Sri Lanka opposition slam HSBC, business chambers over dollar bond

Sept 12, 2007 (LBO) – Sri Lanka's main opposition has slammed HSBC Bank over its involvement in a controversial sovereign bond issue and accused two trade chambers that came to its aid of creating a "new class of exploiters". Last week HSBC defended itself saying it was following local rules after the opposition United National Party (UNP) leader Ranil Wickremesinghe threatened to cancel its banking license if he ever came to power.

HSBC is a joint lead manager of a proposed 500 million dollar sovereign bond which the opposition is threatening not to pay back if it ever comes to power.

Illegal Bond?

The UNP says the bond is "illegal" as parliamentary approval has not been obtained for it and it is also helping the government break a fiscal responsibility law which required the budget deficit to be brought down to 5 percent last year.

Despite claims that the money would be used for "infrastructure" by the government, officials have been so far been unable to pin point projects for which the money would be used.

Wickremesinghe earlier wrote to HSBC chief Stephen Green saying that a future Sri Lankan government would not be able to pay the loan back.

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