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| >> Regional Overview >> Sri Lanka Overview | |||||||||||||||||||||
IntroductionSri Lanka provides a unique opportunity in South Asia for advancing U.S. national interests in democratic values and economic opportunities. The country has a fifty-year tradition of vigorous democracy with active political parties, a free press and an independent judiciary. Its levels of literacy and life expectancy rival those of developed-countries; it has broad gender equality; little abject poverty; and has made progress on economic reforms. Overall unemployment has dropped, from over 15% in 1990 to around 8.5%, although the percentage of unemployed educated youth still remains high. Despite the gains it has made, Sri Lanka remains at the bottom of the list of middle-income developing countries in terms of GNP per capita. The prolonged 16-year conflict in the North and East Provinces continues to threaten its progress.The Mission Performance Plan (MPP) for Sri Lanka emphasizes economic growth that promotes political stability, democracy and human rights, and humanitarian assistance as essential to the U.S.-Sri Lanka relationship. USAID's programs are at the forefront of these efforts. The main focus of USAID assistance is to strengthen Sri Lankan competitiveness in global markets and improve the enabling environment for trade and investment. Other USAID assistance is directed at democracy and human rights, and humanitarian assistance. The Development ChallengeSri Lanka has made progress in macro-economic reforms and some financial and structural reforms that stimulate productive investment. However, diversification of the economy away from its traditional reliance on commodity exports and low-value products remains too slow to generate a significant increase in incomes. To progress rapidly to develop a fast growing, outward-looking economy, Sri Lanka's private sector needs to implement better business strategies and the Government of Sri Lanka (GSL) needs to make the necessary policy and regulatory reforms to improve the enabling environment for the private sector.USAID's economic growth program is aimed at increasing Sri Lankan competitiveness in the global market place. Through strategic partnerships with the GSL, business leaders and associations, USAID is bringing attention to the issue of Sri Lankan competitiveness and supportive policy and regulatory reforms. A South Asia Regional Conference on Competitiveness was held in Colombo to raise awareness on competitiveness. Meetings were held with private sector association representatives, firms, suppliers and service providers within given industries to introduce the cluster concept of working together to create competitive business strategies. As a result, the garments, tea, rubber, education, tourism, eco-tourism and jewelry industries have requested USAID assistance to form such clusters. USAID's technical assistance and analytical support to government institutions assists the GSL to participate effectively in the competitiveness process. Financing of industry and infrastructure development is also being enhanced with assistance from USAID, through the development of a listed corporate and government debt market-trading program. USAID provided institutional strengthening training for Ministry of Finance personnel on Taxation Policy Analysis to develop their capacity to examine revenue and cost benefit implications of tax proposals. Better dialogue between associations and the GSL has led to requests for reforms in privatization of state-owned livestock farms and restructuring of livestock extension services, which is to be included in the GSL FY 2000 budget proposal. Tariffs relating to high-tech agricultural equipment and importation of improved seed and livestock have been eliminated. An agro-industrial policy framework has been drafted and is awaiting final approval by Parliament. USAID technical assistance persuaded poultry and dairy associations not to lobby for protectionist tariffs and instead the associations launched programs to increase domestic consumption of their products. In 1999, the conflict in the North and East Provinces of the country continued to place heavy demands on the country's resources. The GSL continued its strategy of intensive military confrontation and reestablishment of normalcy in the Jaffna peninsula. Resettlement of the displaced population to the Jaffna peninsula continued but was slowed by security problems in the area, and a large number of persons remain displaced. Efforts to reach a negotiated political settlement were stalled by the lack of cooperation between the major political parties and lack of interest on the part of the insurgents. The GSL showed courage in conducting a transparent investigation of alleged human rights abuses committed by its own forces during the ongoing conflict. USAID funded foreign forensic experts to assist the GSL in the investigation into a multiple gravesite at Chemmani in northern Sri Lanka. Other DonorsIn 1998, the United States was the sixth largest bilateral donor, and the ninth largest overall. The leading donors were the Asian Development Bank (ADB), the World Bank (WB), UNDP, Japan, Germany, Norway, Netherlands, Sweden and the United States. Japan, the ADB and the WB are the largest donors to Sri Lanka. Japanese development assistance continues to place emphasis on supporting improvements in key physical infrastructure and environment while the WB is supporting a Private Sector Infrastructure Development project. The ADB has an ongoing Science & Technology project and has plans for a Private Sector Development Program. USAID is the lead donor working on competitiveness at the industry cluster level and developing policy reform through the private sector. The GSL remains committed to allowing NGOs to work effectively in the north and east. USAID activities complement efforts of the UN agencies such as UNICEF, WHO, UNHCR and international voluntary organizations, which are providing health care and shelter to the displaced.
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