By Shamindra Ferdinando The Island

Central Bank Governor Ajith Nervad Cabraal yesterday said claims being made in some quarters that the government was facing a 20 per cent cut in US aid, were hightly exaggerated as USAID funds had always been channeled through various NGOs and civil society organizations.

The Governor was responding to media reports which quoted US Secretary John Kerry as having proposed a 20 per cent cut in aid. The US announcement was made in the wake of the State Department offering two grants, each amounting to $ 500,000 for two projects aimed at promoting post-war national reconciliation and promoting media freedom.

While the actual US development assistance to Sri Lanka NGOs and civil society organizations in 2012 was $ 8 million, Kerry has proposed about $ 6 million for 2014.

Asked whether the government was concerned about the US move, the Governor asserted that a section of local and international media had interpreted US budgetary proposals to convey a different picture. He said that some media had gone to the extent of saying the US move had to do with human rights issues.

In actual term, Kerry had proposed $ 11 million in aid, which, according to a senior State Department official, is a “drop of 20 per cent” from the actual spending in the 2012 budget. Cabraal said that the US decision meant that those NGOs and civil society organizations could lose some of their funding.

The Governor said that Denise Rollins, Senior Deputy Assistant Administrator, Asia Bureau, USAID explained her governmentƒÆ’‚¢ƒ¢-¡‚¬ƒ¢-¾‚¢s position with regard to assistance provided to Sri Lanka in late February. Addressing the media in Colombo, Rollins said that the US would provide approximately $ 13 million this year.

When the media asked Rollins whether the US was concerned about corruption and it actually going down to the people when funds were channeled through the government, she emphasized USAID programmes were implemented through NGOs, contractors and the private sector. Rollins said that the Sri Lankan government did not receive the resources directly. She also highlighted that the USAID always finalized the contracts to ensure transparency and accountability.

Responding to another query, Rollins discussed the possibility of USAID pruning its support due to severe financial crisis in the US. She said: “Everyone knows thereƒÆ’‚¢ƒ¢-¡‚¬ƒ¢-¾‚¢s a serious crisis, financial crisis for us. Depending on how long it lasts it could potentially affect not just foreign assistance but everything. There are several government agencies that are now getting ready to have furloughs of their staff, so this is a very serious situation for the United States. We just have to see how that works out.”