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A political crisis in Sri Lanka, where two prime ministers struggle for power, frightens tourists and raises questions about foreign aid, which will sound the alarm for the economy as the currency moves forward. To collapse to record levels.
The turmoil that reigns in the Indian Ocean nation, which has seen one of the prime ministers refuse to be sacked, as well as a new battle to prove the majority within the nation. 39, a parliament banned from meeting have caused major upheavals that Sri Lanka can not afford.
Amid the warnings of politicians about a "bloodbath" if the dispute intensifies, tourists cancel hotel bookings, while Sri Lanka's beaches and major sites like the Temple of the Tooth get ready for the high season.
Although no official figures have been provided, luxury hotels have reported cancellations and a critical decline in the number of new bookings in the last 10 days.
"This comes at the worst time when Europeans plan their holidays abroad," said AFP an official of an urban hotel in Colombo. "We had a lot of cancellations from the United States."
"With the political crisis, our winter season is over," said the director of a luxury beach resort in the south of the island.
– tourist dollars needed –
Western countries have warned their citizens to remain on their guard in Sri Lanka.
"You have to be vigilant and avoid any demonstration or big political rally," said a council of the British government.
Tourism is a cornerstone of the economy. Last year, more than 2.4 million foreign holidaymakers visited the country and spent $ 3.2 billion. Authorities forecast an increase of more than 10% this year.
And whether Ranil Wickremesinghe remains in office or former President Mahinda Rajapakse takes his place, foreign revenues will be indispensable.
The Asian Development Bank had predicted economic growth of 3.8 percent this year and 4.5 percent in 2019, but all bets are now open.
The energy vacuum has cast doubt on a Japan-funded light rail project rising to $ 1.5 billion and additional funding of $ 480 million for transportation and health said Wickremesinghe Minister Patali Ranawaka last week.
The International Monetary Fund (IMF) was about to announce an agreement on the release of a new tranche of a $ 1.5 billion loan when President Maithripala Sirisena reportedly sacked Wickremesinghe on October 26th.
"We are monitoring the situation closely and staying in touch with our counterparts at the technical level," said an IMF spokesman about intensifying the power struggle.
– Populist cups –
Wickremesinghe, a market liberal, insisted that he was still in command while the former leader of former strongman Rajapakse – already accused of accumulating debt for the island when he was president from 2005 to 2015 – launched last week his rival government with measures that caused new crises. .
Rajapakse, Minister of Finance and Head of Government, has reduced the price of gasoline and other essential goods and reduced taxes to win the public.
Treasury officials, who asked not to be named, said the loss of revenue from cuts could blow up a new hole in the country's balance sheet.
Official figures show that Sri Lanka will have to start repaying a record debt of $ 4.2 billion in 2019, up from $ 2.8 billion this year.
The crisis erupted just days after Finance Minister Mangala Samaraweera called for a "coalition of supporters" to stabilize the Sri Lankan rupee in free fall, as well as other emerging market currencies.
The rupee reached a record high of 177.32 to the dollar last week, despite official measures taken to halt its decline.
The currency has lost more than 14% this year and Sri Lanka fears that it will slide further as US sanctions weigh on Iran, the main source of oil for the island.
Samaraweera, whose position is now disputed by Rajapakse, said the flight of foreign capital had accelerated during the first four days following the political crisis.
He quoted figures from the Colombo Stock Exchange that foreign investors had withdrawn nearly $ 23 million from the market, against $ 35 million for the first nine months of this year.
Rajapakse announced that he would reduce non-essential imports and taxes of individuals and companies in order to encourage local industry and businesses.
Fitch said, however, that a protracted political crisis could undermine the confidence of foreign investors and "make it even more difficult" for Colombo to pay its debts.
Last year, more than 2.4 million foreign holidaymakers visited Sri Lanka, spending $ 3.2 billion
Tourism is a cornerstone of the Sri Lankan economy and authorities have forecast an increase of more than 10% this year
The former president and new Prime Minister of Sri Lanka, Mahinda Rajapakse (C), has reduced the price of gasoline and other essential goods and reduced taxes to win the public.
Western countries have warned their citizens to be on their guard in Sri Lanka
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