June 29, 2006 (LBO) – Sri Lanka’s deteriorating security situation is undermining growth and slowing the island’s attempts to snap out of the poverty trap, a top World Bank official said Thursday. “The political situation and the sustained violence in the recent past are undermining the potential for growth,” the bank’s country head designate for Sri Lanka, Naoko Ishii told reporters.
She said the tropical island’s 24 billion dollar economy was not performing to full potential, due to the ethnic violence that has claimed over 60,000 lives since 1972.
“We are currently monitoring the situation here,” she said seated beside the outgoing country director Peter Harrold.
Harrold said a spike in violence is also undermining the bank’s development projects, in the north-east parts of the island.
Sporadic attacks on military bases in the north-east have worsened since last December, leaving more than 825 people dead.
The bank, which lends around 80-100 million dollars to Sri Lanka each year, has a few medium-term projects in the conflict areas.
“We are extremely concerned about the current security situation. The violence has had an impact on the pace of implementation of o