Sri Lanka asks World Bank to fund highway to Jaffna

Sri Lanka has asked the World Bank to fund a highway to the northern Jaffna peninsular, which is now cut off from the rest of the island by a stretch of land held by Tamil Tiger guerrillas, a top official said.

The A-9 highway starts from Kandy in the central part of the island and goes to Jaffna town in the north.

“We have asked the World Bank to fund the A-9 highway,” Treasury Secretary P B Jayasundera said Tuesday at the launch of the annual report of the country’s Central Bank.

“We do not need money to reduce poverty. We can do that ourselves. But we need money for infrastructure.” Jayasundera said Sri Lanka now had a per capita gross domestic product (GDP) of 1600 US dollars putting it in the middle income category and the country was now making its own decisions.

“On energy subsidies, we have challenges,” Jayasundera said. “We can be proud that bold decisions had been taken.”

“We have removed the wheat subsidy. Its benefit is not just to the budget but it gives productive sectors a chance to produce our own goods.”

Last month Sri Lanka raised power tariffs by around 30 percent and has started to raise fuel prices more often. Over the last year Sri Lanka has been cutting energy subsidies begun in 2004 when the country jettisoned a donor backed economic reform programme and the country slipped back to high budget deficits and high inflation.

Jayasundera said one aid agency was taken aback to discover that it was falling behind in becoming in the ranks in financing the country as new lenders were coming to give money to the country.

China has emerged as a major new player financing a large coal power plant and a port in Southern Sri Lanka. Jayasundera said the aid agency in question had said that it had to re-look at their programme because other countries were giving money.

“The institution no longer has the power,” Jayasundera said. “For the southern area other countries are giving money. So foreign agencies have lost the control they once had.”

(LBO)