AMBASSADOR'S COURTESY CALL ON FINANCE MINISTER

C O N F I D E N T I A L SECTION 01 OF 02 COLOMBO 001801

SIPDIS

DEPT PLEASE PASS TO E, EB, SA/INS, SA/RA, DRL
DEPT ALSO FOR USAID FOR BERNADETTE BUNDY - ANE/SA
DEPT ALSO PLEASE PASS TO USTR FOR AUSTR WILLS
TREASURY FOR JERRY ADKINS
DOL FOR SUDHA HALEY
NSC FOR ELIZABETH MILLARD
COMMERCE FOR ARIADNE BENAISSA

E.O. 12958: DECL: 9/30/13
TAGS: ECON ETRD EFIN EAID PREL IZ CE
SUBJECT: AMBASSADOR'S COURTESY CALL ON FINANCE MINISTER
CHOKSY

REF: A) STATE 287999, B) STATE 287995


1. (U) Classified by Ambassador Jeffrey J. Lunstead.
Reasons 1.5 B and D.


2. (C) Summary: During his initial courtesy call with
Finance Minister Choksy on October 10, the Ambassador
raised TDA technical assistance, aid utilization,
government procurement problems, and the Iraq Donors
Conference in Madrid. Choksy was enthusiastic and engaging
on TDA assistance, aid utilization efforts and the Iraq
conference. Government procurement problems and US
advocacy seemed to fall outside either his comfort zone or
area of interest. Choksy indicated the GSL is preparing
legislation to create a new agency to coordinate
assistance, is ready and willing to continue full-bore with
the Treasury advisor program, and would look into what they
might offer for the Iraq conference. End Summary

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Technical Assistance Programs
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3. (C) Choksy raised USG technical assistance, from both
TDA and the Treasury Department, noting that the current
Treasury Advisor on budgeting had been very helpful and
effective. The GSL looks forward to working with the new
TA on debt management, due to start sometime in November.
Choksy thought debt management would be particularly
important as the GSL considers a sovereign credit rating.

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FDI and the Peace Process
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4. (C) On the issue of a sovereign rating, Choksy expressed
some concern that the lack of momentum on the peace process
could push a GSL rating down. The Ambassador commented that
during recent discussions with the American Chamber of
Commerce in Singapore he found significant interest in Sri
Lanka. Singapore based US businesses needed to be educated
about the peace process, particularly the unique reality of
Sri Lanka, where peace could hold, despite the long process
toward an agreement. Choksy noted that local investment
was also sidelined and waiting for more movement on the
peace front. Finance Secretary Charitha Ratwatte commented
that "investors who get in early could reap greater
rewards." Ratwatte thought a good showing through the
tourist season would bolster confidence and improve Sri
Lanka's image as well.

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AID Utilization
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5. (C) Regarding aid utilization, Choksy said that the GSL
had prepared legislation authorizing the formation of a new
agency (located under the PM's Policy Development Ministry)
that would serve as a coordinating body for all assistance,
especially that slated to come in as a result of the Tokyo
conference. With regard to current disbursements, Choksy
said a decision had been taken to fast track certain
incomplete projects and get them finished. New projects
would be funneled through the new coordinating agency. At
least one of the current coordinating bodies, the Donor
Assistance Coordinating Committee, would be subsumed into
the new agency.


6. (C) The Ambassador noted the value in a coordinating
body, but raised concerns about what seems to be a
proliferation of coordinating groups (Note: the Embassy has
received three different letters from three different
bodies in recent days. End note). Choksy, who
acknowledged that he was unfamiliar with the other bodies,
suggested that there might be some division with regard to
aid for the north and east, and aid for the rest of Sri
Lanka. The new agency he had described would control aid in
the GSL controlled areas. Coordination of aid to other
areas would be a point of negotiation for the new Interim
Administration. The Ambassador noted that the donors had
emphasized at the recent Tokyo follow-up conference that
they would move forward with aid projects in the south to
send a political message to the LTTE: "you cannot hold
development of the entire country hostage."

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Iraq Donors Conference
--------------

7. (C) The Ambassador took advantage of the meeting with
Choksy to raise the Iraqi Donor Conference invitation from
Spain (Ref A). Choksy had not heard about the invitation,
but said he would query the Foreign Ministry. The
Ambassador acknowledged the GSL's fiscal realities, but
suggested there may be some creative ways the GSL could
support the process. He further noted that the Spanish
were convening a conference for CEOs, (Ref B) and, though
Sri Lanka had not been one of the original invitees,
perhaps it could offer to send some of its talented
business people (who also have significant commercial
experience in Iraq) to that conference.


8. (C) At first Choksy and his staff seemed non-plussed by
the suggestion of a donor conference, but after hearing
some of the Ambassador's ideas, they clearly became more
enthused. Choksy offered to pursue the invitation and see
what they might be able to do.

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Comment
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9. (C) Choksy was cordial, a bit reserved, but fairly
enthusiastic in support of our technical assistance
programs, particularly through TDA and the Treasury
Advisors program. It appears the GSL is flailing about
with regard to aid coordination, and the Finance Ministry
seems to be supporting the notion of the new development
agency under the Policy Development Ministry. Choksy did
not show much interest during the discussion on government
procurement and corruption problems. Overall, it appears
he will continue to be a force for positive economic reform
and clearly is interested in pursuing additional assistance
from the USG. End comment.

LUNSTEAD