Sri Lanka’s top donors not convinced that the situation is conducive for reconstruction and investment

Feb 06 (LBO) – A drop in violence and impending peace talks between warring factions has failed to convince Sri Lanka’s top donors that the situation is conducive for reconstruction and investment, officials said Monday. Top officials of the tropical island’s key donors – the World Bank and the Asian Development Bank (ADB) – said the government has also not shown enough commitment for economic reform and poverty alleviation.

However, a lasting peace deal remains the top priority for the tsunami-hit island’s future, heads of World Bank and ADB said.

Sri Lanka has not yet got a security, peace framework that gives comfort…Peace is the key for poverty reduction over time, the World Bank’s Country Director, Peter Harrold, told reporters.

Harrold said security fears are slowing investment, which means that economic growth would be around 4-6 percent in 2006 rather than the government’s expectations of an 8 percent growth.

"Sri Lanka has demonstrated a capacity to grow at no less than 4 percent and not more than 6 percent when conditions with respect to the conflict are not deteriorating sharply," Harrold said.

"You can more or less count on something between 4-6 percent being somet