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| Tuesday, 14 September 2004 |
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ADB funds a much-needed boost The Asian Development Bank (ADB) is a true friend and partner of Sri Lanka. It has stood by us in good times and bad times, giving financial and technical assistance for a variety of projects. The ADB has just announced that it will be extending US$ 570 million (approx Rs.57 billion) to Sri Lanka over the next two years. This includes annual commitments of US$ 90 million from the ADB's concessional Asian Development Fund, which assists the ADB's poorer members and US$ 390 million over two years from its ordinary capital resources. The loans will be complemented by US$ 4.9 million in technical assistance grants that will help in the preparation of loan projects. This is a very considerable sum by any standards and the authorities must endeavour to make full use of the ADB funds. Sri Lanka has gained a reputation for its low rate of foreign aid utilisation. A concerted effort must be made to increase this rate - donors do not want to see their funds left unutilised for whatever reason. The ADB program focuses on "economic reform and governance, rehabilitation in conflict-afflicted areas and direct poverty reduction and rural infrastructure". The loans will finance two major highway projects and the Colombo Port South Harbour project and will also go to social infrastructure development, commercialisation of agriculture and expansion of rural electrification. It will also go to the development of small and medium-sized enterprises, waste water management for Colombo and a Jaffna water supply project. The funds will be a much-needed boost for infrastructure development, an essential requirement for rapid development. Road and sea transport as well as electrification are vital elements of the economy. The other sectors that the funds will be diverted to, such as agriculture and small/medium enterprises are also vital cogs in the economic wheel. One should not also forget the importance of rehabilitating the war-torn areas in the North-East, for which the ADB has granted three loans totalling US$ 121 million. But the Bank has made it clear that prospects for growth and prosperity hinge on continued progress on peace and on uninterrupted economic growth. Alessandro Pio, the Asian Development Bank's new Country Director for Sri Lanka, told a news briefing that Sri Lanka has significant economic potential, provided it improves the efficiency of the economy and accelerates the pace of growth in order to generate more jobs and income. The ADB has recognised that poverty alleviation is a key goal of the Government, which has expanded the Samurdhi program. "Only through additional economic growth and fiscal revenues will the country be able to target resources to poverty alleviation," says Pio. Even developed economies, leave alone developing ones, are reeling under the ill-effects of the recent surge in crude oil prices. The ADB cites a strong economy as the key to countering the destabilising impact of external oil price shocks. Peace will be a crucial factor in the quest for a stronger economy. The Government has reiterated its commitment to a negotiated settlement to the ethnic conflict and is striving to recommence negotiations. It has allayed fears that war could resume and urged the international community to continue their unstinted support for overall development of the country. As the ADB's Pio has noted, Sri Lanka's economy has proven remarkably resilient in the past and continued to grow an average of about four per cent per year despite two decades of war. One can only imagine the potential for a spurt in the growth rate if lasting peace is achieved. |
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