Use peace dividend for inclusive growth – WB MD

Thursday, 23 December 2010 00:01 -     - {{hitsCtrl.values.hits}}

  •  Hails ‘Mahinda Chinthana Extended Vision,’ Budget 2011 and President Rajapaksa’s keenness to graduate to top 30 in the global index of Ease of Doing Business from the current position of past 100
  • Lists infrastructure development and human resource skills development as most immediate challenges
  • Expects World Bank assistance to double to over $ 400 million with Sri Lanka qualifying for greater access to finance from IBRD window in addition to soft-loan IDA programme

World Bank Managing Director Dr. Ngozi Okonjo-Iweala last week urged Sri Lanka to use the peace dividend for inclusive growth both in an economic and political sense.

“I feel the biggest opportunity for post-war Sri Lanka is using the peace dividend for inclusive growth both in terms of economic development and promotion of democracy. This will ensure Sri Lanka achieves lasting peace and prosperity,” Okonjo-Iweala told journalists on the conclusion of her first ever two-day visit to Sri Lanka last week.

She also said that there was no reason for the World Bank to look for anything other than a peaceful Sri Lanka.

However, the World Bank Managing Director emphasised that Sri Lanka also faces twin challenges – development of infrastructure and human resource skill base.

The World Bank Managing Director during her visit called on President Mahinda Rajapaksa, Central Bank Governor Nivard Cabraal as well as visited Batticaloa on an inspection tour of some of the projects supported by the multilateral donor agency.

During her visit she also announced that the World Bank’s recent creditworthiness assessment concluded that Sri Lanka is now eligible for financing from the Bank’s non-concessional window – International Bank for Reconstruction and Development (IBRD) in order to better reflect the new development ambitions of the government. This is in addition to the existing arrangement via the International Development Association (IDA) funding.

The Managing Director said that the twin window provides Sri Lanka an excellent opportunity to benefit from a significantly higher amount of resources on an annual basis based on the expressed interest of the Government.

“It is an important recognition of the middle income country status of Sri Lanka, signalling a relationship founded on knowledge sharing that complements the available financing going forward,” she added.

She also said that in the past Sri Lanka has been receiving around $ 175 to 200 million per annum and with the new recognition the country will have access to a higher pool of resources. She indicated that the Government has expressed keenness to receive World Bank assistance to the tune of $ 500 million next year.

“I am confident that World Bank assistance to Sri Lanka can be doubled as well now that the country has two windows of financing,” she said.

“For over 55 years, the World Bank has provided financing and technical assistance to support Sri Lanka’s economic development as it has grown to join the ranks of middle-income countries. The focus on existing operations and new lending in Sri Lanka is towards supporting Sri Lanka as it moves to a middle income country in lasting peace,” Dr. Okonjo-Iweala said.

As of 1 December 2010, the World Bank’s lending portfolio in Sri Lanka consists of 17 projects with total commitments of US$ 1.25 billion in a variety of sectors. In addition, the International Finance Corporation (IFC), a part of the World Bank Group, has a portfolio of $ 144 million in 10 projects among diverse sectors.

“Sri Lanka’s loan portfolio has been a good one and the Government has been upfront with counterpart funding,” Dr. Okonjo-Iweala added.

It was pointed out that access to IBRD and IDA will help Sri Lanka to achieve a good blend of concessional and non-concessional borrowing with varying repayment periods. The IDA offers a 30-year repayment option whilst IBRD has a shorter repayment lifespan of 15 to 17 years.

Sri Lanka will need lot of resources for her post-war rebuilding and flexibility of funding options will be useful.

Commenting on her visit, Dr. Okonjo-Iweala said it was “very good” and more to do with “listening, understanding and learning”.

“I must congratulate Sri Lanka and President Rajapaksa for defeating terrorism and making good economic progress and trying to move ahead to successfully overcome challenges,” she said.

The World Bank Managing Director also welcomed the 2011 Budget saying it was “credible” and commended the Government’s expressed desire of moving towards a lower budget deficit in the medium term.

“A lower deficit and fiscal consolidation will strengthen macroeconomic stability thereby empowering higher socio-economic growth. The Government is moving in the right direction in terms of lower deficits, single digit inflation which are very important for the economy to grow,” Dr. Okonjo-Iweala emphasised.

President Rajapaksa’s ‘Mahinda Chinthana Extended Vision’ was praised by the World Bank Managing Director.

“I read it personally and it is a good one,” Dr. Okonjo-Iweala said, adding that what was most striking was the vision of transforming Sri Lanka to many hubs such as maritime and logistics, tourism etc and the country endeavouring to seek different sources of growth.

“Making Sri Lanka an educational hub and transforming the country to a knowledge economy fits well some of the recent projects supported by the World Bank.”

She said that during her visit to Batticaloa, she was impressed by the success of ICT Agency’s Nenasala programme, which has got support from the World Bank.

The ‘Mahinda Chinthana Extended Vision’ also focuses on developing the infrastructure which the World Bank feels is a key challenge for post-war Sri Lanka.

She said as Sri Lanka’s growth prospects improve, it was important for the country to improve its ranking in the global index of Ease of Doing Business. “This will encourage greater investments by both locals and foreigners,” she added.

“I was also encouraged by President Rajapaksa’s remark to me that he is keen to ensure Sri Lanka moves up to the top 30 in the Ease of Doing Business Index from the current position of past 100,” Dr. Okonjo-Iweala said.

As Managing Director of the World Bank — the second highest position in the development institution — Dr. Okonjo-Iweala has special oversight for the bank’s work in South Asia as well as Africa and Eastern Europe and Central Asia.

Dr Okonjo-Iweala has been at the forefront of the Bank’s efforts to help countries hard hit by the food, fuel and financial crises. She has also, this year, been chair of the 16 replenishment of funding for IDA, the International Development Association, the World Bank’s fund for the poorest countries.

A national of Nigeria, Dr. Okonjo-Iweala has served as Nigeria’s Minister for Finance and later, Foreign Affairs Minister.

As the country’s first female Minister of Finance, Dr. Okonjo-Iweala spearheaded negotiations with the Paris Club of Creditors in 2005, which led to the wiping out of US$ 30 billion of Nigeria’s debt. She also garnered international recognition for her battle against corruption, opening the government finances to public scrutiny.

Dr Okonjo-Iweala is a member on numerous boards and advisory groups including the growth commission chaired by Nobel laureate Michael Spence.

WB welcomes higher Chinese, Indian lending if…

The World Bank last week said it welcomes higher bilateral financial assistance from China and India to Sri Lanka provided they are well used.

“We have no problem if Sri Lanka seeks greater bilateral assistance from countries such as China and India provided they are used productively for the benefit of the economy,” World Bank Managing Director Dr. Ngozi Okonjo-Iweala told journalists in Colombo last week.

She was responding to a question as to how the World Bank sees the Sri Lankan Government’s decision to seek higher aid from bilateral partners as opposed to relying on multilateral donors such as the World Bank and the Asian Development Bank.

“If Sri Lanka wants and if bilateral partners want to extended support, then why not?” Dr. Okonjo-Iweala queried, adding, “It is good provided such assistance is well used.”

She also said that the World Bank’s current Sri Lankan portfolio of US$ 1.25 billion was well used and performing with ready counterpart funding on the part of the Government.