Sri Lanka to allay expropriation fears

Nov 15, 2015 (LBO) – Sri Lanka will explain to Moody’s, a rating agency that expressed alarm over policy uncertainty and deteriorating property rights, that there will be no more expropriations, Central Bank Governor Nivard Cabraal said. The State is seizing land in some 37 enterprises and expropriating one listed firm it is entirety for underperformance with no opportunity to explain or judicial redress through a law which critics said deeply flawed and trespassed on a constitutional separation of powers.

Governor Cabraal said it will be explained to Moody’s that the expropriation was a one-off event.

Cabraal said assurances will also be given to bond holders and that he believed Moody’s had misunderstood the issue.

The secretly written law was rushed to parliament as an urgent bill with Supreme Court approval within 48 hour with no opportunity for citizens to object.

Property Rights

“The government’s seizure of assets creates ambiguity around the protection of private property in Sri Lanka,” Moody’s said Monday.

“The use of the fast-track procedure, which we believe limits public scrutiny, largely reflects the tendencies of the current government to exert strong and direct influence over the economy