Published: 18 April 2003

Commends Progress in Peace Negotiations Funds to Support Government’s Economic Program Based On “Regaining Sri Lanka”

The International Monetary Fund’s (IMF) Executive Board approved today, a US$567 million credit equivalent to one hundred percent of quota for Sri Lanka, to support the government’s economic program for 2003-2006. Effective immediately, the Sri Lankan government will receive US$81 million. The IMF also commended the significant progress of the government’s peace negotiations and emphasized the need for donor financing to support economic initiatives to strengthen the peace process. This IMF decision was the first contribution to the country right after the seminar hosted by the U.S. Deputy Secretary of State Richard Armitage at the Department of State, ahead of the Tokyo Conference on Reconstruction and Development of Sri Lanka scheduled for June 9 and 10, 2003. At this seminar, the IMF and other donors supported the peace process and expressed strong support for providing Sri Lanka with increased international financial assistance. Shigemitsu Sugisaki, Deputy Managing Director and Acting Chairman of the Executive Board of the IMF said: “Sri Lanka today stands at a pivotal point in its history. Over the past 20 years, a long civil conflict has beleaguered the country, which not only disrupted economic activity, but also hampered the sustained implementation of economic reforms. The current environment, in which peace negotiations are progressing well and economic activity is picking up, provides an excellent opportunity for Sri Lanka to implement deeper economic reforms and put the economy on a path of sustained high growth.” Sri Lankan Ambassador to the U.S., Devinda Subasinghe welcomed the decision and said: “The decision of the IMF today, the largest ever IMF commitment to Sri Lanka, is a testimony of actual support the international community is giving to Sri Lanka as the government pursues the path of peace and economic growth. This credit, the first commitment of financial support following the U.S. government hosted seminar earlier this week, reinforces the international statements of support for the gains we have achieved by providing the economic foundations for peace.” The credit arrangement, under the IMF’s Poverty Reduction and Growth Facility (PRGF) seeks to increase economic growth and reduce poverty by supporting the government’s economic program based on “Regaining Sri Lanka”. Sugisaki also praised the government’s efforts towards economic reconstruction and decreasing poverty and pointed out: “The government’s attention to reducing conflict-related and rural poverty is well placed. The implementation of plans to strengthen rural infrastructure and improve access of the poor to quality education and health services are appropriate and necessary steps.” Sugisaki also noted as well the government’s economic reforms: “To fully realize the program’s medium-term objectives for growth and poverty reduction, lasting peace is necessary. The authorities are fully committed to the program and have embarked on difficult reforms, while making strong efforts to preserve public support for the peace process.” He also emphasized the need for donor financing and said: “…continued donor financing is required to support reforms and reconstruction, as well as the momentum of the peace process”. Embassy of Sri Lanka Washington DC USA 18 April 2003

