சிறீலங்காவில் குறைந்துவரும் வெளிநாட்டு முதலீடுகள்

[kurukaalapoovan]

Sri Lanka May Struggle to Attract Overseas Funds on War Concern

By Anusha Ondaatjie and Sam Nagarajan

Nov. 17 (Bloomberg) -- Sri Lankan President Mahinda Rajapaksa may struggle to convince overseas investors to fund record spending on roads and ports on concern the island-nation is sliding toward civil war.

The International Monetary Fund this week warned that peace talks with Tamil rebels on the verge of failure threatened to curb investment and Standard & Poor's said its negative rating on the island nation would remain unless security improved.

Sri Lanka failed to sell its first overseas bonds this year, causing Rajapaksa to miss his foreign financing target by more than a third. He needs funds for $7 billion in spending on roads, ports and power plants, equivalent to the entire stock market, as Asia's second-highest borrowing costs curb loans at home.

``It is going to be very difficult to raise the money from abroad as we've seen in the current year,'' said Dudeepa Ratwatte, head of global markets at Commercial Bank of Ceylon Ltd., Sri Lanka's biggest private lender by assets. ``While the conflict ruins things, a better sovereign debt rating would help improve prospects.''

Rajapaksa, elected 12 months ago with a mandate to renegotiate a peace treaty with Tamil separatists, is raising spending on the army, navy and air force by 44 percent next year to a record 139 billion rupees ($1.3 billion). His first year in office saw the deadliest suicide attack in Sri Lanka's two- decade conflict, a bomb blast in the heart of Colombo's business district and the breakdown of talks with the Liberation Tigers of Tamil Eelam.

The president yesterday opened his budget speech with an appeal to the Tamil rebels to return to talks.

Weakening Currency

The country's surplus in the balance of payments, a broad measure strategists watch to determine the strength of the currency, dwindled to $140 million by the first week of November from $501 million at the end of last year.

A deficit in a country's balance of payments adds pressure on the currency to weaken as it also means enough money from overseas isn't coming to fund the current-account deficit.

``I don't think the broader economy will be hurt because of the peace talks, but because the confidence has waned in the country's long-term prospects,'' said Arjuna Mahendran, chief strategist and economist at Credit Suisse in Singapore. ``Investment flows into the country are slowing down and this means the rupee will come under pressure. The balance of payments is my main concern.''

Remittances

The central bank in a report yesterday said foreign- exchange reserves and remittances from expatriates helped stem a slide in the currency in the first nine months of the year. The government expects workers overseas to send $2.4 billion home this year, compared with $1.92 billion in 2005. The Central Bank of Sri Lanka sold $390 million of dollars from the country's reserves this year ``to provide liquidity to the market,'' Governor Nivard Cabraal said in an interview Nov. 15.

The Sri Lankan rupee on Nov. 15 dropped to a record low, having slid more than 6 percent since Sept. 1. It is the worst performer among 15 currencies tracked by Bloomberg in the Asia- Pacific region.

``Sri Lanka's perceived political risk is very high and it is reflected in the currency,'' said Michael Preiss, an associate director at HSBC Holdings Inc.'s investment advisory group in Dubai. ``Sri Lanka needs foreigners more than foreigners need it.''

Overseas investment is targeted to reach $600 million this year, missing the government's $1 billion forecast, which Rajapaksa yesterday extended to 2008.

Tourists

Income from overseas tourists, Sri Lanka's third-largest foreign-exchange contributors, is projected to more than double to $1 billion in two years, from $400 million in 2006, the president said. He'll need peace to meet that goal.

A suicide attack on the historical port city of Galle last month triggered a 24 percent slump in tourists from Western Europe in October, the first month of the holiday season.

``The recent escalation of hostilities could pose a risk to future economic prospects,'' the International Monetary Fund wrote in a report this week. ``The setbacks in the peace process, which have caused some weakening in confidence, could further affect investment going forward.''

Still, Rajapaksa yesterday forecast the $24 billion economy will expand at a 7.5 percent clip next year, the fastest in three decades, following 7 percent growth in 2005.

Shipments of tea, rubber garments and other goods from the South Asian island rose 8.8 percent in the nine months through September to $3.9 billion, according to the central bank.

`Resilient'

Overseas investors, who last year ploughed a record 6.1 billion rupees into the local market, have bought a net 4.2 billion rupees in 2006, helping lift the benchmark Colombo All- Share Index to a record. About 30 percent of the island's stock market investors are based overseas.

``Our economy has been sufficiently resilient to withstand security concerns and the oil shock and yet come out strong,'' central bank Governor Cabraal said Nov. 15. The country has maintained ``growth at 8 percent, a reasonably stable exchange rate, reasonable interest rates and the lowest unemployment rate. That's the message we want people to understand.''

The president appealed to the Tigers to return to the negotiating table in a bid to revive the stalled talks.

``I once again request the LTTE to give up violence altogether, surrender arms,'' Rajapaska said. ``We are ready to reciprocate and continue with a dialogue to solve national problems.''

Talks

Fighting in Sri Lanka has spread since May to the northern Jaffna peninsula from the eastern region near the port of Trincomalee, threatening a return to civil war in the nation of 20 million people. The first talks between the government and the Tamil rebels in eight months collapsed in Geneva last month without any progress being made.

The LTTE, classified as a terrorist organization by the U.S. and the European Union, has been fighting for two decades for a separate homeland in a conflict that has killed more than 60,000 people. A peace settlement is crucial for the growth of Sri Lanka's tea and textile-exporting economy, which has expanded every quarter since the 2002 cease-fire was signed.

``The big if, is if the security situation was substantially improved, international investors will be more receptive,'' said Paul Rawkins at Fitch Ratings in London. ``If there's no peace, or talks, donors will also become difficult. This could only lead to a cut back in capital expenditure or borrowing locally when credit is anyway growing very fast.''

Fitch Ratings and Standard & Poor's changed their outlook for Sri Lanka's sovereign debt to negative on April 27 on the threat of an escalation in the island-nation's ethnic conflict The negative outlook means the agencies are closer to lowering their ratings, which are already non-investment grade.

Standard & Poor's rates the country's foreign-currency debt four levels below investment grade, while Fitch rates it three levels below.

``The fiscal direction and the security are the key constraints and will be the considerations on whether the negative outlook will be removed,'' said Agost Benard, credit analyst at S&P in Singapore. ``Unless there is improvement in at least one of these, it is difficult to imagine that the outlook will be removed and the rating changed.''

http://www.bloomberg.com/apps/news?pid=206...&refer=home

சிறீலங்காவிற்கு அந்நிய செலாவணிய கொண்டுவருதில் 3ஆம் நிரலையில் இருக்கும் சுற்றுலாத்துறை 2006 இல் 400 மில்லியன் டொலர்களை சம்பாதித்தது. இதை அடுத்த 2 வருடங்களிற்குள் 1 பில்லியனாக அதிகரிக்க இருப்பதாக 2007 வரவுசெலவுத்திட்டம் அறிவித்துள்ளது. சிறீலங்காவிற்கு உல்லாசப் பயணிகளை அனுப்பும் நிறுவனங்கள் நோக்கிய மற்றும் சிறீலங்காவிற்கு அதிக அளவில் உல்லாசப் பயணிகளாக சொல்லும் நாட்டு மக்களை நோக்கிய பிரச்சாரங்களை முடுக்கிவிடுவதன் அவசியத்தை இது காட்டுகிறது.