Economy resilient despite challenges - President

Sri Lanka Development Forum 2007:

Rohan Mathes in Galle

GALLE: President Mahinda Rajapaksa yesterday declared that despite the challenges caused by terrorism and natural disasters the country's economy stood resilient in terms of growth, increased investment and decline in unemployment.

Inaugurating the Sri Lanka Development Forum 2007 at the Lighthouse Hotel in Galle yesterday, President Rajapaksa said the non-cooperation of the LTTE in the negotiating process and the prolonged conflict interrupted some of the development activities in the North and the East.

"We have also gone through a year of natural turbulence, heavy rains floods and earthslips.

Despite these challenges the Government sustained an economic growth in excess of seven per cent during 2006, unemployment declined to six per cent while exports grew around eight per cent," the President said.

In addition, the Government was able to attract overseas remittances of over US$2 billion and Foreign Direct Investment in excess of US$ 500 million - twice the level of annual FDIs in the country. Income from tourism exceeded US$ 400 million.

The President said the deliberate escalation of terrorist attacks on innocent civilians, public property and Security Forces caused disruption and led to increased spending.

Equally, the Government's deterrent action against terrorism to liberate the people from humanitarian burdens created by the LTTE has increased the demands for funds for relief and resettlement programmes.

He said it was encouraging to note the recognition by the international community of the cost of terrorism especially with regard to Sri Lanka which has suffered heavily from terrorism.

Sri Lanka would therefore work hand-in-hand with the global community to deal with terrorism, by addressing its root causes through political negotiations and constitutional solutions as well as by counteracting senseless terrorist violence on innocent people and national assets.

"Our aim in defeating terrorism is to liberate innocent people who have become its victims. In such a liberation exercise, we are committed to ensure that human rights are preserved and democracy is respected."

He said his Government considers development of the North and East as being critical to promote sustainable peace and to find meaningful solutions to potential conflicts within multi-ethnic and multi-religious societies.

The President said the country had made satisfactory progress in the tsunami recovery process and has been able to use a substantial amount of assistance extended by Sri Lanka's development partners.

He said the same speed of development they were witnessing in the South could have been seen in the North-East as well if not for the violence and terrorist activities of the LTTE.

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Aim to build a new Sri Lanka based on Mahinda Chinthana - President

President Mahinda Rajapaksa's statement at the Sri Lanka Development Forum - 2007 in Galle

GALLE: President Mahinda Rajapaksa said, "I have been looking forward to this Development Forum being held in our historic port city of Galle. Two years ago, this city and several other areas of Sri Lanka were damaged by the tsunami.

We take modest pride in the fact that this city and other areas so affected have now returned to near normalcy and that we have been able to hold this forum in this city with the participation of our development partners.

The same speed of recovery that we are witnessing in the South could have been seen in the North and East as well, and we could have probably organised this forum in Trincomalee, if not for the violence and terrorist activities of the LTTE. Nevertheless, on the whole, the country has made satisfactory progress in the tsunami recovery process and has been able to utilise a substantial amount of assistance extended by our development partners.

The document placed before you which has been prepared by the Ministry of Finance and Planning in consultation with donor representatives and other stakeholders, amply demonstrates the progress as well as complexities and challenges associated with this recovery process.

Let me at the very outset, extend my sincere appreciation to the international community and multilateral agencies for their assistance in the post - tsunami recovery process without which we could not have recovered so rapidly.

Utmost importance

"This is the first Development Forum under my chairmanship as Minister of Finance and Planning and also under my Presidency. This forum is of utmost importance to my country's future development. At the last Presidential Election, I received a mandate to implement the 'Mahinda Chinthana': A Vision towards a new Sri Lanka.

"During the fist year of administration, my Government translated this overall vision into action. As you may be aware, I presented the 'Mahinda Chinthana - 'the Ten Year Horizon, Development Framework 2006-2016' together with the 2007 Budget, outlining the future directions, strategies and objectives of our Government.

The commitment to fulfil the objectives of this 10-year horizon is a pledge to achieve the Millennium Development Goals. That is to eradicate poverty on a sustainable basis. Therefore, I have no doubt that this Development Forum will focus on the 'Mahinda Chinthana': The 10-Year Horizon - Towards a new Sri Lanka.

"During the first year of my administration, which is also the first year of the decade committed by Sri Lanka to realize the Millennium Development Goals, our country was confronted with many challenges.

Unprecedented rise in oil prices caused a severe burden on our economy and in turn on our people. Our nation spent around 2 billion US Dollars in 2006 to finance oil imports - three times higher than what it was prior to the tsunami.

We reverted to debt servicing after one year of debt relief in 2005. We faced immense challenges in the recovery process from the tsunami - the worst ever natural disaster that shattered our nation.

In addition, global competition subjected our export industry to a painful transition process, with several factories becoming extremely vulnerable and struggling for survival.

Non-cooperation by LTTE

"Non-cooperation by the LTTE to participate in the negotiation process and their refusal to allow other democratic parties to function, prolonged the conflict interrupting some of the development activities in the Northern and Eastern provinces.

The deliberate escalation of terrorist attacks on innocent civilians, public property and security forces, caused disruption and led to increased spending.

Our deterrent military actions against terrorism to liberate the people from humanitarian burdens created by the LTTE has increased the demand for funds for relief and resettlement programmes.

