Foreign Aid & Sri Lanka's Military Expenditure
Sri Lanka Aid Group Meeting
Paris, February 7, 1992
Statement by the Delegation of the Commission of the
Mr Chairman, Ladies and Gentlemen
I would like to join in the appreciation of the well-prepared, constructive and
also critical World Bank report which has been presented for this meeting. I
would also like to thank the Sri Lankan delegation headed by the Honourable Mr
Wijchunga for the informative and encouraging statements on the government's
commitment to reforms, an open market economy and human rights.
It is with satisfaction that the Commission has noted the achievement of the Sri
Lankan economic reforms centered around a rationalisation of the public sector,
privatisation and improved private investments. However, it is equally
important to note that the achievements are still fragile and need to be
reinforced through the continuation of firm and coherent policies. The
weakness in the financial sector and in macro-economic management raises well
founded concern. The bold commitments of the Sri Lankan government to reforms
need to be maintained and intensified so as to keep the progress intact. In
addition it is hoped that the positive achievements can be strengthened through
a political dialogue within Sri Lanka, facilitating the task of applying
available financial resources most effectively and enhancing productive
opportunities all over the country in support of the development process.
Sri Lanka has continued its positive trade development with the European
Community using successfully the evolving European single market in
strengthening and diversifying its exports. However, maintaining competitiveness
and especially continuously improving product quality are crucial elements in
penetrating the very sophisticated and demanding EC market. As concerns
development aid, the Community has continued to support rural development
through the combination of direct grant aid and use of food aid counterpart
funds. Cofinancing projects with non-government organisations represent also a
recognised important way of supporting development. The successful repatriation
of Sri Lankan people caught in the Gulf crisis can further be mentioned.
The cofinancing, with the World Bank, of the National Irrigation Rehabilitation
Project has been the most important new project decided in 1991, especially in
view of its transfer of responsibilities for management, maintenance and project
sustainability to the use groups.
In addition implementation of the on-going activities consisting of Mahaweli
system projects, the pilot village development programme under Jana Saviya, and
minor irrigation in the North Western Province will be pursued and strengthened.
As already mentioned in other recent aid group meetings, new guidelines for
Community co-operations with the developing countries in Asia and Latin America
have been adopted. It establishes an overall framework of co-operation for
1991-1995 with a financial volume of grant aid of 2.75 billion Ecus/3.5 billion
US$ (1 Ecu = 1.28US$). This EC aid is made available through annual budget
allocations and Sri Lanka competes on equal terms for these resources with other
developing countries in Asia, based on quality of projects, effectiveness in
project implementation, etc. It can be noted that the EC development aid centres
around support for the rural sector in the broad sense of poverty alleviation
environmental protection, fight against drugs and AIDS, and human and structural
dimensions of development.
In addition, special and increasing attention is given to economic co-operation,
providing technical assistance and facilitating transfer of technical know-how,
serving mutual interest between economic operators in the EC and the Asian and
Latin American countries. It is very much in line with the favourable trend to
rely on private sector initiatives as an important vehicle for self-sustaining
development. In this context, let me underline that Sri Lanka is a strong
candidate to benefit from the special EC Investment Partner Scheme which is
designed to promote private investments through joint venture activities. A
total amount of 34 million Ecus or more than 43 million US$ is made available
alone for supporting such activities in 1992.
However, to fully take advantage of these mentioned opportunities it is
essential that the government of Sri Lanka firmly continues its policies of
economic transformation and pursue every possible step in reconciling internal
differences, working for progress within a clear commitment of respect for human
rights. The Commission's representative in joining Community and the EC
member states expressed positions is referring to the joint statement made by
the UK delegation in the capacity of representing the EC Council Presidency.
Finally let me state that the EC will continue to be a constructive partner,
using its various instruments in assisting the government of Sri Lanka's efforts
of improving the living standard of the population.
Thank you Mr. Chairman.