth will
allow for revenues to improve.

39. Financial sustainability. This project represents only 0.25% of Sri Lanka’s public debt
and will not affect Sri Lanka’s public debt profile. With higher economic growth and a better fiscal
position than otherwise, this project will help the government better manage its fiscal and debt
situations.38 The project outputs are considered public goods with positive externalities. As there
is no opportunity for cost recovery, a financial viability assessment is not required. Almost 80% of
the project base cost will be used to procure vaccines and medical consumables which will be
discarded after use, and only about 14% will be invested in developing sewerage systems in
selected hospitals as well as in procuring equipment to be repurposed for general use in various
medical institutions after project completion. The incremental operation and maintenance
requirements of these assets are expected to be negligible, and the funds will be made available
by the recipient entities as the facilities provided will strengthen their routine operations. To ensure
the project is sustainable, the project will finance the operation and maintenance costs of the
sewerage systems created and incinerators procured under the project until project completion.
In addition, the government has provided assurance that (i) adequate budget support to cover
incremental operation and maintenance will be provided to the respective entities and (ii) all
entities receiving equipment will maintain sound asset management practices.

40. Macroeconomic and debt situation. Sri Lanka faces significant economic challenges
which have been exacerbated by the outbreak of the COVID-19 pandemic, and the central
government debt–GDP ratio was 101.0% as at the end of 2020. Macroeconomic and debt

38 Macroeconomic and Debt Analysis (accessible from the list of linked documents in Appendix 2).
 13

analysis (footnote 38) shows that Sri Lanka’s debt remains vulnerable to slower growth, rise in
primary deficit, and exchange rate depreciation. The government’s medium-term fiscal framework
envisages reducing the debt–GDP ratio to 75% by 2025 by reducing the fiscal deficit from 8.8%
of GDP in 2021 to 4.0% in 2025. However, the prolonged impacts of COVID-19 and slow
economic recovery (1.3% in the fourth quarter of 2020) are affecting its initial implementation,
while the government is seeking support of the International Monetary Fund (IMF) and other
external financing agencies to bridge the gap.39 ADB is closely monitoring the macroeconomic
and fiscal conditions and consulting with the government, along with the IMF and other
development partners, on appropriate means to help achieve the medium-term fiscal framework
targets. Vaccination efforts are critical to better managing the fiscal and debt situation. Debt
analysis shows that debt is likely to be higher without the vaccination as economic recovery will
be slower and the fiscal situation will be weaker.40

B. Governance and Anticorruption

41. The government has been strengthening anticorruption measures, including the
enforcement of existing anticorruption laws, further empowering institutions to deal specifically
with corruption, and implementing the 5-year Anti-Corruption Action Plan with the target of making
Sri Lanka a corruption-free nation by 2023. ADB’s Anticorruption Policy (1998, as amended to
date) was explained to and discussed with the government and the MOH. The specific policy
requirements and supplementary measures are described in the PAM (footnote 36).

42. The NMRA approves and registers new medicines and medical products including
vaccines through the NMRA Act No 5 of 2015. Emergency use authorization for new vaccines is
done through the legal provision under section 109 of the NMRA Act No 5 of 2015. WHO also
provides a listing of approved vaccines and these recommendations are also considered when
the NMRA provides clearance at the country level.

C. Environment and Social Safeguards

43. In compliance with ADB’s Safeguard Policy Statement (2009), the project’s safeguard
categories are as follows.41

44. Environment (category B). Project outputs 1–3 will not result in any significant adverse
environmental impact or significant health and safety risks. The MOH has drafted and
implemented a comprehensive national policy on health care waste management. The MOH on
20 March 2020 issued a guide on management of COVID-19 infectious waste including
immunization waste. Further, the main regulatory tools implemented under the National
Environmental Act No. 47 of 1980 and its amendments (No. 56 of 1988 and No. 53 of 2000)—
such as (i) the environmental impact assessment process, (ii) environment protection license and
scheduled waste management license procedures, (iii) standards for discharge and waste
disposal, and (iv) international good practices as recommended by WHO—are being implemented
by the MOH.42 Therefore, project outputs 1–3 are classified category C for environment. Civil

39 The specific measures include (i) a $1.5 billion equivalent swap facility by the People’s Bank of China in March 2021,
(ii) a $500 million loan facility by the China Development Bank in April 2021, and (iii) a proposed new special drawing
right allocation by the IMF of $780 million (equal to 0.12% of $650 billion).
40 ADB has maintained a regular dialogue with the IMF on Sri Lanka’s macroeconomic and debt situation. The IMF

acknowledges ADB’s assistance for vaccination as critical to recovery.