We have also gone through a year of natural disturbances, heavy rains, floods and earthslips which caused loss of income and disrupted the day-to-day life of our people. These challenges reflect the hard political economic reality that we have to deal.

"Against all these challenges and complexities in our political economy, our Government sustained an economic growth in excess of 7 percent during 2006 - a further improvement from the growth of 6.2 percent in 2005. Unemployment declined to 6 percent. We have seen an export growth of around 8 percent. We have attracted overseas remittances of over 2 billion US Dollars.

"We managed to attract foreign investment in excess of 5 million US dollars - twice the level of annual FDIs in our country. Income from tourism exceeded 400 million US Dollars.

"Government revenue raised in excess of 17 percent of GDP and public investment increased to 6 percent. Inflows of official development assistance exceeded 1 billion US Dollars.

Contained budget deficit

Also recording the highest ever utilization. We contained the budget deficit to below 8 percent of GDP. Public debt as well as debt service indicators further improved. As targeted, our foreign reserves remained at around 2.5 billion US dollars.

New commitments of assistance by the international community also exceeded 1 billion US dollars during 2006. In response to the inflationary pressures that built up in the economy during 2006, we tightened our monetary and financial policies to stabilize the economy.

These gains demonstrate the resilience of our economy and people and our success in managing complex economic and political challenges.

Infrastructure network

"We give high priority to a nation-wide infrastructure network to accelerate growth in lagging regions. In this context, accelerated development in electricity, irrigation, transport, seaports and airports, and urban amenities have been identified as key priorities under 'Randora', The Government's infrastructure development strategy.

We have been able to progress on the long delayed Upper Kotmale Hydro Power Plant, the Puttalam and Trincomalee Coal Power Projects, Kerawalapitiya Power Plant, Colombo South Port, Galle Port, a new international airport, Hambantota International Convention Center, National road projects, Moragahakanda Irrigation Scheme and several other irrigation and water supply schemes.

We are working very closely with our development partners for an early completion of a four-lane Southern Expressway, an Industrial port at Hambantota, Greater Colombo Outer-circular Expressway, with several townships and Investment Zones in Trincomalee and Hambantota.

"I have also requested assistance from the World Bank and the ADB to develop the Northern Expressway, linking the North and South to create greater connectivity in support of the peace building process.

I take this opportunity to thank our development partners who helped to build the Jaffna and Trincomalee Court complexes, the Jaffna Teaching Hospital and Water Supply Scheme, Mannar, Mannampitiya and Arugambay bridges, housing roads and irrigation schemes in the Northern and Eastern provinces. Economic development is the surest way to revive these areas and provide meaningful opportunities to the people in such areas, who have suffered enough.

Development will not be wholesome or sustainable unless it is associated with a value system, respect for human rights and democracy, the culture and heritage.

Therefore, our rural development programme is essentially an initiative to empower the community itself in the planning and development process at grass roots level.

This will also facilitate and promote public accountability, transparency and local ownership in development. We need to ensure that overall development will be pro-poor but at the same time pro-growth.

Placing emphasis on roads, electricity, irrigation and water supply, housing, and livelihood assistance, we have launched the 'Jathika Saviya-Gama Naguma - country's rural development initiative within a medium-term development framework aimed at addressing problems in the lagging regions.

"My Government also places equal importance on promoting a knowledge economy to accelerate our future development. Having achieved notable successes in our Human Resource Index, Sri Lanka is looking towards a brighter future by building its economy based on productivity, skills, knowledge and technology.

Accordingly, we have continued to maintain our commitment and reoriented our policies as well as the limited resources, towards further improving education and health services.

In doing so, my aim is to take technology to villages. In this context. 'Nana Sala' an initiative to popularize computer access and my new initiative to create e-villages are designed to promote access to information to those living in distant locations.

Find democratic solution

"Our country has long endeavoured to find a democratic solution to harmonize the needs of different communities. It has a long history. Several democratic solutions have been attempted by successive Governments, since Independence.

However, such attempts have not succeeded in providing an acceptable solution. All democratic parties in Sri Lanka as well as the international community agree that terrorism is not the answer to this situation or a way to find a lasting solution. "Our country has suffered heavily from terrorism. It is encouraging to note the global recognition of the cost of terrorism, more seriously than in the 80's.

We as a country therefore work hand-in-hand with the global community to deal with terrorism, by addressing its root cause through political negotiations and constitutional solutions as well as by counteracting senseless terrorist violence on innocent people and national assets.

Our aim in defeating terrorism is to liberate innocent people who have become victims of terrorism. In such a liberation excise, we are committed to ensure that human rights are preserved and democracy is respected.

Build New Sri Lanka

"We consider that development in the North and East is critical to promote sustainable peace and to find meaningful solutions to many potential conflicts within multi-ethnic and multi-religious societies. I have no doubt that our development partners will therefore separate terrorism from a conflict in a complex multicultural society with many income and regional disparities.

I also hope that our 'Gama Naguma' initiative focusing the grass root level, will be a solid foundation to empower the community.

I therefore seek the fullest cooperation of our development partners, in our sincere commitment to build a New Sri Lanka based on the 'Mahinda Chinthana': the Ten Year Horizon, and to achieve the Millennium Development Goals, well in advance," President Mahinda Rajapaksa concluded.