Changing Support

Source : Lankabusinessonline

Iran tops Sri Lanka donors up to May 2008, displacing Japan

Iran emerged as the biggest lender to Sri Lanka, displacing traditional top donors Japan and the Asian Development Bank (ADB), in the five months up to May 2008, aid commitments disclosed by the finance ministry show.

Germany, which had earlier said it was cutting off aid to the island owing to displeasure with the ethnic war and allegations of government human rights abuses, was not in the top list of donors.

Earlier in the year a top Japanese official said his government may “review its aid policy” to Sri Lanka. Japan and ADB, in which it is very influential, are the biggest lenders to Sri Lanka.

Aid commitments up to May this year would have almost halved if not for 450 million dollars of Iranian support, the finance ministry mid-year fiscal report shows.

Total commitments made by lenders and donor agencies to Sri Lanka during the period of January to end-May 2008 were 1,049 million US dollars, of which project loans accounted for 959 million and grants for 90 million dollars.

Aid commitments in the same 2007 period were 874 million dollars.

Iran committed 450 million dollars for the Uma Oya multi-purpose hydro-power and irrigation project, followed by Denmark with 155.2 million dollars for the eastern Oluvil port project and a water treatment plant near Colombo.

India committed 109.2 million dollars, mostly to finance imports from the country.

In the same period last year, Japan topped the list of lenders with commitments of 362.8 million dollars followed by ADB with 300 million dollars. China committed 66.1 million dollars and Germany 17.2 million dollars last year.

Both India and China usually give high interest loans with short pay-back periods. Western donors, Japan and multilateral agencies usually give very long term loans at rates usually below the inflation of the lending currency.

Read on(Source): Lankabusinessonline

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