Sri Lanka’s worsening human rights record and hardline militaristic approach to the ethnic question has not deterred international donors from continuing to fund the Sinhala-dominated state.
In March 2007 the Japanese government and the Asian Development Bank (ADB) awarded a total of US$ 620 million to Sri Lanka.
And whilst some donor countries like Germany and the United Kingdom have linked aid to improved human rights and de-escalation of violence, no significant reduction in fund flow has been noted.
The ADB approved a US$ 300 million loan towards expansion of Colombo port which it considers to be a key trans-shipment hub in South Asia while the Japanese government provided its largest yen loan package to Sri Lanka - US$ 320 million - under its Official Development Assistance (ODA) loan scheme.
This is the 38th loan package Japan has extended to the Sri Lanka. Japan is the single largest donor to Sri Lanka in terms of the total amount of assistance since 1986, and Sri Lanka is one of the largest recipients of per head assistance from Japan in the world.
The loaned funds is to be spent on infrastructure projects identified by Sri Lankan President Mahinda Rajapkse’s election manifesto and is aimed at building infrastructure.
According to the ADB, Colombo port which is now capable of handling 3.3 million containers would be able to handle 5.7 million containers following the expansion.
Prodyut Dutt, a senior transport specialist with ADB's South Asia Department, said: "In recent years, Colombo Port has lost market share in trans-shipment because it does not have the operating capacity or depth required to berth the latest generation container ships."
Recent military offensives against the Tamil Tigers by the Sri Lankan government in defiance of the 2002 ceasefire agreement has increased risk violence spreading to the south and according to ADB the expansion plan incorporates stepped up security measures.
Sri Lanka whilst borrowing heavily has significantly increased its defense budget for 2007 to US $1.4 Billion. An increase of 46% over the previous year and 23% of Sri Lankan state’s total income.
On April 2, a coalition of about 200 Sri Lankan civil society groups called South Asian nations to cut defense spending and increase funding for socio economic development to curb poverty in one of the world’s poorest regions.
“We realize that the lavish spending on weapons by poor South Asian countries is one of the major causes of rampant poverty in the region,” Arjun Karki, a coordinator of the coalition, told a news conference.
