The Asian Development Bank (ADB) has agreed to offer 40 million U.S. dollars worth of assistance to Sri Lanka's drought hit regions to provide water for nearly 500 000 people, an official said here on Thursday.
Cabinet approval has been given to accept the ADB assistance following a Cabinet paper presented by President Mahinda Rajapaksa on Wednesday, Cabinet spokesman and Media Minister Keheliya Rambukwella said.
"The project is expected to complete a water and sanitation project in the drought hit areas and will assist over 453 000 people," he told reporters.
A severe drought has affected over a million people in the north central part of the country hit by the worst drought in more than two decades.
Lack of water has also destroyed an estimated 100 000 acres of paddy, Sri Lanka's major agriculture product. Agriculture experts have warned that loss of such a large stock of rice would drive up the cost of living.
The export of tea, Sri Lanka's highest foreign exchange earning crop, has also dropped to a three-year low due to adverse weather conditions.
Sri Lanka's energy minister has also warned of severe power shortages if rains to not arrive soon.
The government has allocated 2.7 million U.S. dollars (3.7 billion rupees) to assist the drought affected areas but has come under pressure from farmers that are not seeing any difference on the ground.
The country's central bank last week downgraded Sri Lanka's growth target from 7.2 percent to 6.7 percent.
However, Finance Ministry Secretary Dr. P.B. Jayasundara in a subsequent interview stated that he expects growth to be as low as 6.5 percent.