US$ 40 m from ADB for drought assistance

The Asian Development Bank (ADB) has agreed to provide US$ 40 million worth of assistance to Sri Lanka’s drought hit regions to provide water for nearly 500,000 people.

Cabinet approval has been given to accept the ADB assistance following a Cabinet paper presented by President Mahinda Rajapaksa on Wednesday, Cabinet Spokesman and Media Minister Keheliya Rambukwella said.

“The project is expected to complete a water and sanitation project in the drought-hit areas and will assist over 453,000 people,” he told reporters.

A severe drought has affected over a million people in the north central part of the country in what is said by experts to be the worst drought in over two decades to hit the island.

The lack of water has also destroyed an estimated 100,000 acres of paddy, which produce rice – Sri Lanka’s staple dish. Agriculture experts have already warned that loss of such a large stock of rice could cause severe shortages later in the year and would drive up the cost of living.

Tea exports, Sri Lanka’s highest foreign exchange earning crop, have also dropped to a three-year low due to adverse weather conditions. Energy Minister Champika Ranawaka has also warned of severe power shortages if rains do not arrive soon.

The Government has already allocated US$ 2.7 million (Rs. 3.7 billion) to assist the drought-affected, but has come under pressure from farmers who are not seeing any difference on the ground.

The Central Bank last week downgraded Sri Lanka’s growth target from 7.2 per cent to 6.7 per cent due to supply issues brought on by the drought.

However, Finance Ministry Secretary Dr. P.B. Jayasundera in a subsequent interview stated that he expected growth to be as low as 6.5 per cent.