Published: 18 April 2003

The Hon. Milinda Moragoda, Sri Lankan Minister for Economic Reform, Science and Technology, has completed a highly successful visit to the United States that resulted in several U.S. and international officials expressing strong support for providing Sri Lanka with increased international assistance. “The Minister had a series of meetings with U.S. and international officials in which he consistently heard how much the international community supports the peace process and understands our need for financial support,” said H.E. Devinda R. Subasinghe, Ambassador of Sri Lanka to the United States. “As complicated as the world situation is now with regard to Iraq, it was heartening to see that the world community wants to work together to support Sri Lanka.” The week began with formal IMF and World Bank presentations at the U.S. government hosted Pre-Tokyo Seminar on Sri Lanka at the U.S. State Department, calling for $1.1 billion in annual aid for the next three years to help the country recover from conflict. Minister Moragoda met with United Nations General Secretary Kofi Annan at the U.N. Headquarters in New York; International Monetary Fund (IMF) Managing Director, Mr. Horst Köhler; World Bank President James Wolfensohn; U.S. Commerce Secretary Donald Evans; Ambassador Robert Zoellick, U.S. Trade Representative; U.S. Congressman Jerry Weller, a Republican from Illinois who is co-chair of the Sri Lanka Congressional Caucus; U.S. Congressman Christopher Van Hollen Jr., a Maryland Democrat who lived in Sri Lanka when his father served as the U.S. Ambassador to Sri Lanka in the early 1970s; U.S. Deputy Secretary of State Richard Armitage; U.S. Treasury Under Secretary (International Affairs) John B. Taylor; U.S. Deputy National Security Advisor Stephen Hadley; Deputy Secretary of Commerce Samuel Bodman; and U.S. Under Secretary of State for Arms Control & International Security Affairs John Bolton, Assistant Secretary of State for Political - Military Affairs Lincoln Bloomfield Jr., Assistant Secretary of State for South Asian Affairs Christina Rocca, and Assistant Secretary of Defense for International Security Affairs Peter Rodman. In addition to those meetings, the Minister met Vice President Dick Cheney and Deputy Secretary of Defense Paul Wolfowitz at a private reception. “During meetings the Minister was repeatedly assured by these officials that they are pleased with the Government’s commitment to the peace process and the progress that has been made,” Ambassador Subasinghe said. “Statements of support were made with respect to Sri Lanka’s economic reform and economic development efforts and the country’s move to become a regional trade hub in South Asia. There were also strong indications that the United States has a favorable view of expanding bilateral trade and economic cooperation with Sri Lanka. Plans were discussed for a special visit of U.S. Congressmen to Sri Lanka sometime this summer.” “It was clear that there is wide respect for the work the Sri Lankan government is doing to maintain peace and rebuild the nation and also a true recognition that the international community must play a vital role in our recovery process.” Minister Moragoda attended the World Bank/IMF Spring Meetings in Washington and played a leadership role in a Seminar on Sri Lanka that was co-hosted by the United States and Sri Lanka as a prelude to June’s Tokyo Conference on Reconstruction and Development in Sri Lanka. In addition, Minister Moragoda visited the U.S. Coast Guard Yard at Baltimore, Maryland to inspect and tour the Coast Guard Cutter “Courageous,” which is scheduled to be transferred to the Sri Lanka Navy. Minister Moragoda also had meetings with H.E. Abdullah Hassan Saif, Minister of Finance & National Economy of Bahrain; the Hon. Susan Whelan, Minister of International Cooperation of Canada; Ms. Agnes von Ardenee, Minister of Development Cooperation of The Netherlands; Mr. Jin Liqun, Vice Minister of China; Mr. Mohamed Khir Bash, Minister of State for Finance & Industries of the United Arab Emirates; Mr. Peter Woicke, Executive Vice President, International Finance Corporation (IFC); Ms. Mieko Nishimizu, Vice President, South Asia Region, The World Bank; and Mr. Motomichi Ikawa, Executive Vice President of the Multilateral Investment Guarantee Agency (MIGA). The Sri Lanka delegation consisted of Ambassador Subasinghe; Mr. A S Jayawardena, Governor, Central Bank of Sri Lanka; Mr. Charitha Ratwatte, Secretary, Ministry of Finance and Ministry of Policy Development and Implementation; Mr. R. Paskaralingam, Advisor, Ministry of Policy Development and Implementation; Ambassador Janaka Nakkawita, Deputy Chief of Mission, Embassy of Sri Lanka; Mr. Ananda Atukorala, Advisor, Ministry of Policy Development and Implementation; Mr. Jim Robertson, Advisor, Ministry of Policy Development and Implementation; Mr. Saman Udagedara, Minister (Commercial), Embassy of Sri Lanka; and Ms. Siranthani Gopallawa, First Secretary (Economic), Embassy of Sri Lanka. Embassy of Sri Lanka Washington DC USA 18 April 2003

