Economic and Environmental Sustainability of the Asian Region by Gill Sucha Singh;Singh Lakhwinder;Marwah Reena;

Author:Gill, Sucha Singh;Singh, Lakhwinder;Marwah, Reena;
Language: eng
Format: epub
ISBN: 1099365
Publisher: Taylor & Francis Group

Many donors are becoming increasingly selective in allocating aid, basing their decisions on the performance of recipient countries in terms of policy reforms, stronger governance and programme implementation. Lack of good governance in Sri Lanka is considered to be a major obstacle to the effective use of aid in the future. Lack of trained managers and transparency, poor information systems and lack of systems to address these concerns are some of the main causes of weak public management. Another important problem is the lack of communication between the government and the people regarding the latter’s needs.

Utilisation of aid by sector

To understand the effectiveness of foreign aid in economic and social development in Sri Lanka, we must look at the various heads on which foreign aid has been spent. Table 9.7 provides the sectoral distribution of disbursements of aid during the period 1991 to 2005.

The major sectors on which foreign aid has been spent are agriculture, economic infrastructure, social infrastructure, finance and banking and private sector development. Though there was a continuous increase in total disbursements over the period, it has increased from USD 898.2 million in 1991 to USD 1,018.1 million in 2005.

In 1991, a considerable amount of the aid was spent on agriculture. Investments in agriculture funded by foreign aid focused on provision of irrigation facilities, land, quality seeds, fertiliser, modern agro technologies and storage facilities. However, matching the decline in the importance of agriculture in the economy8, the amount of foreign aid spent on agriculture has also declined over the years. The amount spent on agriculture as a percentage of total disbursements declined from 23 per cent in 1991 to 9 per cent in 2005 (Figure 9.1).

Table 9.7 Aid Disbursements by Sector (in USD million)

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