On May 5th, 2022, SLYCAN Trust hosted an initial technical dialogue on accessing and scaling up climate and disaster risk finance for Sri Lanka. The event aimed to engage key stakeholders from the public and private finance sector to build on the existing scientific evidence base on climate change, identify opportunities and mechanisms for mobilizing climate or risk finance, and enhance economic stability and resilience in Sri Lanka.

The dialogue opened with participants sharing their views and expectations as well as drawing attention to existing challenges in the financial system, such as resilience-building in key sectors, data availability, the need to develop sustainable policies, and attracting foreign exchange inflows and green funding.

Through a moonshot approach with three scenarios, the event explored the key question of what a sustainable and resilient financial system could look like in the short- (6 months), medium- (2024), and long-term (2030 and beyond). Participants worked in groups to envision scenarios for the national and local level interlinked with regional and global processes. Key characteristics of the ideal financial system included access to stable foreign inflows; a consistent and transparent policy environment; an equilibrium between producers, suppliers, and consumers; availability and free sharing of data; mainstreamed climate and disaster risk management; universal basic financial literacy; a pool of skilled professionals and experts in the country; enhanced entrepreneurship support; access to a range of financial instruments and mechanisms across different levels;  and strengthened social safety nets.

Following this exercise, participants engaged in a second group work session to identify crucial elements necessary to achieve these moonshot scenarios and bring about financial stability and resilience. The elements discussed can be grouped into the following:

• Actions to achieve a stable financial system
• Climate and disaster risk financing
• Foreign exchange inflows
• Export development
• Ensuring energy and food security
• Business and entrepreneurship

A few highlights of the discussion process include the following: using taxation as an instrument to guide investment and channel funding into certain areas; building capacities and financial literacy through the education system; providing specific training and opportunities for women and youth; streamlining, simplifying, and speeding up approval processes for projects and funding; enhancing access to climate and disaster risk finance; instituting statutory requirements to mainstream risk management; conducting scoping studies on investment and value addition opportunities for export markets; scaling up green and renewable infrastructure through implementation of long-term plans; conducting a research and development drive for renewable energy and energy services; and establishing a consistent definition and policy framework for SMEs and advising entrepreneurs on registration, certification, accreditation etc.

Following the inception dialogue, participants outlined a potential way forward, including the identification of critical sectors for economic revival, key stakeholders, and financial and technical needs; coordination of efforts from different stakeholders and further exchange through a series of discussions; provision of technical assistance and knowledge; and inclusion of vulnerable groups and communities. To contribute to this process, SLYCAN Trust will host a series of follow-up dialogues with the participants and further expand on the topic of accessing and scaling up climate and disaster risk finance for Sri Lanka.