Published: 17 April 2003

Meeting Reinforces U.S. - Sri Lanka Economic and Trade Relations

U.S. Commerce Secretary Donald Evans and Deputy Secretary Samuel Bodman met with Sri Lankan Minister for Economic Reform Milinda Moragoda to discuss the progress of the peace process and the pace of economic reforms in Sri Lanka, in Washington, D.C. on Wednesday, April 14. Secretary Evans commended the Sri Lankan government for the significant progress achieved in opening the economy, implementing economic reforms, and in the negotiations on the Trade and Investment Framework Agreement (TIFA) between the U.S. and Sri Lanka. The TIFA provides an arrangement for expanded economic relations between the two countries and is usually the first step towards a Free Trade Agreement. U.S. Secretary of Commerce Don Evans pledged the support to the U.S. government to enhance closer commercial and business ties between the two countries. During the meeting, Moragoda emphasized Sri Lanka's desire to strengthen bilateral trade relations between the U.S. and Sri Lanka, and underscored the country's eagerness to attract U.S. investments in sectors such as infrastructure, in the Information Communication Technology (ICT) industry, shared services/call centers and back office operations. In addition, Moragoda stressed the importance of economic development as a critical factor for the success of the Sri Lankan peace process. He also pointed out that the TIFA process would further accelerate economic reform in Sri Lanka and highlighted the government's economic program which includes deregulation, privatization, public sector reforms, among other initiatives. Moragoda emphasized the strategic importance of Sri Lanka as the economic gateway to the Indian subcontinent, especially India. "We would like to help you [Sri Lanka] help yourself by introducing potential trade and investment partners," said U.S. Deputy Secretary Bodman. In reinforcing the relationship between the U.S. and Sri Lanka, Moragoda said: "I am positive that a partnership between the U.S. and Sri Lanka will bring great success to both sides." Talks are also underway to create a U.S. - Sri Lanka Business Council in the United States. Sri Lankan Ambassador Devinda Subasinghe indicated that the Washington Embassy of Sri Lanka is working closely with Tom Donohue, president of the U.S. Chamber of Commerce to organize the Council and to advance the TIFA process. Subasinghe indicated that Sri Lanka is working to expand the membership of the Sri Lankan Congressional Caucus with a trade focus. The meeting was attended by members of the U.S. Department of Commerce including, by Michael Hutchinson, Deputy Assistant Secretary for Textiles, Apparel and Consumer Goods; Molly K. Williamson, Deputy Assistant Secretary Africa and Middle East; and Ariadne Benaissa, International Trade Specialist. Minister Moragoda was assisted by Ambassador Devinda R Subasinghe, Minister (Commerce) Saman Udagedara and First Secretary (Economic) Siranthani Gopallawa. Embassy of Sri Lanka Washington DC USA 17 April 2003

