| News |
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| Vote
of confidence but implementation the key
Sri Lanka's political and economic processes got a vote of confidence last week with donors pledging a sum of US$ 4.5 billion towards development of the whole country including a massive rehabilitation and reconstruction programme in the northeast. According to newspaper reports, media attention and the perception in the private sector, this is the largest amount of foreign aid pledged to this country. Or is it? "Its not a big deal," argues a Central Bank economist, who declined to be named. "If you annualize the quantum of aid received in the past 10 years or more (even during Ronnie de Mel's time as finance minister), the country has been getting about $800 million a year which works out to $3.2 billion over a four year period which is the period in which last week's commitment was made." Officials have said in the past that these funds represent aid to the entire country and is not confined to any particular region. World Bank Country director Peter Harrold told the annual sessions of the Sri Lanka Economists Association, two weeks ago, that 20 percent of the aid would go to the northeast while the balance would be for the rest of the country. This is an old ratio of disbursement except that in the past, northeast development didn't take place and the money was unutilized. The Central Bank economist also pointed out that last week's pledges include the World Bank's April announcement of US$800 million in the form of grants and interest-free loans and the IMF's already-announced $500 million under the Poverty Reduction Growth Facility (PRGF). The economist and private sector officials stressed the need for transparency and accountability in the utilization of these funds, particularly because the present government was also falling into the trap of raising a lot of hype about getting so much money while there is little or no information about the quantum in terms of grants and low-interest or interest free loans. That's another issue. During the times of the much-hyped up World Bank-organised donor meetings during Ronnie de Mel's times and upto the mid-1990s (they are no more pledging conferences but annual development forums), governments boasted about the amounts secured at these meetings and they were essentially "WE DID BETTER THAN THE FORMER REGIME" type of political messages. But what wasn't analysed then was how these numbers (of $800 million or less) at each donor conference were arrived at. In some cases - or often for that matter - donors re-pledged sums that had been committed before when projects were ongoing for three to four years. For example an amount of $40 million pledged by a donor in a particular year - say in 1992 and included in that year's total which the finance minister would come back and proudly announce - would be brought back in a commitment made the following year if the project is ongoing. Which meant that commitments for instance in 1994 would include pledges made in 1992 and so on. This also illustrates the lack of transparency, obviously for political reasons, in providing details to the public about the amounts pledged. The same should not happen now in an era when the government has promised transparency and accountability. The media is also partly to blame for raising expectations of foreign aid "seen ending all the problems in this country" through eye-catching headlines or sunshine stories like "a massive dose of foreign aid" or the conference being a tremendous endorsement of support from the international community and so on. Praise is okay as long as it is balanced with objectivity and connected to ground realities as to whether the money trickle down to the poor. "The money should not only trickle down to the poor ---- they should get large doses of it," says Nihal Abeysekera, president of the Federation of Chambers of Commerce and Industry of Sri Lanka (FCCISL). "It is vitally important that we get it right this time. We missed the (development) bus in the 1950s. The bus has come again … we should not miss out this time. Making sure the rural poor benefit from donor support is essential and there should be transparency in the way things are done," he added. The government also needs to pay more attention to its biggest donors like Japan and the ADB, who are providing far more than the US and the World Bank. The ADB has committed $1billion compared to the World Bank's $800 while the US contribution of $54 million is nowhere near the Japanese input of $1 billion. In Sri Lanka
however the US has made sure it has a bigger say in the peace process,
the economy, trade and investment. Having said that the World Bank,
ADB and to some extent, Japan and the EC are also driven by US interests
and hence the latter's contribution to the total $4.5 billion of
donor aid may be indirectly much higher. The private sector is also enthusiastic about the Regaining Sri Lanka Programme and the Needs Assessment and sees it (private sector) playing a crucial role in the development of the country. Civil society concerns have been raised about the lack of inclusion in the consultative process when the Needs Assessment study was being done in criticism that has been endorsed by Ports Minister Rauf Hakeem. "Civil society views didn't come in as the Needs Assessment consultative process and study was rushed through in six months. The Muslims too had some concerns which didn't get into the document," he said adding however that was an evolving process and "I am sure multilateral agencies would be flexible in the approach during implementation" He said the development agency (announced by the Prime Minister) which would be responsible for disbursing the aid would be a public-private sector partnership. One must not forget the LTTE equation in the development process. Donors are seen tying up aid disbursements to progress in the peace process which implies that if there are no peace talks, aid wouldn't come in. Economists however note that this would apply only in mega projects in the northeast since funding for projects like the southern highway, power sector reforms and other southern infrastructure are already on stream and would continue irrespective of peace talks.
