Sri Lanka

Sri Lanka Appeal No. 01.29/2002 Annual Report

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The Federation's mission is to improve the lives of vulnerable people by mobilizing the power of humanity. It is the world's largest humanitarian organization and its millions of volunteers are active in 178 countries. For more information: www.ifrc.org
Appeal No: 01.29.2002;
Appeal target: CHF 652,199;
Appeal coverage: 71%

"At a Glance"

Although the National Society (NS) was successful in gaining increased support from donors in 2002, there were still needs for further support for the organizational development (OD), disaster preparedness (DP), and humanitarian values programmes.

A joint branch assessment mission undertaken by the Sri Lanka Red Cross Society (SLRCS), the International Federation and the International Committee for the Red Cross (ICRC) to identify the needs of five northern branches traditionally working in conflict-affected areas in the first half of the year also identified short, medium and long-term needs of these branches. A programme based on the assessment submitted by the Spanish Red Cross Society on behalf of the Sri Lanka Red Cross Society to the European Commission's Humanitarian Office (ECHO) to cover a six-month programme to address some short-term needs in these branches is now underway in close cooperation with the ICRC.

The three components of the International Red Cross and Red Crescent Movement in country agreed that the recommendations from this joint assessment should lead to a nation-wide branch development programme, as the issues of capacity building facing these branches remain the same as those facing the remaining 20 branches. A nation-wide branch development programme with full cooperation among the three components of the Movement is the underlying need in order to maximize the impact of the Sri Lanka Red Cross Society's service delivery at the community level.

The new trilateral memorandum of understanding (MoU) which was anticipated to be signed in September between the Sri Lanka Red Cross Society, the ICRC and the Federation to improve strategic coordination and planning between all components in the future in the spirit of the "Strategy for the Red Cross Red Crescent Movement", was finally signed in March 2003. It is hoped that a comprehensive branch development strategy will be drawn up for sharing with a wider set of partners.

Overall analysis of the programme

Since the first round of peace negotiations between the government of Sri Lanka (GOSL) and the Liberation Tigers of Tamil Eelam (LTTE) in September 2002, four sessions of talks took place. The parties agreed to bring the peace process forward, responding to the overwhelming call of the people of Sri Lanka and to create the conditions for lasting peace, prosperity, and respect for human rights. Both the GOSL and LTTE already expressed their resolve to address issues pertaining to a lasting political settlement of the ethnic conflict in Sri Lanka, pursuing a step-by-step approach. The following round of talks in Berlin, Germany was expected to address political and fiscal aspects of federalism, human rights and child recruitment. The sixth round of talks, in Japan from 18-21 March, is to be followed by a donor conference in June in Japan. The agreement was therefore made to have the World Bank be the custodian of the North East reconstruction fund and solicitations were made to the international community to commit funds to support this. Due to on-going peace talks, trust and confidence is gradually increasing between the previously warring parties. Traffic to and from the north is back to a certain level of normalcy with the International Committee of the Red Cross (ICRC) acting as an intermediary. Half of the displaced Muslim population who had settled in the government's camps in the north-eastern, north central and western provinces have already returned to their homes while the other half resettled elsewhere in the country. Tamils, displaced within the northeastern province have started their own return process but face difficulties as their land is yet to be cleared of mines and military installations.

The government's determination to resort to non-inflationary methods of borrowing and keep the budget deficit between 7.5-8 per cent of the GDP rules out substantial direct relief in the short-term, aiming at a medium term reduction of living costs and increase in job opportunities. Purchasing power of the majority of the population remained low, and unemployment rates, particularly in the rural sector, did not show improvement. Growth in the agricultural sector and the recovery in the manufacturing sector are imperative to improving the employment situation and to absorb the 150,000 young people who enter the labour market every year. The GDP growth was strengthening at an estimated three per cent for 2002, along with the strong performance of the services sector, which now represents more than 50 per cent of the GNP. Consumer price inflation continued to decelerate. The interest and the exchange rates remained stable. Contraction in manufacturing production may have bottomed out. There was a sharp recovery in tourist arrivals, and growth in the telecom market remained strong. Exports were enjoying a rebound; while garments and tea exports were rising, and imports in all major categories recovered. As a result, foreign exchange reserves were rising. The 2002/2003 budgets, which were announced in early November, suggest the economic reform combined with relaxed monetary policy will continue.