Published: 15 April 2003

A wide array of international officials spoke positively about the progress being made in the Sri Lankan peace process and outlined plans that could result in $1.1 billion in annual international aid to help the country recover from two decades of war. U.S. Deputy Secretary of State Richard Armitage convened a one-day seminar yesterday at the State Department that served as a prelude to June's Tokyo Conference on Reconstruction and Development in Sri Lanka. The seminar was co-hosted by the U.S. and Sri Lankan governments, with the special participation of Norway and Japan. The IMF and the World Bank also participated as they were involved in the needs assessment for Sri Lanka. Armitage opened the session by saying that "international support is essential" for Sri Lankan peace to survive and later noted that the country was providing "a message of hope" to the world and serving as a "working model" on how to resolve fierce ethnic strife. He was joined at the podium by Norwegian State Secretary Vidar Helgesen, whose country is facilitating the peace process, and Yasushi Akashi, special representative of the Government of Japan, where the next steps will be made to provide financial support to the Sri Lankan government. There were many countries and international organizations such as the United Nations Development Program (UNDP), Overseas Private Investment Corporation (OPIC), U.S. Trade Development Agency (TDA) which were represented. High level representatives from the European Union including Canada, France, Germany, The Russian Federation, China, Denmark, Finland, Iceland, India, Japan, Norway, Pakistan, Saudi Arabia, Thailand and the United Kingdom were all in attendance. Milinda Moragoda, Sri Lankan Minister for Economic Reform, Science and Technology, acknowledged that 20 years of conflict "have wounded minds as well as bodies" and reminded the audience that the conflict has killed more people than the United States lost during the entire Vietnam War, while spreading terror throughout the country and crippling the economy. "It is not feasible for us to deal with reconstruction of war-ravaged areas in isolation from the development of the rest of the country which has also suffered economic and social damage as a result of the war," Minister Moragoda said. "Nor would we succeed in our efforts if assistance were to be delayed pending conclusion of a peace agreement. …If we are unable to demonstrate the dividend that peace will bring, we risk a breakdown of the negotiations and a resumption of hostilities." Minister Moragoda said, "Funds are urgently required for both the immediate needs of reconstruction, rehabilitation and relief as well as for laying the foundations for overall economic recovery after two decades of destructive and debilitating conflict." Five areas in need of immediate attention, he said, are: locating and neutralizing one million landmines scattered in the nation; rebuilding whole towns and villages; providing shelter and simple agriculture equipment to an estimated one million displaced persons; rebuilding and refurbishing schools; and getting jobs for displaced people and others hurt by the war. A report from the IMF highlighted the progress made under Prime Minister Ranil Wickremesinghe, including a return to economic growth of 3.5 to 4 percent last year after the economy shrank 1.25 percent the year before, a decline in the rate of inflation to 9.5 percent compared with 14 percent, and the advancement of structural economic reforms that have increased confidence in the economy's direction. However, continued reforms alone will not be enough to close the gap between greater government revenue from continued economic growth and the mounting cost of recovery from the war, the IMF concluded, adding that additional international