TOKYO, Tuesday, June 10, 2003 – World Bank President James D. Wolfensohn stressed the critical link between peace and economic development, equity and social justice in a video message to the Tokyo Conference on Reconstruction and Development of Sri Lanka which wrapped up proceedings today.

“The World Bank is anxious to be as supportive as it can to the current efforts of the Sri Lankan people to regain their country and to follow the vision and strategy they have set out for their future,” he said in the message which was screened for participants. “Wherever we are in the world, we find that the interrelationship between peace and development is one that becomes more and more true. It is of course for the two sides to decide on peace – a peace which is so necessary to all the citizens of Sri Lanka. But we, the international community, have the opportunity to participate in a supportive way by providing the human and the financial capital to this remarkable country and this remarkable people".

The World Bank has just begun the implementation of a new Country Assistance Strategy for Sri Lanka which pledges US$800 million to the country over the 2003-6 period in support of peace, growth and equity, the three pillars of the strategy.

“Sri Lanka has a precious opportunity to create the peace which is so necessary to open the space for economic development,” said Mieko Nishimizu, World Bank Vice President for the South Asia region who did not attend the conference. “But for this space to be created, all parties to the process must be accommodated at the table and their fears and aspirations heard and respected. Reconstruction and the broader goal of development that must reach across the entire Sri Lanka from North to South, cannot be achieved in the absence of the political will to drive the peace".

The World Bank Group was represented at the Tokyo Conference by Motomichi Ikawa, Executive Vice President of the Multilateral Investment Guarantee Agency, Peter Harrold, World Bank Country Director for Sri Lanka and by Sanjiva Senanayake, Country Representative for the International Finance Corporation.

Harrold noted the considerable changes that have come to Sri Lanka over the past 18 months during which the guns have been silent, and a calm, peaceful atmosphere restored. Good progress had been made in laying a foundation for the permanent peace necessary for economic development and poverty reduction which could be accelerated by a higher rate of economic growth, more in line with Sri Lanka’s real potential.

The World Bank collaborated with the Asian Development Bank and the United Nations System in the preparation of a Needs Assessment for the conflict-affected areas of the Sri Lanka. The report identified some US$1.5 billion in assistance needed to rebuild infrastructure and capacity in the North East of the island and to support the return of internally displaced persons to this area. In addition, about $3 billion was needed to support the implementation of the Government’s poverty reduction strategy, “Regaining Sri Lanka.

”Harrold said it was gratifying that the international community had pledged very significant support for both these objectives at the Tokyo meeting. It had been clear to everyone present that the level of development assistance to Sri Lanka would depend crucially on the success of the peace process, he said.

While the first rounds of the peace talks between the Government of Sri Lanka and the Liberation Tigers of Tamil Eelam had made good progress, this had not yet been matched on the ground by marked improvement in the lives of the people in the conflict-affected areas.

Along with a number of other agencies, the World Bank had been able to increase assistance, but not yet by enough to make a serious impact on the very severe challenges facing this area, Harrold said.

The Tokyo meeting would be important to supporting this process but progress in the peace talks would be the key to accelerating the pace of reconstruction and recovery in the North East of Sri Lanka. It would be vital to translate commitments made in Tokyo into change in the lives of some of the poorest people in the country, said Harrold.

“As peace and economic growth take hold, it will be vital to ensure that the benefits are felt by all the people of Sri Lanka,” he added. “There are areas of the country, such as the South, and the plantation areas, where poverty remains much too high, and where little progress has been made in improving the quality of life of the people for too long. Moreover, little is known about the exact extent of poverty in the conflict-affected areas, and it will be important to address this knowledge gap in the coming year".

The Bank had already begun working closely with its partners in Sri Lanka to address these knowledge needs and looked forward to deepening this process over the coming period.