COLOMBO : Sri Lanka’s deposed Prime Minister Ranil Wickremesinghe said the United States and Japan had frozen more than a billion dollars of development aid after his abrupt dismissal raised doubts about the future of democracy in the island.
The move to hold back project financing, along with the EU’s warning it could withdraw duty-free concessions for Sri Lankan exports if it didn’t stick to commitments on national reconciliation, will further strain the economy, Wickremesinghe told Reuters in an interview.
President Maithripala Sirisena fired him last month after months of tensions within the government and appointed Mahinda Rajapaksa as premier in a shock move that has plunged the nation into a political crisis.
The United States has held off on a nearly $500 million aid programme for building of highways and improving land administration by the government-funded Millennium Challenge Corporation (MCC), Wickremesinghe said.
Japan had also put on hold plans to extend a soft loan of $1.4 billion for a light railway project, he said. “A lot of projects are held up, the Millennium Challenge, the Japanese loan,” he said.
The Sri Lankan embassy in Washington has been informally told by the MCC that around $480 million will be on hold because of the latest situation in the country, a Sri Lankan foreign ministry official separately confirmed to Reuters.
