Announcement of First IDA Forestry Project in Sri Lanka on January 20, 1983

FOR IMMEDIATE RELEASE .World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A.• Telephone: (202) 477-1234 IDA NEWS RELEASE NO. 83/37 Contact: Hugh Blackman January 20, 1982 (202) 477-3879 FIRS![r IDA FORESTRY PROJECT IN SRI LANKA Sri Lankp, will uJ\e an SDR 8. 5 million ( $ 9 million) credit from the I11ternational Dev\~lopment :'Association (IDA) to help finance a forest resources development projedt· This is the first assistance specifically for the country's forestry aector from the concessionary lending affiliate of the World Bank. The project aims to strengthen planning capability and to help reduce the shortage of skilled manpower in the forestry sector. It is also expected to improve the management of existing forest plantations. Two new industrial wood plantations will be established to meet projected industrial wood shortages. About 8,000 hectares of new industrial wood plantations will be established under the project -- one in the Batticaloa and Amparai Districts to the east and the other in the Moneragala and Hambantota Districts to the south. Existing plantations will be upgraded, mainly through thinning. • Conservation and protection measures will be taken to arrest the rapid deforestation taking place in Sri Lanka. Over a 20-year rotation period, wood production will increase by an estimated 7.3 million cubic meters at plantations established or upgraded under the project. A technical assistance program will help transfer the latest forestry technology to Sri Lanka and help reduce soil erosion. In order to improve planning for Sri Lanka's 1.6 million hectares of forests, the IDA credit will provide technical assistance for preparing a sector master plan. An institutional development study, forestry inventory, the establishment of a data bank, and studies related to wood market and demand will be financed. The total cost of the project is estimated at $15 million. The Government of Sri Lanka is providing $3.59 million. Finland's Ministry of Foreign Affairs under the Department for International Cooperation (FINNIDA) is expected to contribute a $2.44 million grant for technical assistance. Since 1954, the Bank Group has approved nine IBRD loans and 32 IDA credits, totalling $723.6 million for high priority development projects in Sri Lanka. About half of this assistance has been for agriculture. The IDA credit is for 50 years, including 10 years of grace; it carries no interest but bears a small annual service charge (0.5% on the undisbursed • balances of the credit and Q.75% on the disbursed balances) . NOTE: IDA credits are denominated in SDRs (Special Drawing Rights), which are valued on the basis of a "basket" of currencies. The U.S. dollar equivalent of the SDR amount of the IDA credit reflects the exchange rates existing at the time of negotiation of the credit.