Supreme Court ruling to affect aid flows, exchange rate

Sri Lanka’s Supreme Court blocking the joint mechanism on tsunami relief distribution could slow foreign aid inflows and hurt the reconstruction effort, according to diplomats close to the peace process. Sri Lanka’s Supreme Court blocking the joint mechanism on tsunami relief distribution could slow foreign aid inflows and hurt the reconstruction effort, according to diplomats close to the peace process. A Western diplomatic source with a hands-on approach to the peace initiative said the virtual scuttling of the joint mechanism, or the Post Tsunami Operational Management Structure (P-TOMS), could undermine donor confidence.

Donors who pledged three billion dollars in aid to rebuild the island after the December 26 tsunami tragedy had insisted on the P-TOMS even though the key aid givers such as Japan made it clear they will not directly fund it.

“The P-TOMS was seen as a mechanism that would allow the two parties to work together, build confidence,” the top diplomatic source said. “Instead, what we see is the whole process put on hold.”

Sri Lanka’s largest single donor, Japan, had said it will not directly contribute to the P-TOMS, but that the mechanism would be seen as “progress” in the p