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| Sunday, 15 May 2005 |
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Eye-opener for future development strategies by M. P. Muttiah More than 40 bilateral and multilateral donor agencies including the World Bank, International Monetary Fund and more than hundred government representatives will participate at the Sri Lanka Development Forum that begins tomorrow in Kandy. This is the first time this Forum is to be held in Sri Lanka. This forum will be a platform for Sri Lanka to present its future development strategies for donor's review. Sri Lanka's first Development Forum was held in May 27, 1998 in Paris. This forum is a successor to the Paris Aid Group or Paris Club that consisted of 19 creditor countries and the international financial agencies which usually met either in Paris or Washington. Sri Lanka received US$ 860 million in 1997 and $780 million in 1998 from donor countries. At the second forum held in Paris on December 18, 2000 President Chandrika Bandaranaike Kumaratunga, as the Finance Minister, submitted Sri Lanka's point of view for more credit. However, the Vice Chairman of the World Bank's South Asian Desk Mieko Nishimizu stressed that the Sri Lankan government had to implement the Bank's proposed framework before the 'development partners' would support Sri Lanka 'with knowledge and experience' and if necessary and appropriate additional financial resources. Nishimizu's comments were underscored by a European Union statement to the forum, stressing the necessity of a negotiated end to the war and further economic restructuring. The prospects of good economic performance in the long-term requires, the determined point of indispensable reference and of good governance as well as the introduction of simplified government procedures together with the restoration of peace. The third forum was held in Japan in 2003 after the Ceasefire Agreement and Memorandum of Understanding between the government and the LTTE. This forum focussed much on the rehabilitation and reconstruction of the war-torn North and East. The present Forum which will begin tomorrow is considered an important one. The development strategies drawn by the government and the donor agencies had been shattered with the tsunami disaster. Sri Lanka has been hard-hit in terms of loss of life, infrastructure and economic assets. Official estimates are that more than 31,000 people were killed and approximately 6,300 missing. The estimated number of displaced stands at 443,000 while the affected population is estimated to be one million. Therefore, the government will place its new strategies at the Forum not only for the development of economy but also for the post-tsunami reconstruction and rehabilitation. Among other things are the proposals for reforms for high growth and poverty alleviation, monitoring, implementing, governance and peace initiatives. The significance of this forum is its wider participation. The foreign delegations would be able to see for themselves the progress made in the country in the post-tsunami period. The other important factor is that wider sections of the society, including trade unions and NGOs would be able to participate at the forum. The World Bank in its report 'Sri Lanka Development Forum, the Economy, the tsunami and Poverty Reduction' says that the budget deficit remained at around 8 per cent of GDP and money supply growth accelerated to about 20 per cent. Poverty incidence in urban areas was halved to 7.9 per cent while rural poverty declined by less than 5 percentage points (to 24.7 per cent) and poverty in the estate sector actually increased to 30 per cent. The service sector has been on the incline during the past three years growing by over 7 per cent. Foreign Direct Investment also rebounded to US$ 230 million in the last two years. With regard to the financial requirements to assist in the humanitarian and reconstruction effort, the report says: 'Although, the levels of commitments are substantial, there remains some uncertainty regarding the timing and magnitude of actual assistance' At the end the World Bank Report says: 'In summing up, the government has taken positive steps towards boosting growth, protecting those affected by the tsunami, and maintaining relative peace. As it embarks on finalising its poverty reduction strategy, it is hoped that equal emphasis is placed on raising investments and on addressing the remaining policy constraints. Efforts need to be stepped up to strengthen the macro-economic environment, address behind the border barriers including road and power infrastructure and labour regulations, and revamp the rural economy towards faster growth and more rapid poverty reduction.' |
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