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| Friday, 14 November 2003 |
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President Chandrika Bandaranaike Kumaratunga assured the heads of foreign donors of her commitment to achieve a negotiated peaceful solution for the ethnic issue and to accelerate economic development coupled with economic reforms. The President met Senior Resident Representative, IMF, Jeremy Carter, Country Director, World Bank, Peter Harrold and Resident Representative ADB, John Cooney on Wednesday, briefed them of the current political situation and economic development activities in the country at a discussion ran for nearly two hours. IMF Jeremy Carter told the Daily News that the discussion continued in a 'friendly' manner. "We explained her that much of the donor assistance is linked to the peace process followed by the country's economic progress. The President in agreement assured of her commitment to the peace process and to proceed with economic reforms," he said. Representatives were assured that Parliament would re-open and the budget presented on time, to ensure donor commitments are met, President's Senior Advisor, Mano Tittawella told Lanka Business Online. "There is no need for markets to panic or investors to get jitters. The President is committed to ensure that the government's economic plan continues," he said. The Bulk of the US$ 4.5 bn aid pledged in June, as well as multilateral donor funding, hinges on budget proposals and peace talks re-starting in January. A second US$ 80 mn tranche under the International Monetary Fund's US$ 567 mn concessionary lending facility is also due mid December. Colombo stock market perked up on the hope of a breakthrough in the 'political peace talks', with the key All Share Price Index rising 36.42 points to close at 1,221.14. Tittawella assures that Kumaratunga will honour the ceasefire agreement and had conveyed her sentiments, when she met Norwegian Deputy Foreign Minister Vidar Helgesen and Special Envoy Eric Solheim for talks on Wednesday evening. An election would be a negative sign for the equity markets. But the currency and bond markets have not responded in a knee-jerk fashion to the current political developments. The stability is partly due to thin volumes, but largely due to Central Bank's moralsuation tactics to keep a grip on the markets. Some market players, especially bond dealers, took a collective stand during the early days of the crisis, not to engage in speculative trading. Yields on the secondary bond market are unlikely to spike, unless the peace process collapses and the LTTE takes up arms. The Central Bank maintained its soft interest bias, following its monthly Monetary Policy Review on Tuesday, and also said it was reducing its November domestic borrowing programme by Rs. 2 bn, due to an inflow of US$ 50 mn from the Asian Development Bank. |
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