Sri Lanka seeks $1.8b investment

COLOMBO — Sri Lanka will seek $1.8 billion worth of overseas aid and investment in the next five years to develop its eastern region, after the military captured the area following 14 years of fighting against Tamil rebels.

By (Bloomberg)

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Published: Thu 18 Oct 2007, 8:38 AM

Last updated: Sat 4 Apr 2015, 11:27 PM

The government wants to increase spending on roads, power, agriculture, manufacturing, tourism and “security and civil administration” in the Eastern Province, Basil Rajapaksa, senior adviser and younger brother to the president, said in an interview yesterday.

President Mahinda Rajapaksa pledged to hold elections and attract investors and tourists to the region that has a 462- kilometre (287-mile) coastline after soldiers overran the last rebel stronghold there in July.

The rebel Liberation Tigers of Tamil Eelam, who are fighting for a separate homeland in areas of eastern and northern Sri Lanka, say international aid is being used to fund projects such as road construction in militarily strategic areas. Fighting between government troops and the Tamil Tigers escalated last year as two attempts at peace talks in Geneva failed. "We can add two more percentage points to gross domestic product if we can add the Eastern Province to the economy,” Basil Rajapaksa said at his office in the capital, Colombo. “We have to build investor confidence.”

Economic Growth

Central Bank Governor Nivard Cabraal said last month he expects growth in the $26 billion economy to slow to 7 per cent this year from 7.4 per cent in 2006. He expects it to reach 8 per cent in 2008 on increased infrastructure spending.

Sri Lanka attracted $1.25 billion of orders for a $500 million bond offering, its first sale of debt overseas, according to an e-mail sent to investors from underwriting banks yesterday.

The government plans to use the proceeds from the bond sale to fund projects costing $5 million to $30 million, including power plants, roads and bridges, ports and railway lines, it said in the offer document.

The LTTE, designated as a terrorist organisation by the US, the European Union and India, have an estimated 12,000 fighters and control areas in northern Sri Lanka. The rebels say any peace settlement must be based on a homeland for Tamils, who make up about 8.5 per cent of the South Asian island nation’s 20 million people.

The rebels accuse the government of seeking a military solution to the conflict, rather than a negotiated settlement. Sri Lanka’s government is dividing districts in the east to prevent a Tamil homeland being created, a move that will spoil the chances of a peace settlement, R. Sampanthan, the leader of the Tamil National Alliance party, said last month.

“Our main purpose is not to control lands but to win the hearts and minds of the people, so that terrorism can’t live,” Basil Rajapaksa said.

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