The Hindu : World Bank commits $1 billion aid to Sri Lanka

Online edition of India's National Newspaper
Thursday, Jul 17, 2003

International

International

World Bank commits $1 billion aid to Sri Lanka

By V.S. Sambandan

COLOMBO JULY 16. The World Bank today committed $1 billion to Sri Lanka over the next four years to provide financial backing for the recovery of the island's war-ravaged economy.

The Bank, however, reiterated the international position linking the disbursement of financial assistance to the progress of the ongoing peace process, stalled since the unilateral suspension of negotiations by the Liberation Tigers of Tamil Eelam (LTTE) on April 21.

Releasing the Country Assistance Strategy (CAS) for Sri Lanka, Peter Harrold, Country Director, said, "We are natural optimists. We hope there will be adequate progress so that we can commit the assistance entirely." The support package includes the $800 million announced at last month's international donors' conference in Tokyo.

Of the $300 million for the next 12 months, "about $140 million would be in grants and the balance, on usual terms, of zero interest with repayments over 40 years, starting from 2013", he said. The Bank had identified three support areas — peace, growth and equity — to produce "results on the ground towards reduction of poverty".

According to the Bank, 25 per cent of Sri Lanka's 19.6 million people lived below the poverty line. It said it would provide support in reconstruction, capacity building and restoration of services in the northeast. "We await the Government's new proposal for an interim administration and the resumption of the peace talks around such a proposal with considerable anticipation," Mr. Harrold said. The issue of an interim administration was the "key to the peace talks".

For the northeast, the Bank's present commitment was to the tune of $73 million. In addition, it would also administer the North East Reconstruction Fund (NERF), the main vehicle for implementing humanitarian and reconstruction programmes. The NERF was a mechanism agreed to by Colombo and the LTTE for the rehabilitation and reconstruction of the northeast. They had also agreed that the World Bank would be the custodian of the Fund.

The international community, which pledged $4.5 billion at the Tokyo conference, had linked their release to the progress in the peace process. A declaration was also issued setting suitable milestones to gauge the movement at the ground level. The LTTE, which boycotted the conference, rejected the Tokyo Declaration that incorporated issues such as human rights, democracy and pluralism.

Asked if the Bank would link the release of funds to an adherence to human rights, Mr. Harrold said it was "an integral part of the peace process". The Bank, he said, "is not an agency that specialises in human rights" but it went by the "advice" from "sister agencies" in the U.N. fold.

The 108-page Country Assistance Strategy listed five risk factors. Peace, it said, was the "biggest uncertainty". While noting that the peace process was "going on remarkably well", it added that "after 20 years and several failed attempts, claiming certainty would be foolish".

A "political crisis" against the backdrop of a cohabitation Government, the progress of economic reforms and the "absorptive capacity" of Sri Lanka for the pace of implementation of the strategy were among the other internal risks.

On the external front, the Bank expressed apprehension that a deterioration in the situation in West Asia could affect the economy, which had a heavy external dependence.

Printer friendly page
Send this article to Friends by E-Mail

International