Ranil says U.S., Japan freeze aid over political crisis

COLOMBO (Reuters) – 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 abrupt dismissal raised doubts about the future of democracy in the island.

The move to hold back project financing, along with the EU’s warning it could withdraw duty-free concessions for Sri Lankan exports if it didn’t stick to commitments on national reconciliation, will further strain the economy, Wickremesinghe told Reuters in an interview.

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 has 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 international concerns about a government led by Rajapaksa.

“Countries are sensitive, they have concerns (about a government led by Rajapaksa) democratic countries have concerns,” he said in the interview conducted in the prime minister’s official residence in a colonial-era bungalow where Wickremesinghe is camping along with his supporters.

The United States has held off on a nearly $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 $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.

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