Amunugama appreciates ADB’s effective assistance

Following is the address delivered by Senior Minister of International Monetary Cooperation and Deputy Minister of Finance and Planning Dr. Sarath Amunugama at the ADB’s 46th Annual meeting held in New Delhi in India recently

It is my pleasure to be here on behalf of the Government of Sri Lanka and address on this 46th Annual meeting of the Board of Governors of the Asian Development Bank (ADB).

First and foremost, I would like to express my sincere appreciation to the Government of India for hosting this important meeting in this historic city of Delhi which has served as a capital of various kingdoms and empires. India is our closest neighbour and friend. Our historical relations have matured and diversified encompassing all areas of contemporary relevance. I also extend my gratitude to the people of India for their warm welcome and great hospitality.

On behalf of the Government of Sri Lanka, let me also extend my heartiest congratulations and best wishes to Mr. Takehiko Nakao, the newly elected President of the Asian Development Bank. Mr. Nakao, your election to the highest office of the ADB is a manifestation of the confidence that the member countries have placed in you. I am certain that your vast experience in the realm of financing and international affairs will provide the necessary guidance to steer ADB forward. I also believe that the excellent relations maintained by ADB and Sri Lanka will reach unprecedented spheres under your able leadership.

I also congratulate Mr. Haruhiko Kuroda, former President of the ADB, for his commitment and valuable contribution to uplift the economic conditions of member countries during his term. I wish him the very best in his new career.

Sri Lanka greatly appreciates the effective support extended by the ADB to its member countries to raise the financing needs for their development, particularly under uncertain world economic conditions. It is noted that ADB has approved about US$ 49.4 billion to its member countries during the three-year period from 2012 to 2014 by means of loans, grants, technical assistance and guarantees. These investments will certainly help to sustain the region’s growth into the future.

We commend the recent initiatives of the ADB to strengthen the bank’s operation and enhance the transparency. The newly-approved Public Communication Policy (PCP) will enhance the stakeholders’ trust and ability to engage with ABD, thereby increasing the effectiveness of ADB operations.

Support for Sri Lanka

ADB’s continued support for Sri Lanka’s development effort has been very helpful. The partnership between Sri Lanka and the Asian Development Bank (ADB) for nearly five decades has helped the Government to implement its long-term economic development plan, securing a significant portion of its foreign financing needs. The partnership has produced a wide range of development projects that have bettered the lives of thousands of Sri Lankans. Since joining the ADB in 1966, we have obtained nearly US$ 5.5 billion for implementation of priority development projects.

In 2012, ADB has approved four new loans amounting to US$ 352 million which has been provided on concessionary and non-concessionary terms. These commitments include US$ 130 million for the power and energy sector, US$ 124 million for the water supply and sanitation sector and US$ 98 million for the road and transport sector. A large number of Sri Lankans will be benefitted from the proposed infrastructure development projects.

We had the privilege of receiving four Executive Directors and three Alternate Executive Directors from the ADB in 2012. We hope that their visit to Sri Lanka and especially to Jaffna provided a good opportunity for the Board of Directors to gain greater understanding of the country’s development experience and witness the outcome of the economic development program initiated by the Government in the Northern Province and other regions and review the implementation progress of ADB assisted projects.

Developments in Sri Lanka

Let me now briefly highlight developments in my own country. Sri Lanka continues to harness the dividends of ending a 30-year-long conflict in 2009. Despite a difficult global and domestic environment, the Sri Lankan economy grew by 6.4% in 2012 following two consecutive years of robust growth of over 8%. The moderation of the growth in 2012 is due to the weakening global economy, which has adversely affected our export demand. Improved consumer and investor confidence arising from the peace dividend, favourable macroeconomic conditions, increased capacity utilisation, expansion of infrastructure facilities and renewed economic activity in the Northern and Eastern Provinces will help Sri Lanka to sustain this growth momentum in the coming years.

Our Government has expressed its strong commitment to fiscal consolidation. Fiscal policy in 2012 was based on fiscal consolidation as articulated in the Medium Term Macro Fiscal Framework with a further reduction in the overall budget deficit to 6.2%  of GDP from 6.9% of GDP in 2011. Sri Lanka’s accomplishments in reducing unemployment and poverty have been remarkable.

We have already achieved the Millennium Development Goals (MDG) in relation to reducing poverty, child and maternity care and primary education. Our unemployment rate in 2012 stood at 4.2% which is very low with compared to the other regional countries. The prudent demand management policies as well as supply side improvements enabled Sri Lanka to maintain inflation at single digit levels for over three years from 2009.

Sri Lanka has taken steps to reorient its economic development policy framework to suit the requirements of a middle economy. The main objective of the Government budget for 2013 is to facilitate transformation of Sri Lanka towards a poverty free upper middle income economy. Our aim is a country with food, water and environment security which is approaching a path to a technology revolution through quality education and skills development.

On the path to peace

The country is now on the path to peace, reconciliation and development based on the Economic Policy Framework of the Government. In 2012, we have concluded Provincial Council Elections in three distinctly different provinces that represents one fourth of the population. It is an encouragement to the Government is encouraged that people from all communities have placed their overwhelming confidence in Government development programs. Upholding our commitment to developing the Northern Province in par with other Provinces, the Government has implemented many development initiatives. People have returned to normal family living. Access to electricity, education, water and health facilities is improving rapidly. Banking and financial institutions have expanded and there is a strong enthusiasm in people from the Northern Province to find economic prosperity in the newly found environment.

New strategy and plan

The Government of Sri Lanka has updated the ADB Country Partnership Strategy for Sri Lanka for five-year period from 2012-2016. The new Country Partnership Strategy and Country Operation Business Plan 2013-15 reflects the agenda of a middle income country while recognising the inadequate and poor quality of infrastructure as a major constraint to sustaining rapid economic growth. Large infrastructure projects have been planned in roads and transport, energy, water and sanitation sectors.

Sri Lanka also needs substantial investment in human resources development for an economy which will have growing demands for an educated and skilled workforce. Therefore, a significant portion of the ADB assistance for the next three years will be allocated for improving the quality of secondary education and implementing new programs satisfying the requirements of technical skills for emerging new economic sectors.

The Government has taken all efforts to utilise the total loan amount under concessionary financing and ADB has increased ADF allocation to Sri Lanka to US$ 262 million for the 2013-14 period from US$ 189 million allocated for the 2011-12 period. Sri Lanka’s ADF allocation increased as a result of the higher rating received for performance on macroeconomic policies, the quality of public sector management and the performance of portfolio management.

The Government of Sri Lanka always encourages development partners and lending agencies to engage local experts and adopt local systems in the project formulation, procurement and implementation. Since Sri Lanka has developed a reasonably good procurement system over time, the development partners needs to find ways and means to adopt the country system as much as possible for foreign financed projects.

May I, in conclusion, express my sincere appreciation for the efforts made by the President of the ADB and his team to promote economic development in the region and in that spirit, the continued support extended to Sri Lanka. I look forward to further strengthening our partnership in the future.