41 ADB. Safeguard Categories.
42 WHO. 2014. Safe Management of Wastes from Health-care Activities. Geneva; WHO. 2019. Overview of

Technologies for the Treatment of Infectious and Sharp Waste from Health Care Facilities. Geneva.
14

works under output 4 are limited to renovating COVID-19 designated hospitals and strengthening
medical waste management via the provision of incinerators to satellite hospitals in six
provinces.43 Although civil works will be carried out within existing government hospital facilities,
such works have potential for temporary and site-specific adverse environmental impacts, which
may qualify as category B as per the ADB Safeguard Policy Statement. Thus, the overall project
is classified category B for environment based on output 4.

45. Involuntary resettlement (category C). The civil works to improve and strengthen
medical waste management will be carried out within existing government hospital facilities. No
involuntary land acquisition or land use restriction resulting in any physical or economic
displacement is anticipated.

46. Indigenous peoples (category C). The project does not affect the dignity, human rights,
livelihood systems, or culture of indigenous peoples or affect the territories or natural or cultural
resources that indigenous peoples own, use, occupy, or claim as their ancestral domain.

D. Poverty, Social, and Gender

47. Poverty in Sri Lanka is more relative than absolute; 4.1% of the population lived below the
poverty line in 2016.44 Multidimensional poverty levels (based on 10 indicators across the three
dimensions of health, education, and living standards) across sectors indicates that 12.4% of
estate sector households are multidimensional poor. Further, the vulnerability to multidimensional
poverty is observed in 11.9% of households in Sri Lanka, with the estate sector reporting 22.4%
of households being vulnerable to poverty and the rural sector reporting 12.7%.45 Weak market
links—evident in limited access to comprehensive, high-quality public services and employment
in the formal sector—have placed this poorer group of the population at a disadvantage. Poverty
persists in many districts because of multiple variables such as low and/or irregular income, rapid
urbanization, high population density (Central province), low education levels, poor health status,
rising indebtedness and weak social capital, food insecurity, susceptibility to disasters and
resultant low levels of resilience, and weak connectivity.

48. The project is categorized as effective gender mainstreaming. The project will facilitate (i)
training civil society organizations to effectively mobilize community support to the national
vaccination program targeting women and excluded and vulnerable groups; (ii) improving access
of women and excluded and vulnerable groups facing mobility constraints through dedicated
transportation facilities; (iii) conducting a survey in six provinces to identify and monitor vaccine
hesitancy among vulnerable groups, with 60% of surveyed participants being women; (iv)
developing and disseminating public information communication materials addressing identified
gender gaps and, through the use of all national languages, ensure effective outreach to women
and excluded and vulnerable groups; (v) monitoring and reporting on gender equity and social-
inclusion-related information in the COVID-19 vaccination beneficiary database system; (vi)
increasing HPB staff capacity to reach out to women and excluded and vulnerable groups with
effective communication strategies; and (vii) recruiting a full-time gender equity and social
inclusion consultant to support the PMU in implementing and monitoring above activities.

43 An environmental assessment and review framework has been prepared to guide the screening, categorization, and
assessment of subprojects under output 4. Specific locations of subprojects will be identified following the subproject
selection criteria in the framework. Additional capacity building programs will be provided to the MOH, including those
on safeguards requirements and medical waste management.
44 ADB. 2020. Basic Statistics 2020. Manila.
45 Department of Census and Statistics. 2019. Global Multi-Dimensional Poverty for Sri Lanka. Colombo.
 15

