This report presents an analysis of poverty in Sri Lanka. It is prepared as a part of a consultative process between the Government of Sri Lanka and the Asian Development Bank (ADB), aimed at forging a poverty reduction partnership agreement. Progress in poverty reduction hinges on the degree to which the poor have a voice in decision making. Democracy is critical, as it empowers the media and other instruments of civil society to fight for the eradication of poverty and protect fundamental rights of the people. The ADB would focus on a core set of high priority activities that are likely to make a meaningful difference to long-term poverty reduction.