$12.8M Additional Loan to Assist Sri Lanka's Conflict-Affected Areas

MANILA, PHILIPPINES - The Asian Development Bank (ADB) is providing additional financial assistance for the rehabilitation of conflict-affected areas in the Northern province of Sri Lanka, particularly to assist the return and resettlement of Internally Displaced Persons (IDPs).

ADB will provide a $12.8-million loan from its concessional Asian Development Fund (ADF) for the ongoing North East Community Restoration and Development (NECORD) Project II.

Last year, more than two decades of civil conflict came to an end after the government defeated the Liberation Tigers of Tamil Eelam and gained full control of the Northern province. However, by the end of the fighting there were more than 290,000 people displaced in the Northern Province. This was in addition to another 150,000 people who had been displaced earlier in the long-running conflict. The conflict resulted in significant destruction and severely retarded the region's development, with poverty levels in the Northern province estimated to be at least 37%, more than twice the national average.

NECORD II was initially funded in 2005 with a $26 million concessional ADF loan and $14 million ADF grant and $5.9 million grant from the Government of Sweden, plus $9.1 million from the Government of Sri Lanka. More recently, AusAID provided a grant of $7.3 million to assist returning IDPs to restart their livelihood.

Consistent with the original scope of NECORD II, the supplementary finance will rebuild urgently needed community, social and economic infrastructure in health, education, agriculture, rural electrification, rural access and administration in the Northern province.

"The project will assist the government in meeting the urgent basic needs of the war weary people of the North, particularly returning IDPs, including a significant number of physically disabled people, households headed by women, and children," said Mookiah Thiruchelvam, project implementation officer of ADB's South Asia Department.

"Basic social and economic facilities need to be restored if affected communities are to recover and return to normal. NECORD II has a well-established implementation structure and channeling the additional funding through this project provides a quick and effective way of meeting these urgent needs," said Richard Vokes, ADB's Country Director for Sri Lanka.

The ADB loan, which is sourced from loan savings and cancellations within the ongoing ADB-supported portfolio in Sri Lanka, will carry a 40-year term, including a grace period of 10 years and an annual interest rate of 1%.