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Sri Lanka May Need Bailout as War Debt, Currency Drain Reserves
Friday, 27 February 2009 - 10:55 AM SL Time
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Sri Lanka may need a bailout from international donors to help pay its debts as the island s 26- year civil war draws to a close.
Since August, the South Asian nation has spent half its foreign reserves, now $1.7 billion, on supporting its currency, paying debt and buying imports. That doesn t leave much after the government shells out another $900 million due in 2009. The reserves aren t getting replenished as the ailing world economy pummels exports and overseas investors flee emerging markets.
President Mahinda Rajapaksa s government is unwilling to turn to the International Monetary Fund, which requires austerity measures in return for loans. Securing financing from other countries may be challenging for a nation whose credit rating from Standard & Poor s is the lowest apart from those of Bolivia, Pakistan, Grenada, Argentina and Lebanon.
Sri Lankan authorities have to act fast to beef up the country s reserves, said Ashok Parameswaran, senior emerging markets analyst at Invesco Inc. in New York. Otherwise, they may have to devalue their currency significantly.
Since December, countries including Russia, Vietnam and Kazakhstan have weakened their currencies rather than use reserves to prop them up. That has made imports costlier, reducing demand for goods from overseas.
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raigamakolla
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Joined: Dec 2006
Posts: 2515
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 27 Feb 2009 09:44:54 GMT Report for Abuse
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This is what i have been saying for the past 3 years!
junta is not good at economic management.
Now, wait and see how the worse will come to worest by December.
Slanka will be reeling on flat tyres. |
freedom1
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Joined: Jun 2007
Posts: 3549
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 27 Feb 2009 13:24:28 GMT Report for Abuse
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Adventures like having a few buddies experimenting with Hedge Funds, Mihin Air, Sri Lankan Airlines etc. is as costly as traveling with an entourage of a hundred to New York.
Donors should have a look at Mahinda Mama's regular 50 dancers on board or at this Jumbo cabinet that can't even keep a few beaches clean enough so that tourists won't get discouraged from aggressive stray dogs and sewerage. |
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27 Feb 2009 09:13:04 GMT