ECONOMYNEXT – Sri Lanka will obtain a 200 million US dollar concessional loan from the World Bank to develop its tourism sector, starting with 77 million dollars to turn Colombo into a high-value travel destination, an official said.
Natasha Kapil, World Bank Lead Private Sector Specialist for South Asia, said the loan supports three successive island-wide operations.
Preparatory work is backed by a 1 million US dollar grant under the World Bank’s Grant Facility for Project Preparation (GFPP).
The initial 77 million dollar ‘Thrive Colombo’ project will be executed via a concessional facility to increase visitor spend and stay time in the capital, followed by two operations targeting nature-based tourism and marine tourism.
Kapil noted Colombo retains only 5 percent to 10 percent of incoming visitors despite having the country’s highest concentration of 5-star hotel rooms.
“If you look at the numbers of visitors that come to the island and those that actually stay in Colombo, the number is minuscule,” Kapil said, adding that most tourists stay just half a day.
The strategy targets higher-spending regional travelers within a 5-hour flying radius for 48-to-72-hour getaways, shifting the focus from volume to value.
The project is structured around three components.
The first component modernizes national institutions under the Ministry of Tourism — including the Sri Lanka Tourism Development Authority (SLTDA), the Promotion Bureau, and the hotel school (SLITHM) — while assisting the new Tourism Act and upgrading digital data systems.
The second component finances physical infrastructure — the “hardware of Colombo” — across two circuits: a Fort heritage loop and an urban wetlands loop.
Hard infrastructure investments will fund pedestrianization, building facade improvements, and waterfront connectivity spanning Galle Face Green to the Pettah market.
Several Fort heritage buildings have been identified for adaptive reuse under private management and operations.
The wetlands loop will upgrade connections around sites like Beddagana and Diyasaru parks.
The third component establishes a Tourism Entrepreneurship Fund to finance the city’s “software.”
Managed by a private fund manager to ensure commercial viability, it will bring in private capital alongside institutions like the International Finance Corporation (IFC).
The fund will direct capital to micro, small, and medium enterprises (MSMEs) — such as artisans, baristas, and walking or nature guides — as well as the “Colombo calendar” of events, including performing arts, Kala Pola, fashion weeks, and literature festivals.
The GFPP-backed strategic consultancy is laying the groundwork through regulatory reviews, skills assessments, and targeted marketing campaigns. (Colombo/Sep01/2026)