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Two international funding efforts for rehab work
Sri Lanka, with the help of international partners, is planning to hold two international conferences aimed at raising funds for emergency needs and long-term requirements, Economic Reforms Minister Milinda Moragoda said.

He told the Sunday Times FT that the first conference - likely before December - would be convened by Norway and focus on urgent priorities not only in the north and the east but also the south.

"We are looking at a meeting, organised by Norway, outside Sri Lanka to discuss quick impact projects which are a priority in these areas. What is required is donor aid in small sums - not large ones - for priority needs like maybe education, housing or even water," he said.

The bigger conference discussing long-term needs and which require bigger funding is planned for sometime next year, noted the minister who returned last week after meeting several ministers and senior officials in the US and Britain in a bid to garner financial support for Sri Lanka's rehabilitation and reconstruction needs.

The two meetings are expected to be at ministerial level. Earlier officials said the US and UK are among 10 countries expected to take part in the international conference on Sri Lanka's emergency needs. The meeting will be held ahead of the Paris Development Forum meeting - jointly chaired by the World Bank and the government - due in December.

Gulf war could hurt economy
American military action against Iraq could have a serious impact on the economy if it sends oil prices soaring and disrupts two of the island's key foreign exchange earners - remittances from overseas workers and earnings from tea exports.
War in the Gulf could also divert world attention with the possibility that Sri Lanka might lose the 'window of opportunity' that has opened up with the peace talks and raised hopes of massive foreign aid and investment to rebuild the economy, a senior minister and economists said.

Economic Reforms Minister Milinda Moragoda, who is also a key member of the Sri Lanka team for peace talks, said the uncertainty could hinder efforts to seek international aid to rebuild the country.

"We need to mobilise international support as quickly as possible because of international uncertainty over the Iraq situation," he said. The US has threatened to attack Iraq, topple Saddam Hussein and destroy his weapons of mass destruction An oil price hike as a result of war would stoke inflation and could have a ripple effect on the entire economy in Sri Lanka, economists said.

"It would have a multiplier effect on the economy," said Dr. Muttukrishna Sarvananthan, a Research Fellow at the International Centre for Ethnic Studies. He said it was still too premature to predict with certainty the impact of a war in the Gulf.

"It would have an all around impact. The inflationary impact would be severe. All costs would rise, particularly in agriculture and even in industry, as well as in transport."

Given the island's total dependence on oil imports, a price hike would have a tremendous impact on the balance of payments and possibly disrupt the fledgling economic recovery.

"Our balance of payments is still quite fragile since the crisis of 2000," Sarvananthan said. "Also, our exports are still quite poor." The uncertainty alone over the possibility of American military action against Iraq could have its own effects. Sarvananthan said that Sri Lankan workers in countries near Iraq, such as Kuwait, might want to return if they feared being attacked. Ceylon tea exports might also be affected if shipments were disrupted or costs rise if longer routes had to be used as a result of maritime warfare.

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