Donor pledges top US$ 3 billion : Development Forum a thumping success

From Ranil Wijayapala in Kandy

The first ever Development Forum chaired by the Sri Lankan Government wound up yesterday in the historic city of Kandy, with the international donor community making commitments and pledges exceeding US $ 3 billion in the form of grants and moratorium on debts in view of the tsunami reconstruction process and for other development programmes initiated by the Government, Finance Minister Dr. Sarath Amunugama announced.

The Donor community representing 45 countries, bilateral and multilateral donor agencies and NGOs made their commitments at the Development Forum after the Government presented its comprehensive reconstruction plan for the tsunami affected areas.

"Ninety five per cent of the assistance committed at the Forum comprise outright grants. There are no loans and there is no repayment also," Minister Amunugama said. "There are absolutely no conditions for the disbursement of these funds to the Government," the Minister added.

Addressing the media after the closing sessions of the Development Forum along with representatives from the World Bank and the IMF, Minister Amunugama said the assistance will be delivered for development projects.

They agreed on the reconstruction strategy that has been formulated, based on a set of guiding principles. Those guidelines include allocation of resources based on identified local needs and priorities, delegation on subsidiarity to the lowest level of government, consultation with affected communities, ensuring transparency, accountability and flexibility, reduction of future vulnerabilities, sensitivity to equity considerations and the effective coordination between the Government and development partners.

"The confirmation of loans amounting to US $ 450 million (China US $ 350 million and Japan US $100 million) also exceeded our expectations," Dr. Amunugama remarked. The total pledges of US $ 3 billion also include the debt moratorium by Paris Club members and non-Paris Club members amounting to US$ 300 million.

The Indian Government conveyed that they have acceded to the Government's request for a three-year debt moratorium on US $ 300 million, he added.

The IMF has also confirmed US $ 250 million for the Government to maintain the balance of payments.

In comparison to the Tokyo donor conference 2003 in Tokyo, Japan, the Development Forum in Kandy was more successful since the donor community has not put forward any conditions when making commitments, Dr. Amunugama said.

"The excellent speech made by President Chandrika Bandaranaike Kumaratunga at the inauguration ceremony of the Development Forum had a great impact on the donor community to make their commitments," the Minister noted.

There were US $ 2.2 billion commitments by the donor community on the first day's sessions of the Development Forum. That figure included US $ 745 million by bilateral donors (US $ 631 million grants and US $ 114 million loans), US $ 631 million by multilateral agencies (US $ 470 million grants and US $ 161 million loans) US $ 853 million from NGOOs and INGOOs.

Finance Ministry Secretary Dr. P.B. Jayasundara said the disbursement of assistance will be for a three to five year well integrated reconstruction plan.

The amount of funds will increase in the coming months, as the NGOs have not yet completed their commitments in the form of MoUs, Dr. Jayasundara added. Responding to a question raised by journalists, Praful Patel, Vice President of the World Bank said the international community has no role to play in establishment of a Joint Mechanism to deal with the reconstruction process in the North-East.

"However we cannot take it for granted. I am much more confident of the unwavering commitment by the President to the Joint Mechanism for equal distribution of aid among communities," he said.

World Bank Country Director Peter Harrold said that Sri Lanka can be satisfied as it has received much-needed funds for the reconstruction process. "From tomorrow onwards we can focus on the implementation process," he added.

The Government has estimated it will cost around $1.5 billion to $1.6 billion to rebuild towns, schools and infrastructure destroyed by the December 26 tsunami. The rupee firmed yesterday on news of the aid pledges made at the forum.

The holding of a full-fledged donor conference in Sri Lanka itself had helped donor community to review Sri Lanka's post-tsunami reconstruction plans at ground level. World Bank Country Director Harrold said the donor community were impressed by the presentations made by Government Agents of Matara, Mullaitivu, and Trincomalee on their experience of the tsunami reconstruction programme.

"These presentations immensely contributed to the success of the Development Forum. These officials themselves have experienced the disaster," he added. The second day's session focused mainly on economic policy and development challenges, economic reform initiative and poverty reduction and partnership in development and peace.

Dr. Amunugama launched the Sri Lanka Millennium Development Goals Report at the end of the third session of the forum.