With public protests growing against the United Nations to force the world body to cancel its investigation of alleged abuses committed by the government during the war in the North and East, Sri Lanka could lose the goodwill of the international communiy, badly affecting the country’s efforts to upgrade its sovereign ratings, official sources said this week.
The sovereign rating indicates the risk level of the investing environment of a country and is used by investors looking to invest abroad. It takes political risk into account when determining the rating. Therefore the protection of Sri Lanka’s image internationally is essential to upgrade the country’s sovereign rating to an investment grade, a member of the high-level Sovereign Rating Committee appointed by the Central Bank, said.
Sri Lanka is expected to choose a rating advisor from among six international investment banks next month, ahead of a sovereign bond sale in the second half of the year. “Under this set up we must not antagonize the UN or any other international agency,” he added.
The committee is now in process of devising Sri Lanka’s strategy aimed at upgrading the country’s sovereign rating from the current speculative B+ (Fitch) and B (S&P) rating to an investment grade of BBB –or higher over the next four-year period.
Members of the committee headed by CBSL Deputy Governor, K.G.D.D. Dheerasinghe, met four times in Colombo to make regular reviews on the developments of the economy and convey these improvements to the rating agencies through rating advisors to upgrade the country’s rating level.
He noted that protest demonstrations against the world body are not favourable for Sri Lanka’s environment for investments and it will also affect their regular reviews on economic development.
The country’s standings were improving with the bringing down of the budget deficit from 10.2 % of GDP to 8% of GDP in 2010 and the peaceful and stable political environment when they reviewed the country’s economy at the recent Sovereign Rating Committee meeting, he said. But the sovereign rating which measures the ability of a country's government to repay debt will be affected amidst concerns of international community on Sri Lanka’s handling of human rights.
The UN office this week was besieged by firebrand Housing Minister Wimal Weerawansa and his supporters, threatening to lay siege to the building until UN Secretary-General Ban-ki Moon scrapped the UN Panel on Human Rights and Accountability in Sri Lanka.
The drama occurred just as dozens of foreign businessmen and consultants participated at the Ceylon Chamber of Commerce’s annual Economic Summit in Colombo. Senior Treasury officials have also expressed concern that the actions against the UN in Colombo could jeopardize foreign investment and donor funding prospects. |
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