World Bank cancels funding to Sri Lanka

Friday, 16 May 2014 

The World Bank has reportedly cancelled a Rs. 2 billion (US$ 16 million) tourism development project.

The cancellation has reportedly taken place following a government request.

The Sunday Times has reported that small time hoteliers — many of whom went through an application and a selection process – are bewildered by the move.

Funds from the much-publicised “World Bank Matching Grant for Small and Medium Enterprises (SME) in Tourism” have now been diverted to a dam safety project in the North and East.

But representatives for hundreds of small time tourist entrepreneurs have said they had no idea the proposed funding had been cancelled.

“We don’t know what has happened and that’s part of the problem,” Suresh de Mel, Immediate Past President of the Association of Small and Medium Tourism Enterprises (ASMET) has been quoted in The Sunday Times as saying. “We need some information on the status of the project.” De Mel was not aware that the initiative had been cancelled. “We did a campaign around the country,” he has said.
“We had 17 meetings and there were about 900 participants. This has been a big blow to our Association because its credibility is at stake. Many people don’t even talk to us anymore. I must have had more than 100 phone calls.”
Entrepreneurs were promised “matching grants” under the project. That is, if a hotelier invested Rs 1 million in his business, a corresponding Rs. 1 million would be disbursed to him as a grant. The figure could go up to a maximum of Rs. 10 million. The funds’ terms and conditions had been negotiated by the Ministry of Economic Development.

Information available on the World Bank website now states, “The Government has requested that the remaining unutilized project funds be cancelled as the priorities of the Government have changed”.

The funds have subsequently been reallocated to the Dam Safety Project. Lack of information about the project has angered the industry. A copy of a letter addressed to World Bank Country Director Francoise Clottes was received in the post by the Sunday Times. It has said that based on the World Bank’s assurance of a matching grant, entrepreneurs had borrowed money from banks, financial institutions and money lenders in villages. Some had mortgaged houses and properties.

“This was done in order to fulfil certain requirements to qualify for the grant,” it has stated. “Two people have already committed suicide, some have gone bankrupt and others wait hopelessly. When business collapses family and children suffer and the World Bank is aware of this situation.”