Sri Lanka’s ousted PM says US, Japan freeze US$1 billion aid

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 dismissal raised doubts about the future of democracy in the island.

The move to hold back project financing, along with the European Union’s warning it could withdraw duty-free concessions for Sri Lankan exports if it didn’t stick to commitments on national reconciliation, will strain the economy, Wickremesinghe said.

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 plunged the nation into a political crisis.

Wickremesinghe, who has challenged his dismissal and vowed to remain prime minister until Parliament voted him out, said there were concerns about a government led by Rajapaksa.

“Countries are sensitive, they have concerns (about a government led by Rajapaksa),” he said at the prime minister’s official residence yesterday.

The United States has held off on a nearly US$500 million (RM2.08 billion) aid programme for building of highways and improving land administration by the government-funded Millennium Challenge Corporation, Wickremesinghe said.

Japan had also put on hold plans to extend a soft loan of US$1.4 billion for a light railway project, he said.