support will be necessary. The World Bank and IMF have estimated that an international aid package of $1.1 billion a year for the next three years will provide much needed help to the government as it pursues a "Regaining Sri Lanka" program of economic recovery and development. International leaders will further consider the aid request at the June conference in Tokyo. Minister Moragoda described key elements of the "Regaining Sri Lanka" program as infrastructure development including road construction and repair and the augmentation of power generation; making Sri Lanka a transport, logistics and financial hub for the region; establishment of a strong information and communications technology sector; improved education; better health care delivery systems; improved productivity in agriculture, fisheries and small businesses; environmental preservation; tourism and eco-tourism promotion; and public sector reform. "We are convinced that unless we can significantly increase economic growth and demonstrate the prospect of a better future for all, it will not be possible to make headway in the building of a lasting peace and a united nation," Minister Moragoda said. Vidar Helgesen, the State Secretary of Norway, said the ceasefire and seven months of productive negotiations have meant that "people's security has improved dramatically" and that important strides have been made in improving the country's economic and political structures. However, Secretary Helgesen said that "a peace dividend is critical to the success of the negotiations" and that more international support will be needed to provide that dividend. "The parties (in Sri Lanka) are demonstrating patience and persistence," Secretary Helgesen said. "We, the international community, should do the same." Mr. Akashi of Japan spoke of the upcoming Tokyo conference for major donors in June and said the international community "will be harshly judged by history if we do not take full advantage of the positive momentum which as been generated now." India was also present in the seminar, being the first time ever, that the country participated in the peace process-related event. Indian Ambassador Lalith Mansingh stated that his country is pleased to participate in the seminar on Sri Lanka and "India is committed to the unity, sovereignty and territorial integrity of Sri Lanka." India supports the actions taken by the government of Sri Lanka towards a negotiated peace that satisfies the just aspirations of all the communities in Sri Lanka." Ambassador stated that "We have been kept briefed by all the Sri Lankan parties." Mieko Nishimizu, Vice President of the South Asia Region of The World Bank, said Sri Lanka is "no ordinary developing country" and reminded the audience that Sri Lanka was a leader in introducing universal adult franchise and a tradition of democratic governance "right down to the village level." She pointed out that Sri Lanka produced the world's first woman prime minister in the 1960s and has a history of the best socio-economic indicators in all of Asia including life expectancy, infant and maternal mortality, literacy and near universal primary school enrollment. "Today, there is a coincidence of the sovereign will of the people of Sri Lanka to change, to capture peace, to secure good governance, and to embrace sound economic policies - and their leaders with the singular mandate to regain Sri Lanka that becomes all her people," Mrs. Nishimizu said. "We are invited to offer our moral and financial support, to assist them to begin that journey. We can do so effectively, in ways that will be sustained long after we are gone, if and only if we can honor the sovereign will, and respect Sri Lanka's own leadership for positive social, economic and political change." Embassy of Sri Lanka Washington DC USA 15 April 2003

