Sri Lanka's country vision is tobecome a global hub between the East and the West and anupper middle-income country by 2016. Sri Lanka's urbanvision, as defined in the government's developmentpolicy framework is to develop a system of competitive,environmentally sustainable, well-linked cities clustered infive metro regions and nine metro cities and to provideevery family with affordable and adequate urban shelter by2020. This policy note provides an initial assessment of SriLanka's urban characteristics, outlining the challengesahead and broad policy directions for turning the urbanvision into action. The policy note has six main sections.First section briefly outlines Sri Lanka's urbancharacteristics today. Second section discusses the maineconomic drivers of Sri Lanka's cities. Third sectionpresents the main themes of Sri Lanka's Urban Vision(which includes the System of competitive cities vision andthe adequate and affordable urban shelter for all vision)and discusses its economic rationale and viability given theurban characteristics and economic drivers of thecountry's cities. Fourth section outlines the mainchallenges for achieving the Urban Vision, based on theresults of a diagnostic assessment carried out as an inputto the policy note. Fifth section discusses recentgovernment initiatives for implementing the urban vision,and how they have helped tackle the challenges. And sixthsection offers broad policy directions and priority actionsto achieve the Urban Vision.