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Cabinet Spokesman Prof G.L. Peiris yesterday said that any allegation with regard to the Japanese assistance granted to Sri Lanka will damage only the people of the country.

In response to a statement made by the Peoples Alliance Spokesman Sarath Amunugama that the Japanese government should not grant assistance to Sri Lanka until the LTTE lays down its arms, Prof Peiris said that such statements were greatly detrimental to the national interest of the country since it was the people who will be benefitted by the resources that will be made available.

"We would like to ask the PA spokesman what the logic behind his statement is and who is going to be ultimately affected by it, for they are telling the largest single donor of Sri Lanka who provides 45 per cent of the annual total aid not to release funds. The Japanese assistance which is worth around Rs. 26,000 million will have a direct impact on economic development, especially on the rural sector. It has been granted in a demonstration of confidence in the peace process," he said.

The assistance has been provided on an interest of 2.2 per cent per annum and is repayable in 30 years including a grace period of 10 years.

Emphasising that the funds granted are not for the LTTE, the Cabinet Spokesman said that all the projects initiated through the funds were outside North except for a micro-finance project on poverty elimination which is an islandwide program with one component in the North.

The other projects include the Southern highway project, the Samanalawewa power project, the Walawe west bank project, the Kirinda and Tangalle fisheries harbour development project and for the development of the Matara and Ratnapura general hospitals.

Rs. 4,505 million has been allocated for road development in the Southern region. The funds will also be utilised to develop 770 kilometres including 50 roads in the Sabaragamuwa province and 35 roads in the Central province

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