Published: 14 April 2003

DEPUTY SECRETARY ARMITAGE: Well, thank you all very much. Jim, thank you for your kind introduction. I very much appreciate the presence of all of you here today. For those of us who live in Washington, we're often treated to reminders of the vibrancy of this democracy. That's a way of saying demonstrations are practically a way of life to us. Indeed, I think many of you who work with the Fund or the Bank have had many occasions to enjoy this particular treat, as well. But I hope that no one had too much trouble getting here this morning and, as I said, I'm extraordinarily grateful to all of you for taking the trouble to be here this morning. It is a diverse group which gathers here in these troubled times. We represent nations from nearly every continent, international financial institutions bigger and more complex than some nations, and organizations with a variety of missions and means. But it is my hope that one concern, one worthwhile cause might unite us this morning and that each of us might leave here today connected by a thread of intent; that we can, by working together, be a force for peace. More specifically, that we can be a force for peace in Sri Lanka. I traveled to Sri Lanka last summer, as Jim mentioned, for the second time in my life. My first visit was in 1983 on the eve of a terrible and destructive civil war -- one that has since claimed more than 65,000 souls. My return last summer came about six months into the ceasefire to that conflict. I saw nothing of the time in between, so for me in a sense the years fell away. The change was truly shocking. Back then Sri Lanka was a charming, island nation with an educated populous, a dynamic economy, and strong institutions of democracy. And now it is a nation stunted by war with a populous weary to the bones of bearing the cost of fighting, and a territory that is, in places, nearly as desolate as a moonscape. And I saw something else on my last visit, I saw Sri Lanka as it could be: a thriving, multi-faceted society once again enjoying peace and enjoying prosperity. And it was the Sri Lankans themselves who showed me that vision. Because finally, finally it is a vision they all, Muslims and Buddhists, Christians and Hindus, Sinhalese and Tamils in a vision -- it is a vision that they can all see a way in which to share. And that is essentially why the United States is engaged in the current efforts to build peace. And that is why I want to interest all of you today in this very endeavor because this is something that can be done, and I believe it is something that can only be done with the work and the support of many hands; and, indeed, there are already many hands involved. Norway, represented today by my friend, Secretary Helgeson, deserves much credit for bringing the warring parties to the negotiating table, and helping the warring parties to stay there. And Japan, represented today by Special Advisor Akashi, has been most generous with its considerable development acumen to include sponsoring an upcoming Donors Conference in June, one that I believe will offer tremendous benefits to all parties who attend -- and, of course, most importantly, to the people of Sri Lanka. Of course, the key participants in June will be the parties to the conflict. And it is their willingness to reach a resolution that is providing the momentum to this peace process. To date, the government of Sri Lanka, and the Liberation Tigers of Tamil Eelam, the LTTE, has agreed to a ceasefire, a cease-fire which has held more than a year. Their representatives, including my friend Minister Milinda Moragoda, who will speak to you next; they have met in direct talks in six separate sessions so far. And those meetings have produced a number of important agreements, as well as concessions from both sides including a shared political understanding of the future. In the background, the people of Sri Lanka have responded with optimism. More than 300,000 displaced persons have returned to war-ravaged areas in the north and in the east of the country. Flights have resumed between Colombo and Jaffna, and the normal commerce and trade of civic life have rediscovered their cross-country routes. And while you will have a chance to hear from Sri Lanka, Norway, and Japan today about progress in the negotiations and the next steps, there is one partner to peace that is today conspicuous in its absence, and that is the LTTE. Now I know the Tigers are unhappy about their exclusion today, but let me explain their absence. The United States placed the LTTE on our list of foreign terrorists organizations back in 1997. That designation carries with it legal restrictions including a prohibition on issuing visas to members of the organization for entry into the United States. And while it is safe to say that the United States is encouraged by the recent behavior of the LTTE, we do not yet see a rationale for lifting the designation as a foreign terrorist organization. Our position is crystal clear. The LTTE must unequivocally renounce terrorism, in word and in deed, if we are to consider, to withdrawing the designation. I think it is fair to say with the way the current negotiations are going, the United States can see a future for the LTTE as legitimate political organization, but it is still up to the LTTE to change this situation. It is up to them to demonstrate that they are capable and worthy of such legitimacy. For the LTTE and for the Government of Sri Lanka there are still many obstacles to overcome. Difficult issues still need to be addressed. And while much will depend on their political will, the success of the peace process, ultimately, will depend on tangible results. And it may well be that such results, at least in the near term are simply beyond Sri Lanka's means, especially as it engages in a program of sweeping economic reforms. And that is why international support, both moral support and materiel support is essential if Sri Lanka's quest for peace is to succeed. Indeed, I believe the negotiations between the Government of Sri Lanka and the LTTE have reached an important point, one where an infusion of international support can add an unstoppable force to this momentum of peace. This is an opportunity to show that when nations of good will join together and work as partners with international institutions and organizations, so much is possible -- so much more than any one nation or entity can achieve alone. Now, I know this is a principle everyone in this room believes by instinct as well as by intellect, but it is a point that must be proven at every possible opportunity. So I welcome this chance to discuss with all of you the situation in Sri Lanka, to answer or to attempt to answer, along with the assembled experts, any questions about the ways in which international assistance can help to move the process forward and perhaps to arrive at some benchmarks of progress the Sri Lankans should be prepared to meet in order to secure such assistance. So again, I end where I began. I thank you all heartily for attending this conference today and look forward to the interaction with you. Thank you.