E. Financial Due Diligence

49. A financial management assessment of the MOH has been conducted in accordance with
ADB’s guidelines.46 An assessment was also conducted on the NDVP in the areas of inventory
management, data management, accounting, oversight, and audit. The MOH has an established
track record in conducting vaccination programs, and adequate procedures and practices are in
place. Moreover, the ongoing HSEP PMU that will implement the APVAX project, has satisfactory
financial management performance. However, the premitigation financial management risk is
assessed substantial, mainly because of (i) the scale and complexity of the project; (ii) potential
delays in the release of government counterpart funds; and (iii) the lack of fully integrated systems
for tracking the vaccine distribution, including the use of manual systems at the district level to
record the vaccine stock. The risk will be mitigated by (i) engaging additional financial staff to
support the PMU; (ii) ensuring sound fixed asset, inventory, and vaccine stock management
processes and systems are maintained and routine internal audits are conducted at all levels; (iii)
including comprehensive financial management information in the quarterly progress reports to
be submitted to ADB; and (iv) National Audit Office conducting periodic performance audits on
NDVP implementation in addition to annual project financial statements audits.

F. Procurement

50. The MOH and SPC are well-versed with the national procurement guidelines and PMU
has experience with ADB procurement practices under HSEP. Despite this, the risks in the
procurement of vaccines are inherently high risk. This is because of high global demand, scarcity,
and asymmetrical buyer-seller relationships. The project will also improve procurement
transparency by publishing procurement information on the HSEP website.

G. Summary of Risk Assessment and Risk Management Plan

51. Significant risks and mitigating measures are summarized in Table 5 and described in
detail in the risk assessment and risk management plan.

Table 5: Summary of Risks and Mitigating Measures

Risks Mitigation Measures
Project specific. Lack of availability of The government considers the national COVID-19 vaccination
counterpart funds and adequate budget program as the utmost priority and has provided timely allocation of
allocation for implementation of the project. funds since the pandemic started. Due to limited fiscal resources, the
project reduced the counterpart financing up to all applicable direct
local taxes and duties.
Fiscal. Insufficient fiscal resources to The government has committed to allocate adequate fiscal resources
ensure the sustainability of the project and continue policy dialogue with development partners to ensure
investments because of high public debt. adequacy of fiscal resources for implementation of the NDVP.
Financial management. The asset The project will ensure sound asset management practices and
management, vaccine stock, and inventory systems are in place in the MOH, including (i) use of computerized
systems of the various entities receiving and asset management systems, (ii) periodic inventories and daily
storing vaccines are not fully computerized. vaccine stock take, (iii) reconciliations of the asset and vaccine
Moreover, regular project financial audit registers and physical inventories, and (iv) effective and timely
may not be sufficient to provide the required reporting. The NAO will conduct periodic performance audits on the
assurances. implementation of the NDVP.
Procurement. Limited availability of ADB MOH is engaging with key stakeholders (e.g., COVAX, UNICEF,
eligible vaccines from manufacturers, which vaccine manufacturers), identifying required ADB-eligible vaccines,
leads to long vaccine lead time. and entering into contracts with manufacturers as early as possible.

46 ADB. 2015. Technical Guidance Note on Financial Management Assessment. Manila; and ADB. 2020. ADB’s
Support to Enhance COVID-19 Vaccine Access. Manila.
16

Risks Mitigation Measures

Substantially imbalanced terms of contracts The government will enter negotiations with multiple firms and
that place large risks on the client. prioritize deals with more balanced terms of contracts. Risks of
imbalanced contracts have been explained to the government.
ADB = Asian Development Bank, COVAX = COVID-19 Vaccines Global Access, COVID-19 = coronavirus disease,
MOH = Ministry of Health, NAO = National Audit Office, NDVP = National Deployment and Vaccination Plan for COVID-
19 Vaccines, UNICEF = United Nations Children’s Fund.
Source: Asian Development Bank.

IV. ASSURANCES AND CONDITIONS

52. The government has assured ADB that implementation of the project shall conform to all
applicable ADB policies, including those concerning anticorruption measures, safeguards,
gender, procurement, consulting services, financial management, and disbursement as described
in detail in the PAM and loan documents. The government has agreed with ADB on certain
covenants for the project, which are set forth in the draft loan agreements.

53. No withdrawals shall be made from the loan account for financing a contract to supply
eligible vaccine(s) until: (i) ADB has received a letter from the government confirming (a) which
COVID-19 vaccine(s) have been selected to be procured using the proceeds of the loan; (b) which
of the APVAX vaccine eligibility criteria has been satisfied in respect of the COVID-19 vaccine(s)
to be procured; and (c) such COVID-19 vaccine(s) have received all necessary authorizations of
the government, and have been authorized by the Sri Lankan NMRA and any other relevant
regulatory authorities for distribution and administration within the territory of the country; and (ii)
based on the information provided in the aforementioned letter, ADB has notified the government
that the COVID-19 vaccine(s) to be procured are designated as eligible vaccines.

