Sri Lanka foreign aid pipeline narrows

July 8, 2009 (LBO) – Sri Lanka’s foreign aid pipeline from Western nations showed signs of narrowing amid deteriorating relations, though draw downs of previously committed aid continued apace, official data shows. Analysts say fresh aid commitments could arrest the trend later in the year. The power ministry said in June that China was giving an 891 million dollar 20-year loan for a coal power plant.

Disbursements

But committed aid was being disbursed steadily. In the five months to May 2009 Sri Lanka had drawn down 402.9 million dollars of aid including 88.5 million dollars of grants.

The grants came for the Netherlands (49.4 million US dollars), World Bank (20.5 million) and the European Union (9.5 million US dollars).

Last year 368 million dollars of aid was drawn down in the same period.

In recent years Sri Lanka has taken semi-commercial financing from foreign export import banks to finance infrastructure as foreign aid becomes scarcer as diplomatic relations with the West weakens.

A loan with the International Monetary Fund has also been delayed amid political wrangling by the US and Britain.

Meanwhile tight international capital markets also made it difficult for