Bestweb 2018
Bestweb 2018

‘Good News’ Sri Lanka’s debt is rising

‘Good News’ Sri Lanka’s debt is rising

By Ramesh Irugalbandara

16 May, 2018 | 1:04 am

COLOMBO (News 1st) – On Monday (May 14th) an announcement was made by the Prime Ministers Office that China is prepared to provide 1 Billion US Dollars as a loan for the construction of the first phase of the Central Expressway. It noted that this “Good News” was conveyed to the Prime Minister when he called on the Chinese Ambassador to Sri Lanka.

But, is obtaining a loan of 01 Billion Dollars, something to be happy about?

When Mahinda Rajapaksa was elected President in 2005, the total debt obtained by the country at that time was 2,222 Billion Rupees.
Five years down the line in 2010 Sri Lanka’s debt stood at 4,590 Billion Rupees. This figure rose to 7,391 Billion Rupees by the time the current administration came into power in 2015.

As of 2017 under the present government, the total debt of the country had increased to 10,313 Billion Rupees. The Central Bank attributes the increase of the debt burden to the Government’s low revenue which had been insufficient to meet the daily costs of the country over the past several years. This began a visious debt cycle of obtaining more loans to pay off older loans. According to data from the Central Bank of Sri Lanka, when the country entered into 2018, the Debt to GDP ratio was 77.6 percent.

In such a backdrop how will such a ‘Good news’ loan from China aid benefit the country?

JVP Politburo member Wasantha Samarasinghe was highly critical of the Government’s fiscal management. Samarasinghe claims that the Government has taken on Rs 3 billion in debt each day they were in office.  He claimed that the Government was selling off everything they could to settle the debt adding that they are now planning on selling off state enterprises to ensure that the lights remain on.

Dr. Aminda Perera a lecturer at the Wayamba University stated that obtaining such ‘good news’ loans sets the country on a path towards bankruptcy. Dr. Perera says that the Government has failed to identify it’s priorities when engaging in development activities.

Leader of the National Unity Front Azath Salley weighing in on the manner highlighted the hypocrisy of the current administration. Salley recalled statements made by those in power at present saying that the country’s economy is where it is today because of international loans obtained by the previous administration. Salley remarked that the one billion loan from China would eventually fund Chinese Companies and Chinese workers as they will be the persons contracted to work on this expressway.

While questioning what would happen to the people who had to give up their lands for this ambitious project, that the Government seems keen on finishing prior to facing the next general election, Salley questioned whether the next 2 or 3 generations of this country would be able to pay off these debts.

A recent interview by newly elected Prime Minister of Malaysia Mahathir Mohamed provided a perfect summary of China’s modus operandi when approaching a country. Mahathir sais that former PM Najeeb Razak invited foreign investors from China to purchase and develop properties in Malaysia which end up being out of reach of the common man. He noted that such investments do not provide employment for Malaysian workers nor to they end up benefitting the masses.

Any member of Sri Lanka’s working class who takes a stroll down the streets of central Colombo, could relate to sentiments being expressed by the Prime Minister of Malaysia who seems to be more in tune with the pulse of the working class.