GoSL signs $80 million loan package from ADB for NE rehabilitation

[TamilNet, Wednesday, 14 January 2004, 09:01 GMT]
The Asian Development Bank (ADB) and Government of Sri Lanka Wednesday signed first part of an US$80 million loan package to address the immediate rehabilitation needs of almost 2 million conflict-affected people in the north and east of the country, said a press release issued by the Sri lanka Resident Mission of the Asian Development Bank.

Full text of the press release follows:

ADB News Release:
Loan Signing for Project to Help Conflict-affected Areas of Northern and Eastern Sri Lanka

COLOMBO, SRI LANKA (14 January 2004) – The Asian Development Bank (ADB) and Government of Sri Lanka today signed the first part of an US$80 million loan package to address the immediate rehabilitation needs of almost 2 million conflict-affected people in the north and east of the country.

At the signing, for the first $50 million of the two-part loan package, ADB was represented by Mr. John R. Cooney, Country Director for Sri Lanka. Mr. J. Charita Ratwatte, Secretary, Ministry of Finance, represented the Government of Sri Lanka.

The package provides funding for the Conflict Affected Areas Rehabilitation Project, ADB’s first response to the needs assessment of conflict-affected areas it carried out with the Government and Sri Lanka’s development partners early in 2003. The balance of the US$107.9 project cost will be funded by the Government.

The project will focus most of its activities on the most-severely conflict-affected districts: Jaffna, Mannar, Kilinochchi, Mullaittivu, Vavuniya, Trincomalee, Batticaloa, and Ampara. In these areas it will rehabilitate essential infrastructure, including 500 km of national highways and power transmission and distribution systems, and restore community livelihoods.

The Ministry of Home Affairs, Provincial Councils and Local Government will have overall responsibility for the project. The North East Provincial Council will coordinate the project on a day-to-day basis, including managing the essential interaction with beneficiaries, communities, and the LTTE, and will implement the project’s critical community develop component. Within this structure the Road Develop Authority will manage the road rehabilitation component, the National Water Supply and Drainage Board the Jaffna water supply component, and the Ceylon Electricity Board the power component.

“The project will help a large number of rural communities restore viable living conditions, especially for those who are returning to their homes following displacement by the conflict,” said Mr. Cooney.

“It will also support the peace process by creating or reinforcing local conflict resolution mechanisms that will facilitate resolving future difficulties in a non-violent and constructive manner.”

The project was developed with the assistance of a wide range of stakeholders, including the national government, the North East Provincial Council, beneficiary communities, Sri Lanka’s development partners, and the Liberation Tigers of Tamil Eelam.

“Despite the present difficulties, and the complex problems that lie ahead, we are confident that all parties to the peace process are committed to ending this devastating conflict, and to giving the people in the affected areas the development opportunities that have been unavailable to them for many years. However, we don’t underestimate the challenges that must be overcome for this to happen,” Mr. Cooney added.

"Nonetheless, despite these challenges, we are confident that this project, and others that might follow once the peace process regains the momentum it had until recently, will support and encourage efforts to achieve a lasting end to the conflict. “

ADB’s loan package consists of $50 million from its concessional Asian Development Fund (ADF) and $30 million from its ordinary capital resources (OCR).

The ADF loan signed today has a 40-year term, including a grace period of 10 years, with interest rate of 1%. The OCR loan which will be signed later has a 32-year term, including a grace period of eight years. Interest is determined in accordance with ADB’s LIBOR-based lending facility.