V. RECOMMENDATION

54. I am satisfied that the proposed loan would comply with the Articles of Agreement of the
Asian Development Bank (ADB) and recommend that the Board approve
(i) the loan of $84 million to the Democratic Socialist Republic of Sri Lanka for the
Responsive COVID-19 Vaccines for Recovery Project, from ADB’s ordinary capital
resources, in regular terms, with interest to be determined in accordance with
ADB’s London interbank offered rate (LIBOR)-based lending facility; a term of 10
years, including a grace period of 3 years; and such other terms and conditions as
are substantially in accordance with those set forth in the draft loan agreement
presented to the Board of Directors; and
(ii) the loan of $66 million to the Democratic Socialist Republic of Sri Lanka for the
Responsive COVID-19 Vaccines for Recovery Project, from ADB’s ordinary capital
resources, in regular terms, with interest to be determined in accordance with
ADB’s London interbank offered rate (LIBOR)-based lending facility; a term of 29
years, including a grace period of 8 years; and such other terms and conditions as
are substantially in accordance with those set forth in the draft loan agreement
presented to the Board.

Masatsugu Asakawa
President

16 June 2021
 Appendix 1 17

DESIGN AND MONITORING FRAMEWORK

Impact of the project:

Resilience and responsiveness of the health system enhanced to curtail the COVID-19 virus spread;
reduce morbidity and mortality; and reduce the negative health, social, and economic effects of the
COVID-19 pandemic in Sri Lankaa
Risks and
Performance Indicators with Targets Critical
Results chain and Baselines Data and Reporting Assumptions
Outcome By 2024 for all indicators:
Priority a. At least 18.2% of population fully a. Routine data from R: Changes in
populations of vaccinated against COVID-19 the Epidemiology health-seeking
Sri Lanka (disaggregated by sex, age, province, Unit of the Ministry of behavior,
vaccinated and district) (2021 baseline: 0% as of May Health and the newly including
against COVID- 2021)b introduced VIMS for COVID-19
19 as per the (OP 1.1; OP 2.1.4) COVID-19 (COVID- vaccine
NDVP without 19 immunization acceptance
compromising tracker) behavior, may
routine vaccine (disaggregated data) take longer than
service and the project
other health b. At least 93% coverage of age- b. Annual Health period.
services appropriate routine vaccination program Bulletin of the MOH,
maintained (2021 baseline: 93% for HPV immunization
[for girls]; 98% for MMR [for boys and coverage by regional
girls])c directors of health
areas, Sri Lanka, and
Epidemiology Unit
Outputs
1. COVID-19 1. By 2024, the number of required 1. Epidemiology Unit R: Limited
vaccines COVID-19 vaccine doses for vaccinating supply of
delivered at least 4 million people delivered to the vaccine
central epidemiology unit and the because of high
Regional Medical Supplies Divisions global demand
(2021 baseline: 0)d leads to delay in
(OP 1.1.2) vaccine delivery
2. Vaccination 2a. By 2024, an electronic immunization 2a. Health Information to Sri Lanka
information data management system established Unit and the
dissemination and integrated in the national health Epidemiology Unit
and monitoring information system with sex- and age- with technical
systems disaggregated data (2021 baseline: Not guidance from WHO
strengthened available) Sri Lanka
(OP 6.2; OP 6.2.1)

2b. By 2024, sex-disaggregated age- 2b. Epidemiology Unit,

appropriate immunization data included VIMS records
in annual national health reports (2021
baseline: Not available)e

2c. By 2023, at least 90% of the 5,000 2c. Health Promotion

participants (60% women) of information Bureau and quarterly
campaigns assisted in COVID-19 progress reports
vaccination in the respective medical
officer of health areas (2021 baseline: 0)f
18 Appendix 1

Risks and
Performance Indicators with Targets Critical
Results chain and Baselines Data and Reporting Assumptions
3. Capacity of 3a. By 2022, 36 refrigerated trucks 3a. Epidemiology Unit,
vaccine delivered (10 for MOH and one to each of medical supplies
transport the 26 regional medical supplies division data
systems divisions) to transport vaccines (2021
expanded baseline: 0)
(OP 6.2)

