Announcement of Sri Lanka Aid Group Meeting on June 1, 1979

FOR IMMEDIATE RELE.ASE \ • World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A. • Telephone: (202) 393-6360 BANK NEWS RELEASE JUNE 1 , 1979 SRI LANKA AID GROUP MEETING The following announcement was issued at the World Bank's European office in Paris. The fifteenth meeting of the Sri Lanka Aid Group was held in Paris under the chairmanship of the World Bank. The following countries were represented: Australia, Austria, Canada, France, the Federal Republic of Germany, Japan, the Netherlands, Norway, Sweden, United Kingdom and the United States. Representatives of the International Monetary Fund, the Asian Development Bank, the Commission of the European Communities and the United Nations Development Programme and observers from Denmark, Finland, India, Italy, Switzerland, the International Fund for Agricultural D~velop- ment, the Kuwait Fund and the Organization for Economic Cooperation and Development also attended. Among those representating Sri Lanka were Mr. Ronnie de Mel, Minister of Finance and Planning (Head of Delegation) and Mr. Gamini Dissanayake, Minister of Lands and Land Development and • Mahawel i Development . The main item on the agenda was the Sri Lanka government's medium term development program. The leader of the Sri Lanka delegation described this as ambitious, but capable of achievement. The impressive recovery of the economy in 1978, and the substantial support and encourage- ment from the international aid community had greatly increased the govern- ment's confidence and provided an optimistic outlook for the future. The government was undertaking a number of measures to streamline the adminis- tration for development, to improve the climate for public and private investment, and to mobilize the domestic resources required for development. At the same time, it was anxious to ensure that the social gains achieved in the past should not be eroded. Donors commended the performance of the economy in 1978 and noted the success the new policies and programs were already enjoying. It was felt, however, that to attain the projected levels of investment, and out- put and employment growth would require concerted action in the areas of agricultural price incentives, export :ncentives, appropriate employment policies, increased mobilization of domestic resources and efforts to ad- dress possible absorptive capacity constraints. Several donors expressed the hope that the government would undertake a detailed review of manpower and material requirements to ensure that the investment program did not face severe implementation constraints. Such a review will need to influ- ence final decisions on the size of the public investment effort and of the • phasing of individual projects within it. It was also recognized that an . .. /  - 2 - enlarged investment effort was contingent on an adequate flow of external resources. The Sri Lanka delegation in reply to observations by donors, • outlined the steps already taken and the policies and the further steps which are under consideration in order to address the constraints to de- velopment. Donors expressed continued strong support for the policies and programs of the government, and aid indications for 1979, indeed, showed a substantial increase over actual commitments in 1978. The Aid Group also discussed the status of the accelerated Mahawel i program. Speakers applauded the progress the government had made in the past twelve months and welcomed the government's commitment to fis- cal responsibil lty and to a balanced development program in the form of. the Sri Lanka Rs. 12 billion ceiling set on Mahawel i expenditures for the 1979-83 period. This fiscal balance, it was felt, also needed to be matched on the manpower and materials side. Individual donors indicated their in- tentions to provide financial support for specific components of the program. • •