Published: 14 April 2003

Milinda Moragoda Minister for Economic Reform, Science and Technology Sri Lanka Ladies and Gentlemen, At the outset, I would like to express, on behalf of Prime Minister Ranil Wickremesinghe, the Government and the people of Sri Lanka, their profound appreciation to Deputy Secretary of State Armitage, and through him, to the Government of the United States, for having convened this Seminar in preparation for our meeting in Tokyo in June. Equally, we extend our profound appreciation to the Government of Japan for acting as host to the June Conference, which will be of critical significance for the peaceful resolution of the bitter conflict that has fractured our society, and ravaged our country for two decades. No less do we thank the Governments of all the countries represented at this Seminar for their concern and support. We are the more grateful because these meetings that concern Sri Lanka are being convened at a time when the world's attention is drawn to momentous events taking place elsewhere. It is our hope that this demonstration of friendly concern will have its own recompense in the form of satisfaction at being able to assist a process that brings peace and unity to a country and hope for 19 million people. * * * * Ladies and Gentlemen, The world was a different place after the tragedy of September 11th 2001. So too was Sri Lanka. Just months before, in July, an attack by the LTTE severely damaged our only international airport. If that was our darkest hour, the dawn would not be far away. It strengthened our resolve to end a senseless conflict. Since the Government of Prime Minister Wickremesinghe took office some 15 months ago, every effort has been made to arrive at a peaceful resolution of the conflict. With this in mind we invited the Norwegian Government to continue with the facilitation process that was initiated by President Chandrika Bandaranaike Kumaratunge. As a result of the commitment of the Norwegian Government and the sincerity and resolve of the two parties to the conflict, there is now hope for a peaceful end to the bloody hostilities that have killed more people than the United States lost in the entire Vietnam War and has spread terror throughout our country and crippled its economy. The peace process in Sri Lanka has been a matter of learning by doing. However, our philosophy has been rooted in a principled framework that is predictable in approach, flexible when appropriate but firm and resolute when necessary. One reason why the conflict had spread over so many years was that there seemed no way out of it. Some believed that a military solution was feasible. Others, who thought that a peaceful solution could be found, were disappointed, as one negotiation after another ended in failure and renewed hostilities. The approach of the present Government has been different. With a genuine desire to address the lingering issues that had given rise to conflict, we were willing to listen, to learn, and to be patient and inventive in our quest for peace. On the other hand, we would not close our eyes to the possibility of failure, and would be prepared to deal with its consequences. With an open but cautious approach, we can claim now to have made substantial progress toward what we believe to be our common goal. The visionary leadership of Prime Minister Wickremesinghe and his willingness to look with fresh eyes on the complexities of the situation have resulted in agreement on a cease fire, and acceptance by both sides of the political risks necessary to carry the process forward. Most importantly, we have effectively engaged the international community in our quest. We need their concern, their assistance, and their support in our endeavours. That the international community should recognize that they, too, have a stake in the outcome of these negotiations - that, we believe, is our surest guarantee of success. No one should expect that the issues over which thousands of our countrymen have given their lives could be resolved in a brief negotiation. Twenty years of conflict have wounded minds as well as bodies. Those wounds will take some time to heal; they have generated a climate of fear and mistrust in a country that is home to communities of different ethnic origins, of different religious persuasions, and speaking different languages; communities that must come to recognize that it is only through harmony and collaboration that prosperity for all can be achieved. Some donors may, as a matter of policy, think it desirable to postpone granting us assistance until the current negotiations are concluded and a peace accord has been signed. We appeal to them to reconsider that approach in the circumstances of our case. There are many instances where accords have remained on paper, where beneficiaries have been denied a chance to feel the benefits of peace. There is no doubt that without donor support from the outset, economic recovery could turn out to be a distant prospect. If we are unable to demonstrate now, in a preliminary way, the dividend that peace will bring, we risk the negative effects of frustration among the parties, a breakdown of the negotiations, and the resumption of hostilities. By allowing the flow of assistance to commence now, we could begin to show to every section of our people, including the LTTE, that a peaceful accommodation of interests will bring tangible prosperity and a better quality of life for all. In support of our appeal for the timely commencement of assistance that would speed Sri Lanka's economic recovery, we offer the progress thus far achieved under complex and volatile conditions. Whenever ceasefire violations have taken place, both parties have displayed the wisdom and maturity not to scuttle the peace process and revert to violence. Our negotiators have been able to remain focused on the common goal of a political solution. From having to deal with the demand for a separate state, they have moved to a consideration of patterns of devolution within a federal system. The atmosphere at the negotiations has progressed from mutual suspicion tinged with hatred, to mutual caution, in a continuing trend that is fostered through confidence-building measures. Moreover, we would be willing to offer such assurances as may be needed as to the proper use and accountability for the funds provided. Urgent tasks Funds are urgently required for both the immediate needs of reconstruction, rehabilitation and relief as well as for laying the foundations for overall economic recovery after two decades of destructive and debilitating conflict. I would like to outline first the tasks that demand our immediate attention.

