Consideration has been given, on an interdepartmental basis, to the projects in Ceylon which might be financed from funds available in 1955-56. After discussions with representatives of the Ceylon Government, during the course of which projects totalling several million dollars were examined, Canadian officials consider the following projects to be suitable for Canadian assistance under the 1955-56 programme for Ceylon. As in previous years, the total cost of this programme is approximately $2 million. The programme as outlined below is made up of an estimated $1,235,000 in capital equipment and $780,000 in flour, the counterpart fund equivalent of which is to be used for financing local costs of various projects. (In 1954-55, approximately $850,000 in flour was supplied for counterpart fund purposes.)²⁸

The following are the details of the programme which Canadian officials recommend:

(1) School of Practical Technology

As part of the 1953-54 programme for Ceylon, $500,000 was approved for use at this project. This was based on estimates that the total costs of the school would amount to approximately $300,000 and that about $200,000 in capital equipment would be required. Assistance for the rupee costs has already been made available through the shipment of $300,000 worth of flour, which has been sold to provide a counterpart fund equivalent to be used for meeting these costs. Since the equipment for the school would not be required until 1955-56, it was agreed last year that the $200,000 originally set aside for equipment might be diverted in last year's programme to assist Ceylon in its road building programme. It was understood at that time that the cost of equipment for the School of Practical Technology would be included as part of any regular programme of aid to Ceylon in 1955-56, subject to the appropriation of funds in that fiscal year. The Ceylon Government has requested that this item, therefore, should be included in the new programme and that $200,000 should be made available this year to purchase capital equipment. As a result of certain changes in specifications arising out of the recommendations of a Canadian technical expert sent to Ceylon, there has been a revision of the local costs of the school and it is now estimated that an additional $200,000 will be required to meet construction costs. These additional rupee costs could be met by providing $200,000 worth of flour from 1955-56 funds so that the counterpart equivalent of this flour may be applied to the financing of these additional construction costs.

(2) Fisheries Project

As part of previous aid programmes, Canada has agreed to make available a total of $1,407,000 for a pilot fisheries project, including the provision of experimental fishing craft and other related fisheries equipment, an ice-making and fish cold storage plant and a fish reduction plant. In addition, Canada agreed to provide out of 1954-55 funds $600,000 worth of flour, the counterpart fund equivalent of which was used to meet local costs at the Mutual Fisheries Harbour, which is an integral part of the fisheries project. In view of the high priority which this project has for the development of the Ceylon economy and because of the direct interest which Canada has in this project, the Ceylon Government has requested that additional aid for local costs at the Harbour should be made available through the provision of flour from 1955-56 funds.

Ceylon has also requested that additional trawler equipment should be provided in 1955-56 for the fisheries project. The provision of this equipment would appear to be in keeping with Canada's original interest in this project.

As part of the fisheries project, the Ceylon Government proposes to set up a system for the collection and distribution of the fish, which will be closely related to the use of the cold storage plant. The Ceylon Government has requested insulated trucks for use in this connection. In discussions with the Ceylon officials, it has been emphasized that the effective use of these trucks would depend on the establishment of a practical and well integrated scheme for the collection and distribution of fish in Ceylon and that, therefore, the Ceylon Government will be asked to give an undertaking that satisfactory arrangements for the use of these trucks will be carefully worked out in consultation with the Canadian technical experts who are now in Ceylon.

As part of their efforts to improve the Co-operative movement in Ceylon in connection with the development of fisheries, the Ceylon Government maintains a Fisheries Co-operative School at Polgalla. Students from other countries in South and South-East Asia are being, and will continue to be, accepted at this school. A Canadian technical expert is now in Ceylon helping the latter Government organize the training programme at this school. The Ceylon Government has requested assistance in connection with the rupee costs involved in the modernization and extension of facilities at the school.

(3) Aerial Survey

Following a request from Ceylon that Canada should undertake an aerial survey as part of the 1955-56 programme, a Canadian expert was sent to Ceylon to report on the need and usefulness of such a project. This report has now been examined by the Canadian authorities and it is considered that an aerial survey would make a very useful contribution to the further economic development of Ceylon.

(4) Port Equipment

As part of the 1954-55 programme, Canada provided equipment for the newly constructed Colombo Harbour in the form of six-ton portal cranes. The Ceylon Government has requested that additional cranes, which are vitally required, might be supplied as part of the new programme.

(5) Diesel Locomotives for the Ceylon Railways

In an effort to help the Ceylon Government replace their supply of rolling stock, which is in many cases worn out or obsolete, Canada has provided as part of previous aid programmes to Ceylon five diesel locomotives. These locomotives have proven themselves to be efficient and economical and well suited to the terrain of Ceylon. The Ceylon Government has requested that additional diesel locomotives might be supplied as part of the 1955-56 programme.

(6) Pest Control Units

As part of the 1953-54 programme, Canada supplied a series of pest control units made up of trucks and spraying equipment.²⁹ More units were requested at that time than were actually provided by Canada. This project has proven successful in its operation and has made an important contribution to agriculture in Ceylon. The Ceylon Government has requested that additional units should be provided as part of the 1955-56 programme.

Recommendations

On the basis of the programme outlined above, Canadian officials recommend that assistance be provided for the following projects, in the amounts estimated below:

(1) School of Practical Technology

(a) Equipment for use at the school at an estimated total cost of $200,000.

(b) Canadian assistance in the form of flour, to be made available in the amount necessary to provide approximately $200,000, to be used for additional local expenditures at the school.

(2) Fisheries Project

(a) Canadian assistance in the form of flour, to be made available in the amount necessary to provide approximately $400,000, to be used for additional local expenditures at the fisheries harbour.

(b) Trawler equipment up to an amount of $30,000 to be provided for the fisheries project.

(c) The supply of insulated trucks up to a total cost of $50,000, on condition that satisfactory arrangements for collection and distribution of the fish to be handled by these trucks will be worked out by the Ceylon authorities.

(d) Canadian assistance in the form of flour, to be made available in the amount necessary to provide approximately $180,000, to be used for local expenditures at the Fisheries Co-operative School at Polgalla.

(3) Aerial Survey

Canada should undertake to finance an aerial survey in accordance with the recommendation of the report of the Canadian technical expert who investigated this project. The total cost of this survey is estimated at $500,000, and it is recommended that $200,000 should be set aside for this purpose in 1955-56. Authority is to be granted to enter into a contract for the total estimated cost of the project, on the understanding that the balance of the cost in excess of $200,000 will be included in next year's regular programme of Canadian aid to Ceylon, subject to the necessary funds being voted by the Canadian Parliament. It is to be understood also that the balance of these costs will be included with a high priority in any list of projects which the Ceylon Government may propose next year.

(4) Port Equipment

Port equipment in the form of cranes to be provided to Ceylon at an estimated cost of $180,000.

(5) Diesel Locomotives

Three additional diesel locomotives, together with necessary spares, to be provided at an estimated cost of $555,000, on the understanding that the Government of Ceylon is prepared to pay the rupee equivalent of these engines and sleepers into a special account, against which expenditures would be incurred for development projects to be agreed upon between the two Governments at a later stage.

(6) Pest Control Units

Two pest control units, similar to those sent to Ceylon as part of the 1953-54 programme, to be provided at an estimated cost of $6,000.³⁰

L.B. PEARSON