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Mr. Tadao Chino is the President of the Asian Development Bank (ADB) and the Chairperson of ADB's Board of Directors. Under Mr. Chino, ADB has set out a poverty reduction strategy and long-term strategic framework.

Before joining ADB, Mr. Chino was Chairman of the Board of Counsellors of Nomura Research Institute Ltd and also Vice Minister of Finance for International Affairs.

Mr. Chino was involved in the creation of ADB. He was the officer of the United Nations' Bangkok-based Economic Commission for Asia and Far East (ECAFE) in charge of planning and preparing for the establishment of the bank.

by Ravi Ladduwahetty

Q:How do you see economic development in Sri Lanka in the backdrop of the current Cessation of hostilities agreement and the peace efforts of the Government of Sri Lanka?

A:We are encouraged by the progress made in the peace process and we feel there is the potential for economic growth and trade in Sri Lanka. We also feel there is the potential for tourism and investment to improve if the present peace negotiations develop into something more permanent.

Q:What type of assistance would the ADB provide Sri Lanka if durable and lasting peace is arrived at in Sri Lanka?

A:We certainly hope that the present peace negotiations will result in an end to the conflict. Nonetheless, we are already providing assistance to Sri Lanka. Last October, ADB approved the North East Community Restoration Development Project which is now being implemented.

This project includes a broad range of complementary activities in all eight districts in the Northern and Eastern provinces and will ensure that those living there will see a broad improvement to their livelihoods. This project is flexible and adaptable to ensure we can respond to the changing circumstances. We are also identifying areas where funds can be reallocated to works in the North and East.

Q:What are the real reasons for your visit to Sri Lanka? Is it your office or do you see anything substantial in the wake of the ongoing peace process?

A: This is an opportune time for my visit as it comes during an important phase in the peace process. It offers me an important opportunity to see for myself the progress being made. ADB, in cooperation with its development partners, will support the post-conflict rehabilitation of the North and the East.

We will provide support for the critical planning process that must be undertaken for such an enormous rehabilitation task to be effective. As the peace process develops, we will assess the feasibility and timing of a larger rehabilitation.

Another reason I am here is to sign a Poverty Reduction Partnership Agreement with the Government of Sri Lanka. This is an important agreement because it represents a commitment by ADB and the Government to fight poverty. The agreement sets out specific time-bound targets over the long-term and medium-term and has detailed mechanisms to monitor the progress made in achieving these goals.

I am also here to open the new office of ADB's Sri Lanka Resident Mission. Our presence in this country helps us gain a better understanding of Sri Lanka's needs and to forge closer bonds with the Government, private sector and non-government organizations that represent the interests and the aspirations of the people. I see this office as a symbol of our long-term development partnership with Sri Lanka.

Q: What are your economic expectations for the country if peace is achieved?

A: As you know, the conflict has affected investment into Sri Lanka. It has affected the country's tourism industry and trade sectors. The contribution of the Northern and Eastern provinces to the nation's GDP has fallen sharply from 15 per cent in the 1980s to four per cent in 1997. It is largely because of the conflict that there is so much poverty in this country. If peace is achieved then the loss of two per cent GDP per annum, may be recovered.

Q: How do you see this peace process moving forward?

A: ADB is encouraged by the steps being taken in the peace process and we are hopeful for a lasting negotiated peace.

Q: It is said that the aid utilisation in Sri Lanka is low and it has been coming down in recent years. your comments?

A: This is a concern. The disbursement ratios are low, typically about 12-15 per cent across all three of Sri Lanka's major development partners including ADB, World Bank and JBIC ? which is lower than the ADB average of 18 per cent across the region. The causes are many, but the most important ones are Sri Lanka's complex financial and procurement procedures which can lead to delays in the commencement and implementation of projects. These need to be significantly strengthened if the disbursement ratios are to improve.

Q: What changes in the bureaucracy do you advocate so that aid utilisation is more effective?

A: The Government has recently taken some measures to accelerate procurement and reduce other impediments to project implementation. The Government has also appointed more staff to implement some of the development projects we support. We look forward to substantial improvements as a result of this effort.

Q: It is said that the main reason for the under-utilisation of aid is the delays in the procurement of goods ( capital investments) and services (contracts which have been attributable to rampant corruption. the Sri Lankan power sector is one such example. What are your views and comments in this regard?

A: A key factor in the under-utilization of aid is due to the procurement procedures currently in place. The Government is aware of this. As to whether this is related to corruption, it has certainly not been our experience.

Impressions among Sri Lankans of the ADB is that it is more a bank for agricuture, highways and rural development etc. There is also a school of thought that Sri Lanka should be developed as a service hub for shipping, banking and trading etc.

When ADB was established in 1966, it was a project financier. However, over the years, ADB has changed to become a broader based development institution in order to meet the changing needs of our developing member countries. In fact, in 2000 we adopted a long-term strategic framework (LTSF) for the next 15 years. Its focus is on achieving sustainable economic growth, inclusive of social development, and good governance.

In particular, the framework embraces the philosophy and thrusts of the new private sector development strategy, and recognizes the importance of regional cooperation. In the Sri Lanka context, we support initiatives to develop Sri Lanka as a service hub for shipping, banking and trading, but the present regulatory environment needs to be greatly enhanced to support these initiatives.

Q: Sri Lanka's military expenditure is said to be 5 percent of GDP and indirect military costs a further five perccent. Some say that the opportunity costs are as high as 30 percent? What are your recommendations?

A: Sri Lanka's military expenditure is directly linked to the present conflicts. If a lasting peace can be achieved then there will be opportunities to focus on much needed areas such as tackling poverty reduction and achieving higher rates of economic growth.

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