3b. By 2023, mobile communication teams 3b.–3c. Health

(50% women) in at least 50% of medical Promotion Bureau
officers of health areas reporting and quarterly
increased knowledge of gender and progress reports
socially sensitive ways of communicating
COVID-19 vaccine benefits and risks to
women and excluded and vulnerable
groups (2021 baseline: 0%)

3c. By 2023, at least 25 district-specific

vehicle hire contracts signed for
dedicated transport to enable vulnerable
women and people with disabilities to
access vaccination centers in all nine
provinces (2021 baseline: 0)
4. Vaccine- 4a. By 2024, 12 satellite hospitals provide 4a.–4b. Quarterly
related medical clustered HCWM practices (2021 progress reports
waste baseline: 0)g
management (OP 3.3.2)
strengthened
4b. By 2024, sewerage waste disposal
improved in 26 COVID-19 managed
hospitals (2021 baseline: 0)
(OP 3.3.2)
Key activities with milestones
1. Output 1: COVID-19 vaccines delivered
1.1 Consumables required for vaccination rollout procured (Q2 2021)
1.2 Procurement of vaccines to cover 2 million population (9.1%) completed (Q4 2021)
1.3 Procurement of vaccines to cover 2 million population (9.1%) completed (Q2 2022)
1.4 Medical supplies management information system upgraded and replaced (Q2 2023)

2. Output 2: Vaccination information dissemination and monitoring systems strengthened

2.1 Laptop computers and tablets (3,640) to all MOH offices procured (Q4 2021)
2.2 Training of civil society organizations to ensure gender equality and social inclusion on vaccination
completed (Q4 2021)
2.3 Project officers and other agreed additional staff (as defined in the project costing sheet) for each
technical unit of the MOH (Epidemiology Unit, Medical Supplies Division, Health Promotion Bureau,
and Health Information Unit) recruited (Q2 2021)

3. Output 3: Capacity of vaccine transport systems expanded

3.1 Vehicle hiring facilities via 25 district-specific contracts available for all nine provinces (Q3 2021)
3.2 36 refrigerated trucks for MOH and RMSDs (10 to MOH [two to Epidemiology Unit, one to FHB, and
seven to MSD] and one to each of the 26 regional medical supplies divisions) procured (Q4 2021)
3.3 Gender consultant and HPB conduct training program on gender and socially inclusive
communication for mobile communication teams in medical officers of health areas (Q3 2021)
 Appendix 1 19

3.4 Training manuals developed addressing the needs of pregnant and lactating women and women
with disabilities, identifying GBV cases, and providing referral support to survivors (Q3 2021)

4. Output 4: Vaccine-related medical waste management strengthened

4.1 12 incinerators procured and installed in identified hospitals in six provinces (Uva, Sabaragamuwa,
North Western, North Central, North, and East) (Q1 2022)
4.2 Clustered HCWM activities introduced at each of the 12 hospitals (Q3 2022)
4.3 26 sewerage systems in the 26 identified COVID-19 managed hospitals will be reviewed, cost
estimated, repaired, and renovated (Q3 2023)

