(by M. Ismeth and Ranga Sirilal)

The Cabinet of Ministers has approved borrowing US$ 15 million (Rs. 1.4 billion) from the International Development Association (IDA) of the World Bank for the Sri Lanka Economic Reform Technical Assistance Project.

This project will focus on five key areas i.e. Strengthening government capacity; Infrastructure reforms; Financial sector reforms; Strategic communications and Economic regulation.

This project will be to assist the strengthening of the capacity of key ministries involved in the Government’s reform activities. It will also address the need to build the reform constituency and establish (2) two-way channel of communication between the reformers and the people. This will be accomplished through a mass communication strategy.

A “Challenge Fund” is also proposed which will be a pool of technical assistance, which can be allocated to sub projects of relevant line ministries and government entities, involved in the economic reform process. Funds will be allocated on a first-come-first-served basis for project proposals, which comply with government reform objectives.

There is no interest charge on the World Bank funding but a service charge of 0.75% per annum is payable. The commitment charge on the principal amount of the credit not withdrawn from time to time is payable at a rate to be set by IDA as on June 30 th each year but shall not exceed 0.5% per annum. The commitment charge on the principal amount of the loan is currently at 0.00 percent. The credit is repayable in 40 years with a grace period of 10 years.