Thrift and restraint in Sri Lanka’s counter terrorism effort

 

* Economic interventions used to put pressure on Sri Lanka



Central Bank Governor Ajith Nivard Cabraal told the Lessons Learnt and Reconciliation Commission that contrary to popular belief Sri Lanka’s defense budget, as a percentage of GDP, was much lower to most countries.


"Contrary to popular belief, Sri Lanka has expended just about 4 percent of its GDP on defense over the 4 years, 2006 to 2009. For a country that has been plagued by terrorism, this quantum of government spending on defense, indicates restraint and thrift in waging the counter terrorism effort. The final results where Sri Lanka emerged as the first country to defeat terrorism, shows that Sri Lanka has been able to expend its resources in an efficient and productive manner," Cabraal said.


"For four years between 2006 and 2009, the cost incurred by Sri Lanka on the LTTE war was US$ 5.5 billion. This included cost of aircrafts, ships, tanks, ammunition, other equipment, training, food for soldiers, uniforms, etc. In contrast, the cost incurred by the US government on training of their forces in Iraq and Afghanistan amounted to US$ 39 billion. About 700 percent more than Sri Lanka’s cost." He said.


Cabraal said the investment in fighting terrorism has paid off and the economy was seeing growth across all sectors of the economy with economic growth estimated at 8 percent in 2010 and 8.5 percent this year.


He pointed out that international forces had tried to make it difficult for Sri Lanka to finally defeat terrorism.


"Many so called economic interventions seemed to be attempts to indirectly pressure Sri Lanka to halt or dilute the final humanitarian effort, such as the threat of withdrawing GSP Plus trade concessions at a sensitive time and the delay in approval of the US$ 2.6 billion IMF standby arrangement," Cabraal said.


"There were massive global mis-information campaigns carefully designed to affect Sri Lanka’s economy, funding sources, cost of borrowing and country ratings.


Every perceived negative factor from an economic point of view was given deliberate and wide publicity both locally and internationally. Hence, a massive effort had to be launched and maintained to convey the positive features of the economy. Even in the future, these efforts have to be continued, in the interest of economic stability," Cabraal said.


Despite the negative sentiments, Sri Lanka had several successes Cabraal pointed out: "Several international bond issues were oversubscribed. There was no fall-out from the withdrawal of GSP Plus. Our ratings were maintained and recently upgraded. Investor sentiment was maintained even in the most difficult of times and the war risk premiums was removed and travel advisories relaxed."


Once the conflict ended, several steps were taken to restore normalcy and livelihoods in the once war torn regions.


"Many vocational training centres have been established and restrictions on fishing have been removed. A large number of new bank branches have been established and existing ones in North and East have been re-established. Thousands of cattle, goats and poultry have been distributed to households. Around 8,912 boats, 6,139 motors and 94,967 nets have been distributed," Cabraal said.


"The Central Bank has started several new credit lines and added to the existing schemes in the North and the East. These schemes have provided extensive access to finance which has greatly assisted the people of these two Provinces to practice their livelihoods," he said.


 
 
 
 
 
 
 
 
 
 
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