More ADB funds for North, East

The Sri Lankan economy recorded a 4.5% growth rate this year against 3.5% forecast by the IMF, Asian Development Bank said last week. Addressing the media ADB country director Richard Vokes said that the recovery of the global economy together with new opportunities in the post-war era Sri Lankan economy expects a 6% growth rate in the next year. Sri Lankan economy was affected by the global economic crisis and global recovery will help Lanka’s economic growth.

Expansionary policies such as bail out packages in the developed countries have started to work. Despite some issues such as recent crisis in Dubai global economy is recovering, he said.

End of the war has opened new opportunities and the situation will help to attract foreign investments and tourists. Already there are positive signs in these areas.

Reconstruction and rehabilitation of North and East is one of the key area where the government expects donor assistance. Government has a three year plan to rehabilitate the North and the East.

Over the next three years 60% of ADB assistance will be utilised on North and East where ADB will provide US$ 350 million, Vokes said.

During 2009 ADB has provided US$ 330 million credit for three important infrastructure projects in Sri Lanka; US$ 160 million for the Clean Energy and Access Improvement Project, US$ 70 million for Eastern and North Central Province Road project and US$ 100 million for the Greater Colombo Waste Water Management Project.

Road sector continues to be a key sector receiving support from ADB. Recently completed projects include; Road Network Improvement Project (RNIP) which was completed improving 309 national roads and 77 bridges.

In addition, the RNIP supported the rehabilitation of about 450 Km of national roads and provincial roads. Under the Road Sector Development Project (RSDP) nearly 800 Km of provincial roads were completed. Lead economist of the ADB Narhari Rao said that economic prospect of Sri Lanka is positive.

Investor confident has been boosted after the end of the war, inflation and the balance of payment position are favourable. The stock market is performing very well. From the third quarter this year economic growth has picked up. Agriculture as well as industries and service sectors are also growing, he said.

Inflation has come down from 20% to 4% as a result of the tight monitory policy adopted by the government. Recently government relaxed the monitory policy by cutting rates and reducing reserve requirements.

The performance on the fiscal front was not as good as we expected. IMF expected the budget deficit to reduce 7% of GDP which could not be achieved and the next year will be a testing year. The budget deficit target for 2011 is 5% of GDP and if this target is achieved it will create a very positive impact on the economy, Rao said. GW