Record foreign aid in 2008

by Uditha KUMARASINGHE

The total foreign aid commitments and disbursements obtained by Sri Lanka in 2008 had been the highest recorded in history.

The total commitments had increased to US$ 2,067 million in 2008 from US$ 1,674 million in 2007 showing a 23.4 percent improvement. The disbursements had reached US$ 1,226 million in 2008 recording an increase of 8.7 percent compared with 2007, according to the 2008 performance report of the Department of External Resources.

This is a clear indication that key bilateral and multilateral agencies and foreign countries have placed their utmost confidence in the Government and provide massive financial assistance to Sri Lanka owing to the sound economic policies adopted by the present Government.

Complying with the development targets identified in the Governments Development Framework 2006 to 2011, the Department of External Resources has diverted the foreign financial assistance towards the improvement of infrastructure in the country paving the way to mitigate regional differences and generating nationwide economic benefits.The proportion for infrastructure development in the total foreign financing commitments had increased to 77 percent in 2008 from 70 percent in 2007, depicting the strong commitment of the Government to fill the infrastructure gap in the country, the report said.

In 2008, the total commitment made by multilateral and bilateral donors as well as export credit agencies was US$ 2,067 million. The multilateral agencies had provided 24 percent of the development assistance while bilateral donor agencies contributed 37 percent. The remaining 39 percent was provided by export credit agencies. The total development aid from multilateral agencies was US$ 495 million. The amount contributed by bilateral donors was US$ 761.3 million while the total amount raised from the export credit agencies was US$ 810.8 million.According to a Finance Ministry spokesman, the Asian Development Bank (ADB), Japanese Government and the World Bank were the main donors that reported higher disbursements in 2008. These donors had disbursed US$ 714 million or 58 percent of the total disbursements. The ADB had disbursed US$ 290 million mainly for projects on roads, water supply, power and port sectors. The Colombo Port Expansion Project, Secondary Towns Rural Community Water Supply/Sanitation Project and Southern Expressway Project were the main projects which reported higher disbursements in 2008.

The Japanese Government had disbursed US$ 279 million mainly for the Southern Expressway project, Upper Kotmale Hydro Power Project, Provincial Road Improvement Project and Walawe Left Bank Irrigation Project. The World Bank had granted US$ 144 million mainly for the Road Sector Assistance Project, Gami Diriya Project and North East Housing Reconstruction Project.

Meanwhile, the Iranian Government, as a new bilateral development partner has extended an export credit facility of US$ 450 million for the Uma Oya Hydro Electric and Irrigation Project.

The Iranian commitment represents 55.5 percent of the export credit and 22 percent of the total commitment in 2008.

Based on the existing portfolio and the expected foreign financing of US$ 4.6 billion for 2009-2010, the total foreign financing available for utilisation in the medium term would be around US$ 10.3 billion, he said.