Financial Times

Foreign funds disbursement shows improvement this year
Disbursement of foreign donor funds, often slowed down by government bureaucracy, has seen an improvement this year particularly after international agencies decided to provide a bulk of the money for budgetary support rather than projects.

World Bank Country director for Sri Lanka, Peter Harrold said the bank was expected to disburse $200 million this year, up sharply from last year while $175 million has been spent so far this year, three times more than disbursements in 2002.

So far the World Bank has provided $125 million out of the $175 million disbursed so far this year in the form of budgetary support. “That can have a very fast impact on disbursements because it takes a long time to disburse $125 million in a project,” Harrold said in an interview. “The money is deposited in the government account to help finance the budget,” he said, adding that other donors have been encouraged to do the same with JBIC expected to follow suit and the ADB to some extent.

Both ADB and JBIC, suffering from slow disbursement of their funds, have reported a pick up, while the government works separately on proposals for a new structure that would oversee disbursements which are expected to be finalised next month. Ever since Ken Balendra, a former John Keells Holdings (JKH) Chairman was asked by Prime Minister Ranil Wickremesinghe to lead a committee that would try to increase donor disbursements from previously dismal levels, there has been a pick up in spending donor money, official sources said.

The World Bank Sri Lanka chief expects about $1 billion to be delivered this year by all donors which is in line with the Tokyo aid commitment of $4.5 billion over four years. “I think this is pretty good. Some donors like the World Bank have seen a spectacular increase in delivery while a number of countries have seen a similar rise in delivery.” Harrold said new commitments from donors to work in the northeast have been delayed due to a lack of progress in the peace process.

Clarifying the way pledges were made in Tokyo, he said most donors have not decided how much of their share of the $4.5 billion would go to the north and the east.

“What they've done is to allocate an X amount of money as their total commitment to Sri Lanka and within this amount a portion is for the north and the east but they are undecided about how much would go to those regions.”

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