1. There are some 1 million land-mines scattered in unmarked areas, that need to be located and neutralized.
2. Whole towns and villages need to be re-built and their basic services restored.
3. There are an estimated 1 million internally displaced persons, currently accommodated in camps, or staying with relatives. They desperately need shelter and simple equipment to till the soil.
4. Many schools have been destroyed or damaged in conflict-affected areas, while schools in other parts of the country have suffered severely from a chronic lack of funds. Sri Lanka is proud of its achievements in education, and its high literacy rates. Access to good schools has been of enormous significance to our people. But unless urgent action is taken to restore the quality of our schools, we shall risk squandering our achievements in this field, and having to deal with a "lost generation" of inadequately educated youth.
5. One of the greatest challenges that we must face is getting people back to work throughout the island. In addition, it has been our experience that whenever people have remained in refugee camps for long periods without hope and regular employment, they tend to become inured to a culture of dependency. But, with very little assistance they can be encouraged to resume their livelihoods as fishermen, farmers, and small traders. The social returns on such small investments will be very large, and the rehabilitation of these sections of our population will be essential if we are to achieve a lasting peace.

"Regaining Sri Lanka": a programme to stimulate economic growth and eliminate poverty A large percentage of our people still live below the poverty line, and the Government of Prime Minister Wickremesinghe is committed to making a determined effort to deal effectively with the problem. Looking back over the 50 years since Sri Lanka re-gained its independence, we can see the strong commitment of successive governments to human development and welfare policies. Large investments in social development have been reflected in Sri Lanka's extraordinarily high placement from year to year in the United Nations Human Development Indices. But over the same period, we did less well in maintaining an appropriate balance between social sector expenditures and investment in creating an environment conducive to economic growth. The result has been an imbalance between the aspirations of the people on the one hand, and on the other, a lack of opportunities for their realization. That imbalance has, in turn, resulted in dramatic and destructive socio-political consequences, especially among the youth. Sri Lanka, it must be said, already possesses the human capital necessary to generate and sustain economic growth; in this, our situation may resemble more that of post-War Europe or Japan rather than that of some other developing countries. The Government's economic programme, called "Regaining Sri Lanka" is designed to redress this imbalance between aspirations and opportunities. We recognize that efforts to alleviate poverty cannot succeed without economic growth, and the programme establishes priorities designed to move the economy to a higher growth path. We also recognize that we cannot be dependent on foreign aid indefinitely. We need to stand on our own feet. "Regaining Sri Lanka" seeks to achieve this. I would like you to note that the "Regaining Sri Lanka" programme was developed with extensive participation by persons from a wide range of backgrounds, and is being implemented by Steering Committees that are essentially public/private sector partnerships. This endeavor has earned the strong support and endorsement of the international community. The Tokyo appeal for timely support In making an appeal to our friends for timely support for our efforts at reconstruction and development, we ask that you take into account the special difficulties that confront us on the way to making peace a reality: It is not feasible for us to deal with reconstruction of war-ravaged areas in isolation from the development of the rest of the country which has also suffered economic and social damage as a result of the war; nor would we succeed in our efforts if assistance were to be delayed pending conclusion of a peace agreement. The situation we face demands first that we undertake reconstruction and development activity right away in the south as well as the north on some equitable basis, looking at urgent development needs over the country as a whole; and second that we balance immediate needs against medium term investment needed for economic growth. We are convinced that unless we can significantly increase economic growth and demonstrate the prospect of a better future for all, it will not be possible to make headway in the building of a lasting peace and a united nation. Hence, the Tokyo Donor Conference is an event of critical importance to the success of our endeavours. There we shall want to focus on reconstruction and development of the entire country. Immediate humanitarian assistance is urgently needed for undertaking the tasks I outlined earlier, such as de-mining, reconstruction of towns and villages, and assistance to internally displaced persons, including promoting their resumption of productive work. But of equal and parallel importance is the need to make substantial progress on the "Regaining Sri Lanka" programme that represents the Government's overall economic strategy for poverty alleviation and forms the basis for the financing we receive from the World Bank, the International Monetary Fund, The Asian Development Bank, other financial agencies and bilateral donors. Elements of that programme include: (1) infrastructure development such as the building or repair of roads and the augmentation of power generation; (2) making Sri Lanka into a transport, logistic and financial hub for the region as well as the world; (3) the establishment of a strong information and communications technology sector that would facilitate the flow of information and contribute to re-integrating the country; (4) improving the delivery of all types of education, especially tertiary education, to our people, and making them more responsive to their needs; (5) strengthening our health care delivery systems - upon which the vast majority of our people depend; (6) improving the productivity of our agriculture, fisheries and small businesses so as to enhance the quality of the lives of our people; (7) preservation of our environment, even as we seek success in increasing economic growth; (8) the promotion of tourism, including eco-tourism and other non-traditional forms of tourism; (9) I mention finally one of the most complex and politically sensitive of the elements in the Prime Minister's programme, namely, reform of the public sector. The disproportionate size of Sri Lanka's public sector - greater by far than any in the Asian region - is a constraint that severely limits economic growth. Conclusion At the time we regained independence 50 years ago, our country was among the most economically advanced in Asia. Since then, political and ideological dialectics have deflected us from the task of building a prosperous, unified nation. This has weakened our economy and left us with the legacy of fratricidal conflict. With the leadership of Prime Minister Wickremesinghe, and the goodwill from our friends in the international community, we now have the chance to draw back from the brink. At last our political leadership and our people are now united in the common cause of harmony and development. Perhaps we may even offer a pattern for others on how the genius of a people can rise again out of the devastation and alienating bitterness of conflict, to regain their place as a strong and vibrant nation, sustained and enriched by the talents of all its peoples. At the Tokyo Donor Conference, we expect to demonstrate in greater detail our single-minded allegiance to that cause. Ladies and gentlemen, it is now, or perhaps never!