Three donor countries ? Canada, Netherlands and Germany ? have decided to freeze all development aid to Sri Lanka with effect from January next year, highly placed sources said.
These countries have informed some of the local Non-Governmental Organisations (NGOs) that they would not be diverting their monetary allocation to Sri Lanka as there was a severe lack of development projects aimed at building peace and harmony in Sri Lanka at present.
Local NGO officials believe the just presented war budget was one of the main reasons for the donors to take this drastic decision.
However, they said the donors had also decided to freeze aid because the per capita income in Sri Lanka has shown a slight upward trend.
`Owing to these two reasons, the donors will not send us any more money for development work,` they said.
They further said, however, there would be no change in the allocation already made by these donors for the calendar year of 2008.
Local NGOs said that more donors were likely to pull out if the present war situation continued with no sign of peace in the future.
`While emphasising on war, the government also must adopt a mechanism to build peace in the country. This is the kind of confidence-building measure that would attract foreign countries,` they said.