(UTV|COLOMBO) – Ranil Wickremesinghe on Sunday (04) said the United States (US) 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 European Union (EU)’s warning it could withdraw duty-free concessions for Sri Lankan exports if it did not stick to commitments on national reconciliation, will further strain the economy, Wickremesinghe told Reuters in an interview.
“Countries are sensitive, they have concerns (About a Government led by Mahinda Rajapaksa) democratic countries have concerns,” he said.
The United States has held off on a nearly USD 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 USD 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 USD 480 million will be on hold because of the latest situation in the country, a Sri Lankan Foreign Ministry Official separately confirmed to Reuters.
An Official at the Sri Lankan Ministry of Megapolis and Western Development also confirmed the freeze to Reuters on the Japanese loan, imperilling the project.
An Official at the Japan International Cooperation Agency said the Agency was closely monitoring political developments and the railway project loan had been withheld.
The US Embassy in Colombo had no immediate comment when asked if Washington is taking any measures due to the Sri Lankan political crisis.
Wickremesinghe said his party will step up a public campaign for Parliament to be called and he be allowed to prove his majority. “We are all contemplating alternative actions, this includes a big mobilisation of people. Ultimately this has to be decided in Parliament.”
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