Political
crisis affects Lankan economy
The unsettled political situation in Sri Lanka is adversely affecting
the country's economy and investments. The political situation could
delay the finalising of the Free Trade Agreement (FTA) with the
US.
'The Sunday
Times learns that Wal Mart, one of the largest companies in the
apparel industry, which had opened an office in Colombo recently,
had cancelled their visit due to the unsettled political situation.
Many investors
have expressed concern and were carefully watching the situation
while others have already cancelled their proposed visits. The consequences
are; the IMF has delayed the release of US dollars 80 million (Rs.
7.5 billion) to Sri Lanka under its Poverty Reduction and Growth
Fund. The start of the second Poverty Reduction Credit release by
the World Bank for the first quarter has been held up.
Meanwhile, US Trade Representative Robert Zoellick has explained
why the Bush Administration viewed Sri Lanka as a viable FTA partner.
The U.S. needs
a "footprint" in South Asia, as it is the only region
in the world where the US does not have an existing FTA partner,
a State Dept. aide said. He also said Mr. Zoellick had pointed to
Sri Lanka as having been supportive of the US at the failed World
Trade Organisation ministerial in Cancun, and it had not joined
the G-21 group of developing countries that have been blamed by
Congress for causing the Cancun breakdown.
Sri Lanka appears
ready to accept a yarn forward rule of origin for textiles that
would require textiles made from either the US or Sri Lanka to be
eligible for preferential access. Mr. Zoelick also said Sri Lanka
was a much more viable partner in the region than India or Pakistan.
He gave no indication as to when the Administration could make a
formal announcement on negotiations with Sri Lanka. |