Sri Lanka to spend 253 billion rupees for development of Northern Province

May 20, Colombo: Sri Lanka plans to spend over 253 billion rupees within the next two years to develop the war-torn Northern Province, most of it on improving economic infrastructure, the Central Bank revealed.

In a presentation at the 60th Anniversary Oration Friday on ‘Promoting Financial Inclusiveness in the North and the East, the Experience of the Past Two Years’ the Governor of Sri Lanka’s Central Bank Ajith Nivard Cabraal highlighted the need to develop the conflict-affected Northern and Eastern provinces.

In 2011 alone, the government has planned major investments in the North worth 50.93 billion rupees, nearly 40 percent of that for the development of National, Provincial, and Rural Roads.

The estimated cost of development under the government’s Northern Spring plan from 2011 – 2013 amounts to 251.583 billion rupees.

The Governor said the effects of the “War on Terror” were felt, not only in the North and the East, but also by the entire economy.

Cabraal revealed that Sri Lanka faced well-disguised, but serious “economic interventions” to indirectly pressurize Sri Lanka to halt or dilute the final humanitarian effort.

He cited the threat of withdrawing European Union tariff concession GSP+ facility at sensitive times and the deliberate delay in the approval of IMF-SBA in March/April 2009 as examples of such attempts.

However, he said the cost of Sri Lanka’s “War on Terror” was a vital investment as Sri Lanka spent only about 4% of its GDP per annum on defence over the 4 years, 2006 to 2009 indicating the restraint and thrift in waging the counter terrorism effort.

The Governor pointed out that when the war ended in 2009, the education and health services were at a basic level in the Northern and Eastern Provinces and roads, highways, and railways were virtually non-existent in many parts of the Provinces.

Transport facilities were marginal and banking and financial services were highly limited, in the region, he pointed out.

The government’s programs to develop the two provinces include rapid de-mining, speedy resettlement of the displaced, quick restoration of livelihood, extensive infrastructure restoration, and upgrade, sustained investment in the North and the East and new initiatives by the Banking Sector.

As a result, the two provinces in 2009 have recorded the highest nominal growth rate of all provinces, at 14.1%. Although on a low base, it is encouraging, the Governor noted.

“From the Central Bank’s point of view, our main challenge was the quick restoration of livelihood while ensuring Financial Inclusiveness in the North and the East,” he said.

Under this goal many vocational training centers have been established by both public and private organizations.

To promote agriculture, restrictions on fishing have been removed and a large number of boats, motors, and nets have been distributed to the fishermen in North and East. Thousands of cattle, goats, and poultry have also been distributed to households.

In the financial sector a large number of new bank branches have been established and the existing ones in the North and the East have been re-established. The Central Bank has started several new credit lines and added to the existing schemes in the North and the East to assist the people to get back on their feet, the Governor said.

Reminding that in 2010, the Sri Lankan economy recorded an impressive overall growth of 8%, a significant increase from the average 5% seen over the last decade, Cabraal said the Government and the Central Bank are focused on ensuring that the benefits of rapid economic growth percolate down to grass root levels.

He highlighted that poverty in the country has come down to 7.6% in 2009/2010 from 15.2% in 2006/2007, as per the Poverty Head Count index.

The head of the Central Bank expected the range of investments made in these Provinces to result in a growth rate of around 13% per annum in these Provinces, from 2011 onwards for the next 5 years.

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