Financial Times

Growth prospects dim if no peace - World Bank

Sri Lanka's prospects for growth and development are poor if there is no peace, Praful Patel, the new World Bank Vice President for the South Asia Region, has said. "Without growth and development, poverty reduction cannot be achieved; and without equity, the benefits of peace and growth may not reach the poor," he said in a statement.

"My first impressions of Sri Lanka tell me that this is a country with tremendous potential that for far too long has been performing below that potential." The conflict has held the country back and this was why the World Bank, along with other donors, was trying to enhance the prospects for peace by attempting to bring some early benefits of the peace process to the people of the conflict-affected areas as well as the rest of the island. "As the cost of war mounted, development took a back seat, the economy stagnated and people suffered all the more," Patel said.

"Moreover, these decades have left the government with a mountain of debt. Now, in re-launching the peace process, Sri Lanka is reaching beyond economic stagnation, beyond civil strife and towards an era of opportunity for all."

The World Bank's global mission, and its mission in Sri Lanka, is poverty reduction, Patel said. "The relationship between growth and poverty is clear but growth does not automatically fight poverty," he said.

"There are many examples of countries with high growth where the poor benefit little. A country needs to plan effectively for the benefits of growth to reach the poor in meaningful ways that result in visible poverty reduction.

This is why we suggest countries prepare poverty reduction strategies and to do so in consultation with their citizens," he said.

"But while growth does not guarantee poverty reduction, what is guaranteed is that without growth, countries cannot eradicate poverty." Policies to encourage growth must remain a major part of the agenda in Sri Lanka.

The World Bank, which will make some Rs. 100 billion available in grants and interest-free loans over the next four years, is fully committed to support the government in that agenda, Patel said.

"The key to poverty reduction is the creation of prosperity in which all citizens have a stake and can find a chance to improve their lives," he said. "Growth with equity in turn requires peace and stability which are indeed the vital factors without which millions of poor people will remain trapped in their poverty.