Govt. to invest Rs. 251 b in North

The government will invest Rs. 251 billion in the North from 2011-2013 with 50.9 billion planned for 2011 alone. In the East, Rs. 116 billion had been invested from 2006 to 2010 while in 2011 Rs. 26.6 billion of investments are planned for the East, said the Governor of the Central Bank Ajith Nivard Cabraal.

He said that the former war-torn areas of the Northern and Eastern provinces have shown the highest nominal growth among all regions after the end of the 30-year war and the momentum is expected to continue. The war in the north ended in May 2009, but military activities in the Eastern province ended earlier.

The Governor of the Central Bank said that under fast-tracked processes 38,277 loans to the value of Rs. 4,097 billion had been disbursed in the Northern Province while 26,577 loans to the value of Rs. 2,170 million disbursed by private and state banks. The Governor said the state was investing billions in the Northern and Eastern Provinces to improve infrastructure in sanitation, water supply, power, roads, irrigation and health which will help sustain growth for years to come. The Governor said that in 2009 the Northern Province had grown by 14.1 percent in nominal terms, which was the highest among all provinces, followed by the East at 14.0 percent.

The contribution to overall gross domestic product had increased to 3.3 percent in 2009 from 2.8 percent in 2006 in the North.

The contribution to the country’s GDP by the Eastern Province had increased to 5.8 percent in 2009 from 4.9 percent in 2006.

Cabraal said that the investments made in these provinces will result in a growth of around 13 percent per annum from 2011 onwards for the next five years.

Cabraal said that the Central Bank had intervened to provide ‘financial inclusiveness’ to the population in the North and East just as the war ended as plans were ready six months before the end of the war. He said lack of access to basic services such as savings accounts will reduce savings, undermine financial planning and reduce investment.

The Governor said that from May 2009 to May 2011, 37 bank branches and 22 extension offices had been opened in the Northern Province and already there are 195 Bank branches and extension offices in the East and 144 in the North.

HSBC and Indian Bank too have opened branches.

The Central Bank had also initiated several re-finance schemes for banks to lend to people who were badly in need of credit, especially war refugees.

He further said that the Central Bank has also stepped into guarantee loans where applicants could not immediately prove ownership and the loans were small and given to individual farmers, fishermen and other people badly affected by the 30-year war. The idea was to give loans as fast as possible when the people needed it most to re-start cultivation or buy boats after fishing restrictions were lifted.