He called for the formation of a bipartisan committee of political parties, NGOs and civil society representatives to oversee the disbursement process suggesting that the committee should meet once a fortnight and review progress. Abeysekera praised the work of former John Keells chairman Ken Balendra, who is heading a government unit finding ways of speeding up disbursements of foreign funds, and retired civil servant R.S. Jayaratne, also in the same unit, and called for a strengthening of this unit. Tissa Jayaweera, a Colombo businessman who attended the Tokyo meetings, complained about the time given to chambers and the business community to prepare for the business forum. "Some of the big chambers were sent invitations to attend just 10 days before the event," he said adding that the Japanese chamber officials were probably working on this at least six months ago. Jayaweera, a member of the FCCISL executive committee, also raised the common issue of implementation and said the problem would come from line ministries and officials who would want their commissions! Hemaka Amarasuriya, chairman of the Singer group, emphasized the need for the government to set targets, goals and mileposts like successful Asian countries if these monies are to be disbursed and used quickly for the benefit of the people. "This is a tremendous boost to the economy and will create more liquidity in the money supply chain. It is also a challenge for the private sector," he said adding however that there is a need for faster implementation rules and cutting across red tape. "Ministers should also be held responsible and accountable for faster implementation of projects." Renton de Alwis, a former CEO of the Ceylon Chamber of Commerce and Chairman, Sri Lanka Tourist Board who is now managing a consultancy business, said when the private sector is given the ask of expending donor funds, it takes on a larger social responsibility than when funds are raised from private sources. "We need to be mindful that the ownership and the responsibility for the repayment of these funds fall on all of the people of Sri Lanka. Most in the private sector I believe need to redefine their business philosophies and work with a somewhat different mindset." Economists'
viewpoint He said policy reforms would create an enabling environment for investment, pointing out also to the lack of attention paid to industry - especially SMI's - in the current process. He said unemployment in five districts have risen to 15 percent compared to 2-3 percent a few years back because local industry is crashing due to being uncompetitive. "How can you expect local industry to survive if they have to get loans at 25 percent compared to single digit levels in Asia, high power and telecommunication rates, etc?" he asked. Muttukrishna Sarvananthan, an economist attached to the International Centre for Ethnic Studies (ICES), reckons the quantum of aid announced at the donor meeting was positive and more than what Sri Lanka had bargained for. However he also pointed out that this is a public relations exercise by donors to send a signal to investors that they endorse Sri Lanka's peace process and economic developments. "This
doesn't mean we would get all this money. Take Afghanistan for instance.
It hasn't got all the money pledged at a donor meeting in Tokyo
(last year)," he said. CIVIL
SOCIETY concerns Late last year, NGO workshop called to include the views of the disabled in the government's poverty strategy paper is told that the paper has already been prepared. An official from the Planning Ministry involved in the process tells participants they can submit their views for inclusion. But none of those views coming from the handicapped were subsequently entertained. Rural participants at another poverty conference called by UNDP are given the same message - the poverty strategy document has been completed but views could still be expressed. Which ultimately didn't happen. Civil society groups complain that the views of the poor are often ignored in the formulation of policies and designing of projects for them. And as our story shows, a government minister also acknowledges that civil society was not consulted in the Needs Assessment process. There is little attention paid to agriculture and fisheries - which represents 80 percent of activity in the northeast - in the new proposals. Jayanandan Joseph, a 58-year old peace coordinator in Jaffna, stresses that while the donor summit is an important event it is essential that the people are the ultimate beneficiaries. The efforts to revive the economy would only succeed if schools are rebuild, children are able to learn, unemployment is reduced and women given their due place, he said. "There is a heavy concentration on infrastructure and focus on big investment aimed at generating jobs and alleviating poverty but where is the attention to traditional livelihoods?" asks Nimalka Fernando, a rights activist and chairperson of the Tokyo-based International Movement Against Discrimination and Racism (IMADR). "In such a case what are we regaining in Sri Lanka if the livelihoods of the people are being taken away," she said. Sunil Bastian, a director at the Centre for Policy Alternatives (CPA) and a social scientist, argues that the basic preoccupation of the "Regaining Sri Lanka" document is the objective of achieving a 10 percent growth rate.Bastian said though he was not opposed to economic growth, the focus on economic growth alone was not enough. Neelakandan Kandasamy from the Centre for Human Rights and Development says donors have their own agendas and focus on peace campaigns without providing resources for human rights and good governance. "There is no proper allocation of resources." |
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