Sri Lanka must commit to peace to achieve its growth potential

Sri Lanka must commit to peace to achieve its growth potential - World Bank

	Published : Mon, 29 Jan 2007 08:00 By : Agencies Print this Story

GALLE, Sri Lanka (XFN-ASIA) - Sri Lanka must commit to peace and restore investor confidence if it is to develop its potential, said Praful Patel, the World Bank's vice president for South Asia.

'There is no choice for Sri Lanka but to pursue peace,' Patel told Agence France-Presse in an interview here.

'It's a tough path, but the path to development and prosperity for Sri Lanka can only be built on a solid commitment to peace and a realisation of that commitment,' he said ahead of a crucial review today of international aid.

International lenders and donors are meeting here for two days to examine Sri Lanka's economy and study if their cash had been well spent.

Sri Lanka plans to convert 1.5 bln usd in aid pledges received for this year's development work into firm commitments during the two-day meeting, scheduled to be opened by President Mahinda Rajapakse.

Sri Lanka's media minister Anura Yapa said yesterday that the government is committed to a negotiated peaceful solution to the Tamil separatist conflict.

However, the government has also said it wants to escalate attacks against the Tamil Tigers by building on recent military gains.

Over the last year, 200,000 new internally displaced people have joined around 300,000 people already forced to leave their homes, Patel said.

'That is half a million people, without homes, education, proper health.'

Sri Lanka, he said, has shown economic resilience but needs to end violence to restore much-needed business confidence.

The island's economy is not performing to full potential, he said.

The bank, which lends around 80-100 mln usd to Sri Lanka each year, has some medium-term projects in conflict areas.

'We now have 750 million dollars worth of projects. Around 25 percent of this is earmarked for the north and east for housing reconstruction, irrigation and agriculture. Some of these projects are on hold because of intense fighting,' Patel said.

As part of the bank's overall post-conflict development plan, Patel said it would consider a government suggestion to fast-track the construction of a north-south highway.

The proposal was made by Rajapakse, who is also the finance minister, when he met Patel last year.

In the interim, Sri Lanka must work hard to resolve the ethnic conflict. 'The conflict costs Sri Lanka two to three percentage points of growth each year, and that is a lot to lose,' Patel said.

Patel warned that the government must also take measures to stamp out inflation which hit 19.3 pct in December.

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Sri Lanka must commit to peace to achieve its growth potential - World Bank