WASHINGTON November 20, 2002 –As efforts to consolidate peace intensify in Sri Lanka, the World Bank agreed on November 14 to provide US$31 million to improve the lives and economic prospects of people living in conflict-affected areas. The funds were mobilized quickly in response to the immediate need for easing the hardships which exacerbate tension in the North East Province, and are in turn part of a broader World Bank strategy to support Sri Lanka’s national economic reform and development in the context of the peace process.

The new financing will support an Emergency Reconstruction Program which will help restore primary health care; repair urban water schemes; provide returning families with opportunities for income generation and employment; and build capacity to undertake a multi-donor-financed reconstruction program in the coming years. It will assist people living in the North East Province where development assistance has been absent for 20 years. The Program will be administered by the North East Provincial Council.

“We have offered this assistance to help those who are among the most vulnerable of Sri Lanka’s poor, as part of the World Bank’s primary mission of helping to reduce poverty,” said Peter Harrold, World Bank Country Director for Sri Lanka. “In addition, it is extremely important that the benefits of peace—which include better social services, economic opportunity and growth—be demonstrated to the entire population of Sri Lanka as early as possible.”

The priorities of the Emergency Reconstruction Program were developed based on a joint rapid needs assessment carried out by the government together with the World Bank’s International Development Association, the Asia Development Bank, The World Health Organization and the German Technical Cooperation Agency. The program will be anchored in the country’s Framework for Relief, Rehabilitation and Reconciliation, a plan for building sustainable peace in Sri Lanka, which was developed through a consultative process begun in July, 1999.

The US$ 31 million will come from project savings that would have otherwise been canceled. Another US$ 12 million will be provided from ongoing projects in legal and judicial reform and education, which were originally intended to reach the North East, but had been blocked earlier due to the conflict. Another US$ 23 million is being provided from ongoing projects aimed primarily at assisting the North East—i.e., the North East Irrigated Agriculture Project and the Landmine Action Project. This brings the total World Bank commitments to the North East to US$66 million. In addition, a recently approved Renewable Energy for Rural Economic Development project and an HIV/AIDS project (under preparation) incorporate initiatives to support the North East.

The World Bank's overall program of assistance to Sri Lanka provides financing and technical assistance for both economic and human development. It is helping to improve basic social services and reduce the incidence of disease, with a special emphasis on HIV/AIDS. It is supporting rural programs aimed at increasing access to innovative agricultural techniques; enhancing land and natural resource management; and helping to meet essential public needs for education, electricity, water, and sanitation services.

In parallel with direct poverty programs, the World Bank is supporting improvements in the broader investment climate and the rural economy through ongoing policy discussions and financing for upgrading key areas of the economy. In particular it is assisting with public sector reform, encouraging the private sector participation needed for more robust economic growth.