Tiger defeat spurs foreign funds to Lanka
Walter JAYAWARDHANA
The Wall Street Journal newspaper said since the Sri Lankan Army
killed the top leadership of the Tamil Tigers the Stock Market has
soared and foreign funds have flocked to Government securities and about
US $100 million in Sri Lankan Government bonds were purchased, quoting
Sri Lanka Central Bank sources.
The report published in the world leading financial journal said the
change happening is clear from foreign-capital inflows in the wake of
the LTTE defeat.
The Journal said the end to a long war has come just in time for Sri
Lanka’s economy, according to the country’s Central Bank chief, who is
now taking steps to lift low foreign-exchange reserves and spur growth.
Central Bank Governor Ajith Nivard Cabraal was quoted having told the
newspaper ,”For 30 years, whenever investors spoke of Sri Lanka, the
refrain was, ‘If only it wasn’t for the war,’ Today, it’s not the next
word. A huge change has taken place.”
The change is clear from foreign-capital inflows in the wake of the
Tigers defeat.
The Stock Market has soared and foreign funds have flocked to
government securities. About $100 million in Sri Lankan government bonds
were purchased in the five-day period ended Wednesday, the Central Bank
chief told the newspaper.
The result is that Sri Lanka is edging back from an economic crisis,
brought on by the global turmoil and the strains of trying to squash the
Tigers’ separatist insurgency, he further told the newspaper.
The Government wants to begin rebuilding its war-torn north,
including roads connecting it to the south and east.
Next week, the Government plans to roll out a special low-interest
loan program to assist farmers, fishermen and small businessmen in the
North.
The region’s revival, though, may depend on how quickly the hundreds
of thousands of predominantly ethnic Tamils are released from camps and
able to rejoin the economic mainstream, the report further said.
The Journal also said, in a report Wednesday, Citigroup Global
Markets recommended buying Sri Lankan treasury bonds on prospects that
peace will improve political stability, reduce defence spending and spur
foreign-capital inflows.
“The end of the domestic conflict between the military and the Tigers
marks a milestone from a political and economic standpoint,” the bank
said in its report.
The economy wasn’t expected to grow more than 3% this year, after
averaging 6% growth over the past four years, according to the Central
Bank chief. But now that the global economy is showing signs of coming
out of its slump, he said, the government may raise that forecast a
couple of percentage points.
“The war’s ending and the global economy is recovering,” Cabraal
said. “That’s a powerful combination.”
In a related development Minister Anura Priyadarshana Yapa , who is
engaged in an investment promotional tour in Singapore and Thailand said
more than 50 investors were interested in Sri Lanka in Singapore,
encouraged by the end of the war in the country.
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