No pledges at Donor Forum

Unlike in previous years, donors will not pledge funds at this month’s Sri Lanka Development Forum, once known as the Paris-based Aid Consortium, to be held on January 29-30 at the Lighthouse Hotel, Galle, The Sunday Times FT reliably learns. They have ‘gently’ turned down a request from Treasury Secretary Dr. P.B. Jayasundera for a pledging session soon after the conference which is expected to focus on many issues including the peace process, development and human rights among others.

Well-informed sources said donors however are expected to reiterate their commitments already made in the current medium term budget framework of the government.

The meeting, in which the IMF is also attending before shutting down its Colombo office, will be addressed by President Mahinda Rajapaksa and Public Administration Minister Dr Sarath Amunugama, who has in recent times been assigned the Finance Minister’s role in local and international economic meetings, while Dr Jayasundera is expected to make a presentation on the government’s 10-year vision. Key donors including the World Bank, ADB and also the IMF are also billed to speak. Other issues up for discussion are post-tsunami work and developing poor regions.

At the last Development Forum, the first ever, held in Kandy on May 16, 2005, the main focus was on the post tsunami recovery process. More that 150 representatives from over 50 countries and donor agencies including ambassadors and other dignitaries took part in which donors made commitments and pledges exceeding US$3 billion in the form of grants and moratorium of debts in view of the tsunami reconstruction process.

The sources said present and expected scenarios on peace and the economy and prospects for 2007 will emerge at the meeting. Good governance vis-à-vis peace, human rights and humanitarian issues is also on the table while corruption also expected to be raised.

The meeting comes in the backdrop of an upsurge in violence in the Northeast and recent bus bomb attacks in the south. Security has been stepped up in the capital but the co-chairs – Japan, the US, Norway and the EU – are urging the government and the LTTE to return to the negotiating table.

The World Bank’s position has been more progress on market reforms and development of rural areas which it is expected to reiterate at the meeting. The IMF is expected to push for commitments on structural reforms, reduced budget deficits and cutbacks in spending on public enterprises but would face opposition from the government now that the fund isn’t in a position to press home its point.

The sources said that the government was resorting to costly commercial borrowing mainly from Citibank in the belief that higher growth would enable the state to pay back these loans – a much better price to pay that bowing to IMF rules and structural adjustment demands.

“Citibank is bankrolling the economy; maybe they should be an invitee at the conference,” quipped a western diplomat. Bilateral partners are expected to be represented by ambassadors while it was unclear whether the World Bank would be represented by a senior official from Washington supported by its country director.

The sources said that bilateral agencies were also concerned about peace, conflict and humanitarian issues and were seeking to make these an integral part of the meeting and as a possible pre requisite for donor support in the future.