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A leading British hotelier in Sri Lanka faces deportation after hanging the Sri Lankan flag upside down. Should foreign businessmen on the island beware?

The bizarre turn of events began shortly before the biennial Commonwealth heads of government meeting, held in Sri Lanka in November. Geoffrey Dobbs, a British and Australian citizen who owns four boutique hotels in and around Galle, one of Sri Lanka’s largest cities, noticed that at least four commonwealth flags – including Australia’s – had been hung upside down or manufactured back to front. Continue reading »

Cabraal: optimist

Sri Lanka watched nervously as India’s rupee plunged, not least because it too suffers from the high current account and fiscal deficit mixture that turned investors sour on its larger neighbour.

Now India’s currency is recovering, and Sri Lanka seems emboldened too, as its central bank today shunned IMF advice and surprised forecasters by cutting rates by half a percentage point. But is it a cut too far? Continue reading »

Investors may not look at school attainment rates very often but perhaps they ought to. Study the indicators and you see that – in terms of education at least – Sri Lanka far outshines the rest of south Asia.

The country is far from paradise. Sri Lankans hunger for a lasting peace after a long and painful civil war; sections of the Tamil minority still complain of repression. But the country’s record in education at least holds out some hope. Continue reading »

Will South Koreans earn higher wages than the French, Germans, Americans and Brits in twenty years or so? Perhaps, according to a study published on Thursday by professional services firm PwC. Continue reading »

Ajith Nivard Cabraal, the Sri Lankan central bank governor, is on a mission – to China.

As the world waits for the US Federal Reserve to start “tapering” its $85bn monthly bond purchase programme – the prospect of which has hit many emerging market currencies including the Sri Lankan rupee – Cabraal is heading to China to attract more investment to the south Asian economy. Continue reading »

Count it again

Sri Lanka’s government says its economy will grow at a zippy 7.5 per cent this year, making it the self-styled fastest growing economy in south Asia.

Yet on Friday morning the central bank suddenly and unexpectedly brought interest rates down by half a percentage point, citing fears of a slowdown. Something doesn’t add up. Continue reading »

It isn’t every day that a country cancels a plan to seek $1bn in emergency loans from the International Monetary Fund, just a few weeks after announcing it.

But having unveiled plans to go cap in hand for money earlier in the year, it seems this is just what Sri Lankan President Mahinda Rajapaksa is about to do, following a row with the IMF. So what exactly is going on? Continue reading »

Central bank of Sri LankaHaving been forced into a dramatic interest rate hike earlier this year to fend off a balance of payments crisis, Sri Lanka’s central bank has made more small waves in the south Asian tourist island this morning, with a rate cut.

The move caught out local analysts, as there had been no hint of a change in policy in recent weeks. Continue reading »

Actis, the emerging markets private equity fund, has invested $32m in Asiri Hospital Holdings, a private hospital chain in Sri Lanka with five hospitals under its umbrella.

Asiri will use the proceeds to buy out minority shareholders in some of those hospitals as it prepares for further expansion in the country. The deal again underlines Sri Lanka’s appeal to foreign investors, attracted by sustained GDP growth of 7 per cent a year against a backdrop of economic downturn in the west. Continue reading »

Sri Lanka’s central bank raised key interest rates for the first time in five years on Friday and directed banks to slow lending in an effort to curb credit growth and to stem the worsening balance of payments.

The repo rate rose 50 basis points to 7.5 per cent a year and the reverse repo rate rose by the same margin to 9 per cent. It came despite the central bank’s downward revision of its GDP growth forecast for 2011 to 8 per cent from 9 per cent. Continue reading »

You’ve done the elephant safari. You’ve been on the snorkelling trip. Now what you want is a few hours at a blackjack table. Or so believes the Sri Lankan government as it looks to boost tourism by throwing open its arms to foreign investment in its gambling sector. Continue reading »

Tired of the usual investment advice on the Brics? On the lookout for new up-and-coming countries? Here are few recommendations that you might not have considered.

Control Risks, a consultancy which looks mainly at political and security risks around the world, released a report called RiskMap 2012 on Monday – with some intringuing investment pointers. Its top five? Bulgaria, Colombia, Libya, Mozambique, and Sri Lanka. Continue reading »

Sri Lanka announced a shock 3 per cent currency devaluation on Monday in an attempt to boost export competitiveness and keep the country’s paymasters at the International Monetary Fund happy.

Mahinda Rajapaksa, who is both president and finance minister, made the announcement to parliament while presenting the 2012 budget. His speech – interrupted when ruling party politicians attacked protesting opposition members – included a projected 14.15 per cent increase in spending and a narrowing budget deficit based on increased revenues. Continue reading »

A Sri Lankan labour makes bricks by hand at a make-shift factory in Biyagamam, a suburb of the Sri Lankan capital Colombo, on July 17, 2011. Far away from the sovereign credit doldrums affecting Europe, a small island state in the Indian ocean seems to be attracting the attention of foreign investors.

Sri Lanka raised $1bn on Thursday after its 10-year bond sale was seven times subscribed, in a sign that investors remain confident that the island’s sustained economic recovery is on track. Continue reading »

Sri Lanka can breathe a sigh of relief. After several months of delays, the International Monetary Fund Tuesday approved the third $400m tranche of a $2.5bn loan and agreed to extend the tenure of the programme.

The IMF had delayed disbursement of the tranche after Sri Lanka recorded a fiscal deficit of 9.9 per cent of gross domestic product in 2009, missing an earlier agreed target of 7 per cent.  Sri Lanka, it appears, has come in from the cold. But it may take the country some time to fully thaw as allegations of rights abuse remain unaddressed. Continue reading »