Project Management Activities

Conduct procurement value-for-money analysis and post-review sampling
Prepare and submit quarterly and annual progress reports
Submit annual audited project financial statements
Submit periodic performance audits on NDVP implementation
Prepare project completion report
Inputs
ADB: $150.00 million (ordinary capital resources loan)
Government of Sri Lanka: $11.85 million
ADB = Asian Development Bank, COVID-19 = coronavirus disease, FHB = Family Health Bureau, GBV = gender-based
violence, HCWM = health care waste management, HPB = Health Promotion Bureau, HPV = herpes papillomavirus, MMR =
measles, mumps, and rubella, MOH = Ministry of Health, MSD = medical supplies division, NDVP = National Deployment and
Vaccination Plan for COVID-19 Vaccines, OP = Operational Priority of ADB Strategy 2030, PMU = project management unit,
Q = quarter, RMSD = regional medical supplies division, VIMS = Vaccine Information Management System, WHO = World
Health Organization.
a
Government of Sri Lanka. 2020. Sri Lanka Preparedness & Response Plan COVID-19. Colombo; Government of Sri Lanka.
2021. National Deployment and Vaccination Plan for COVID-19 Vaccines. Colombo; ADB. 2020. ADB’s Support to Enhance
COVID-19 Vaccine Access. Manila.
b
Aligned with the WHO SAGE Roadmap for Prioritizing Uses of COVID-19 Vaccine in the Context of Limited Supply.
November 2020, and Background Paper on Covid-19 Disease and Vaccines (Draft Document - Prepared by the Strategic
Advisory Group of Experts [SAGE] On Immunization, Working Group on COVID-19 Vaccines). Technical Document, 22
December 2020.
c
Sri Lanka’s Routine Vaccination Program covers 12 vaccine-preventable diseases: tuberculosis (Bacillus Calmette–Guérin
(BCG) vaccine); pentavalent vaccine for hepatitis B; diphtheria; whooping cough; tetanus; Haemophilus influenzae B;
poliomyelitis (both the oral polio vaccine and inactivated polio vaccine); measles, mumps, and rubella (MMR vaccine);
Japanese encephalitis; human papillomavirus for girls. Average age-appropriate immunization coverage for all vaccines
was more than 99% in 2018.
d
Of 22 million population, ADB will provide vaccine procurement support for 18.2% of the total population, the World Bank
13.6% of the total population, COVAX 20.0% of the total population, Government of India in-kind contribution for 1.1% of
the total population, Government of the People’s Republic of China in-kind contribution for 1.3% of the total population, and
the balance by the Government of Sri Lanka.
e
Currently, total age-appropriate vaccination numbers are being reported.
f
Civil society organizations to be engaged will identify these 5,000 people and make them aware of the benefits of
vaccination. These people will be provided with transport facilities to and from vaccination centers, and assistance in the
vaccination process at the vaccination centers.
g
Based on the WHO definition and Sri Lanka context, the medical waste management plan envisages to establish a cluster-
based waste management system. Currently, three provinces’ medical waste is transported and managed at a privately
managed off-site location. The Government of Sri Lanka allocates payments for this service. In the other six provinces, the
MOH and provincial governments are expected to establish clustered waste management plans with incineration facilities
at the apex (higher level) secondary care hospital location. The liquid waste sewerage is expected to be managed at the
facility level.
Contribution to Strategy 2030 Operational Priorities
Expected values and methodological details for all OP indicators to which this project will contribute results are detailed in
Contribution to Strategy 2030 Operational Priorities (accessible from the list of linked documents in Appendix 2). In additio n
to the OP indicators tagged in the design and monitoring framework, this project will contribute results for:
OP 2.1.4 Women and girls benefiting from new or improved infrastructure (Expected value: 2,080,000),
OP 2.2.2 Health services for women and girls established or improved (Expected value: 1),
OP 6.1.4 Transparency and accountability measures in procurement and financial management supported in implementation
(Expected value: 1), and
OP 7.3.3 Measures to improve regional public health and education services supported in implementation (Expected value: 1).
Source: Asian Development Bank.
20 Appendix 2

LIST OF LINKED DOCUMENTS

http://www.adb.org/Documents/RRPs/?id=55085-001-3

1. Loan Agreement: Responsive COVID-19 Vaccines for Recovery Project - Rapid

Response Component
2. Loan Agreement: Responsive COVID-19 Vaccines for Recovery Project - Project
Investment Component
3. Vaccine Needs and Health Sector Assessment
4. Project Administration Manual
5. Contribution to Strategy 2030 Operational Priorities
6. Development Coordination
7. Country Economic Indicators
8. Macroeconomic and Debt Analysis
9. Summary of the National Deployment and Vaccination Plan
10. Summary Poverty Reduction and Social Strategy
11. Gender Equality and Social Inclusion Action Plan
12. Risk Assessment and Risk Management Plan
13. Indicative Master List of Eligible Items, and Agreed List of Acceptable Expenditure
Items (‘Positive List’), for ADB-financing under the Rapid Response Component

Supplementary Documents
14. Eligibility Criteria for Use of Funds under the Rapid Response Component
15. Due Diligence Report on Medical Waste Management in Sri Lanka
16. Environmental Assessment and Review Framework
17. Strategic Procurement Planning
18. Financial Management Assessment
19. Financial Analysis
20. Climate Change Assessment