Announcement of Sri Lanka Aid Group Meeting on May 15, 1974

INTERNATIONAL BANK FOR • RECONSTRUCTION AND DEVELOPMENT 1818 H STREET, N.W .. WASHINGTON D. C. 20433 TELEPHONE: EXECUTIVE 3-6360 May 15, 1974 Subject: Sri Lanka Aid Group Heeting The following annpancement was issued yesterday at the World Bank's European Office in Paris. The Tenth Meeting of the Sri Lanka Aid Group was held in Paris on May 14, under the chairmanship of the World Bank. The following countries were represented: Australia, Canada, France, Gennany, Japan, the United Kingdom and the United States. Representatives of the International Monetary Fund, the Asian Development Bank, the United Nations Development Programme and observers from Denmark, India, Italy, Sweden and the Organisation for Economic Co-operation and Development also attended. The Netherlands was present at the Aid Group meeting for the first time. The Sri Lanka Delegation was led by Dr. H.A. de S. Gunasekera, Secretary of the Ministry of Planning and Economic Affairs. • Sri Lanka 1 s Delegation reviewed recent economic developments, stressing the sharp rise in the prices of imports, particularly foodstuffs, fertilizer and petroleum. Export prices, the Delegation added, failed by a wide margin to keep pace with increased import costs. Consequently~ imports of raw materials, spare parts and equipment for the industrial sector had to be cut in order to stave off a severe balance of payments crisis. The Delegation then outlined the measures taken by the Government in October 1973 and subsequently in an effort to adjust to the sharp downward movement of the terms of trade, and indicated the major elements in the evolving strategy for increasing production exports end investments. The Delegation emphasized that success in achieving these objectives would in large part depend on continuing support from the Aid Group. The Group expressed its sympathy with the difficulties Sri Lanka faces in attempting to restructure the economy in an unfavorable world economic environ-:1 ment. It agreed that the measures taken by the Govemment are of major significand'e, particularly in the budgetary field, and regretted that the beneficial effects of these measures should have been offset in large part by the unprecedented rise • of import prices • The Group also welcomed the Govemment~s intention to follow the economic situation closely and to take such new initiatives and measures as may be needed to increase production, particularly agricultural production, and exports. /more Sri Lanka Aid Group Meeting - 2 - The Group viewed the weak balance of payments position as the dominant • problem of the economy and agreed tha~ substantial external assistance would be needed, with continuing emphasis upon quick-disbursing commodity aid on the softe;st terms p.ossible. 'l'he represented countries and agencies gave indications of fresh assistance about double that of last year. It was tentatively agreed that the Group would meet again early in 1975. - 0 - • •