World Bank gives mixed rating for Sri Lanka

The World Bank last week gave a mixed rating for Sri Lanka for over its challenges and opportunities for growth.

The Bank’s Managing Director Graeme Wheeler who was in Colombo last week said that Sri Lanka has tremendous opportunities for growth but also equally faces major challenges.

Following are excerpts of Mr. Wheeler’s comments at the media briefing last week. “My visit to Sri Lanka, although brief, has been valuable. I have had the opportunity to meet and speak with many Sri Lankans in both villages in the North and here in Colombo. This has been especially rewarding and has helped me gain a better understanding of both the challenges the country is facing and the great potential it has.
Conflict

Over the past two days, I have witnessed first hand that the environment in which Sri Lanka must pursue its development is extremely challenging. As the World Bank has said previously, the conflict remains a major obstacle to Sri Lanka achieving its full potential. My interactions over these days have reinforced my view that the conflict is an enormous burden on both the Sri Lankan people and the country’s longer term economic prosperity. In particular, I was saddened to hear many stories from the communities and people I visited about the daily challenges they face in trying to return to normal lives. I also heard stories that echo the concerns expressed recently by our United Nations colleague, Louise Arbour. Specifically, the large number of reported killings, abductions and disappearances, and weaknesses in the rule of law are alarming.

Having said this, I am nevertheless encouraged to see that the government’s partnership with the World Bank is providing not only physical reconstruction and assistance in conflict-affected communities, but also helping to repair the fragile social fabric that has been so badly damaged by the conflict. During my visit to Vavuniya, I met many villagers who are rebuilding their homes, livelihoods and lives. These programmes are being implemented in a manner in which discrimination, exclusion, and gender inequality are being minimized, and communities and individuals are being empowered. However, there is still much to do in this respect.

The goal should be to ensure that all communities in Sri Lanka are able to live together harmoniously and build a better future.

We recognise that Sri Lanka’s northern and eastern regions have long been excluded from economic growth and the development experienced in much of the rest of the country. The current situation in the East provides an opportunity to implement much needed development activities in a manner in which the people are included and involved in the process, and results on the ground are shared equally by all ethnic groups. The government is currently compiling a plan for the reconstruction of the East.

I urge it to develop a plan that incorporates these characteristics. I understand that many communities still feel insecure and are hesitant to invest heavily in their future. To ensure that such feelings are short-lived, it is important to complete the transition from military to civilian control at the earliest opportunity, so that effective and sustainable development activities can be more successful.

Assistance strategy
The World Bank is currently working with the government on an assistance strategy for the next four years. I would like to assure you that the World Bank will remain engaged in Sri Lanka, including assisting the efforts to reconstruct the East and other conflict-affected areas. The Bank’s engagement will be carried out in a ‘conflict sensitive’ manner, whereby both the causes and consequences of the conflict will be addressed as much as possible in all our activities.

Looking beyond the conflict, Sri Lanka has tremendous development opportunities. The Asian region is likely to drive global economic growth for many years to come. With sound economic management, and strong trade and investment linkages, Sri Lanka would be well positioned to be able to take advantage of this dynamism. But, there are major challenges. Inequality between the greater Colombo area and the rest of the country is increasing. In addition, Sri Lanka’s economic growth is slowing and it needs to address important macroeconomic imbalances.

The rate of inflation is approaching 20 percent, and the government budget deficit and debt levels are too high. The World Bank is happy to be Sri Lanka’s partner in helping to address these issues.
In closing, I would again like to emphasise the vital need to seek a political solution to the conflict as soon as possible. This is critical in order to achieve greater prosperity for all Sri Lankans.