Future foreign financing to be sourced in line with development priorities: PM

• Public investment financing strategy to utilise domestic funds as much as possible
• Foreign financed projects have grown exponentially with significant number of projects worth more than $ 6 b showing slow progress

Prime Minister Mahinda Rajapaksa

Prime Minister Mahinda Rajapaksa said yesterday future foreign financing will be sourced in line with the priorities and strategies of the development clusters.

“A key aspect of the public investment financing strategy is the utilisation of domestic funds as much as possible to support the implementation of the development of national infrastructure, providing access to the rural economy,” he said.

He said that while the number of programs, implemented annually with foreign financing, has grown exponentially over the years, a significant number of projects worth more than $ 6 billion shows slow progress.

He said the main deficiencies include deviation of the projects from national requirements, and frequent cost and time escalations resulting in low returns and as a result, an increase in the foreign loans as well as the increase in debt services could be observed.

The Prime Minister said that while acknowledging and appreciating the support of the donor agencies, the Government has given priority to realign or reallocate those loan funds in line with the priorities identified in the ‘Vistas of Prosperity and Splendour’ socioeconomic development program. “The planned annual utilisation of foreign loans as agreed with the World Bank, Asian Development Bank and Japan International Cooperation Agency alone is approximately $ 1,400 million. In addition, it is expected to obtain bilateral development loans of approximately $ 400 million,” he said.

The Prime Minister added that since most of these projects have very little import content and requirement, this measure will also have a positive impact on foreign currency management.

“Apart from requirements to service foreign loans, acquisition of technological and special requirements, almost 65% budgetary allocations will be utilised for domestic expenditures. To ensure better coordination and also to reduce costs, the foreign financed projects will be implemented as part of the ongoing activities of the Institutions while limiting the establishment of project offices and also the costs on foreign consultancies,” he added.