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US dollars 150 million:

World Bank tsunami relief doubled

Sri Lanka's commitment to ease the burden of its tsunami victims and rebuild devastated parts of the country, received a boost when the World Bank announced a total US$150 million in financial support for the country's reconstruction and recovery program.

The US$75 million emergency credit/grant approved is in addition to the US$75 million made available earlier this month as an immediate response to the tragedy.

The World Bank in a press release states: "Total financing needs for Sri Lanka's recovery and reconstruction are estimated to be approximately US$ 1.5 to 1.6 billion, according to a damage and needs assessment released earlier this month by the World Bank in partnership with the Asian Development Bank and the Japan Bank for International Cooperation.

The World Bank funding approved today will further contribute to this recovery by assisting the tsunami-affected people in rebuilding their damaged houses, restoring livelihoods, and reactivating the delivery of basic services to the devastated areas.

"The need is to create a strong foundation for a longer-term reconstruction and recovery effort, that ensures equity between regions and ethnic groups," said Peter Harrold, World Bank Country Director for Sri Lanka.

"The financing package approved today is geared to help people get their lives back but as the recovery and rebuilding progresses, and as other donors come to the table, we will be flexible about the areas we finance.

Where there are gaps, we will step in; where there is a financing on more favourable terms available, we will step back. What Sri Lankans need now is the best possible deal and our program is designed with that flexibility as a central tenet.

The tsunami caused widespread devastation along Sri Lanka's eastern, southern and western coast, damaging over 100,000 houses and affecting about a million people, out of a total population of approximately 19 million.

Although the tsunami struck without discrimination, worst hit were the poor coastal fishermen, the conflict affected, and the socially marginalized such as the elderly or single parents.

The emergency project will finance housing; roads, water supply and other infrastructure; livelihood support and capacity building for implementation.

While it is anticipated that the recovery and reconstruction needs for health and education will mostly be financed by other development partners, Bank funds will be used if gaps are identified.

The housing component, the largest component of this project will provide cash grants for housing reconstruction and elements of a capacity building program.

This includes training construction workers; a communications initiative; the establishment of a grievance redress mechanism at local, divisional and district levels; land-related management; and social and environmental monitoring. The Bank will support all these efforts with any needed technical assistance to ensure good results.

The repair and reconstruction of priority infrastructure systems, including roads and water supply, will be addressed through the roads, water supply and other infrastructure component of the project.

The vital part of the program is livelihood support, designed to rebuild assets for income generation and employment while protecting the most vulnerable members of tsunami-affected communities.

An income-support program will target the neediest people, providing Rs. 5,000 (about US$50) per family up to a period of four months.

A public works program will also be developed, which will provide employment opportunities for those who have lost their livelihoods because of the tsunami.

This will generate both employment and deliver essential works such as debris removal, road repairs and village water supplies. Further, financial support to micro-enterprises will provide resources to tsunami-affected self-employed and family businesses, helping them resume the activities that supported them before the disaster.

The final component of the project is support for implementation capacity building. This comprises the provision of human resources and consultancy support at the central, provincial and district levels; a continuous social impact assessment; and the design and delivery of training programs for district administrators on financial management and streamlined implementation processes.

In addition, information technology connectivity will be provided along with management information systems. Lastly, basic office equipment, furniture and other operating costs, and urgently needed vehicles will be supported by the project.

"We hope that by building local capacities through this decentralized implementation strategy and with good technical assistance components, the result will be good technical standards in housing, education and health facilities and infrastructure," said Christoph Pusch, the team leader for this operation.

This capacity would in turn improve the preparedness and reduce the vulnerability of coastal communities to future natural disasters, such as cyclones or tsunamis, he said.

"The Bank remains committed to support the Government in establishing natural hazards risk mitigation systems at the national level, and working with the donor community in the efforts to establish regional early warning systems."

The needs assessment exercise had identified a number of guiding principles for the recovery and reconstruction strategy. These principles have been embodied into this project, for example through the reliance on communities to identify those who should receive support, and a distribution of housing grants across the country in line with the damage estimates. These principles were that:

* The allocation of resources both domestic and international should be strictly guided by the identified needs and local priorities, without discrimination on the basis of political, religious, ethnic or gender considerations.

* Reconstruction activities are carried out by the appropriate level of government, with an emphasis on decentralization where feasible;

* Communities are empowered to make their own decisions during recovery;

* Communication and transparency are present in decision-making and implementation;

* Reconstruction avoids rebuilding existing vulnerability to natural hazards; and

* A coordinated approach is used to prevent duplication in activities.

To translate these principles into reality, the Bank will now be participating with all other development partners and key stakeholders, including the Liberation Tigers of Tamil Eelam, and in close collaboration with the Government on the development of district-based reconstruction plans for the affected areas.

US$30 million of the US$75 million approved today is in the form of a grant, and the balance is a credit from the International Development Association (IDA), the concessionary arm of the World Bank, and has a 10-year grace period, a maturity of 40 years, zero interest, and a 0.75% service charge on the outstanding amount.

The earlier approved US$75 million was made available as an immediate response to a government request, pooling resources from the existing portfolio.

The overall financial management functions of the project will be the responsibility of the Task Force for Rebuilding the Nation (TAFREN), the Statutory Authority responsible for the overall implementation and monitoring of the country's disaster management program.

IDA funds will be routed through the Authority to the government implementing agencies at the central government and the district level in the North East and Southern Provincial Councils.

Meanwhile, the ADB said in a news release that The Asian Development Bank (ADB) has approved the reallocation of US$7 million from a Rural Finance Sector Development Project in Sri Lanka to provide emergency microcredit to tsunami affected people in the country.

In the first ADB post-tsunami response after the joint preliminary needs assessment carried out by ADB, the Japan Bank for International Cooperation (JBIC) and the World Bank and published at the start of February, the reallocation will expedite the flow of needed funds to poor and low income tsunami affected households.

Three loans totaling $70 million were approved by ADB in December 2003 for the Rural Finance Sector Development Program (RFSDP) to establish a sustainable system for enhancing access to rural and microfinance services.

Under the project, a $10 million line of credit to support microenterprise subloans of up to about $1,000 each was being disbursed through microfinance institutions. Some $7 million of this line of credit will be reallocated to help tsunami affected households.

"The reallocation will allow an immediate and substantial response to restore livelihoods in affected areas through microfinance institutions," says Ashok Sharma, Principal Rural Finance/Microfinance Specialist.

"Emergency credit will help them quickly overcome the massive disruption and shock they have experienced to their livelihoods and income sources."

After graduation from the emergency credit, affected households will be continuously assisted for further development of their microenterprises and job creation. The reallocation is expected to reach 14,000 households.

"This response will combine with cash grant and public works programs supported by other external partners and the Government, continuing the good tradition of cooperation reinforced by the joint needs assessment" says Alessandro Pio, ADB's Country Director in Sri Lanka.

"Restoring the capacity to generate income is a first crucial step towards renewed self-reliance. It is important that these programs have uniform terms and conditions, in line with the Government's schemes, in order to avoid confusion and disparities".

Sri Lanka will need more than $1.5 billion for its reconstruction and rehabilitation effort following the December tsunami disaster, according to the needs assessment.

The disaster left at least 31,000 dead in the country and destroyed an estimated 400,000 jobs in 200,000 affected families, of which three quarters were already poor and low income households.

ADB plans to process approximately $150 million in new operations in the short to medium term, devoted to the reconstruction effort in Sri Lanka.

Reconstruction in tsunami-affected areas will be coordinated with ongoing post-conflict interventions, and will make use of existing project implementation structures, to ensure speedy and adaptive implementation.

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