If Not For the 13A Sri Lanka Would be Debt Free
Posted on February 21st, 2012

Dilrook Kannangara

Foreign debt is a major problem facing the nation. Every Sri Lankan born today inherits close to a staggering 100,000 rupees debt at birth and increases this debt burden through their life. What is the main evil that made Sri Lankans debtors and tied them eternally to service this humongous debt as bonded labourers?

 Although foreign debt was around, it escalated after 1977 and particularly after 1987. Today it stands at US$ 18 billion. In order to pay (retire) older debt more debt have to be borrowed. With a meagre foreign reserves position of US$ 6 billion, Sri Lanka is a net debtor to the tune of US$ 9 billion. Interest on debt takes a large chunk of available funds that can be used for development.

 It was the 13A that cleared the Constitution to set up Provincial Councils under the Provincial Council Act of 1988. According to Central Bank reports, Provincials Councils costed 111 billion rupees in 2009; in 2000 it was 29 billion rupees.

 http://www.asiantribune.com/news/2011/04/14/provincial-councils-sri-lanka-political-economy-perspective

 Based on the increase recurrent cost of provincial councils can be estimated since 1988. Refer Appendix.

 In addition there’s the cost of elections. Billions of rupees are wasted for election campaigning. A humongous number of candidates contest PC elections. The cost of distributing election cards, administering the election, counting votes, policing and resultant violence also cost dearly. The election day and the following day are affected with less economic activity as people line up at polling booths to vote and due to other election related activities. All these costs cannot be measured accurately. It is fair to say a day’s economic activity is lost due to PC election though the true cost may be more than that. A day’s economic cost is calculated by dividing the total GDP by 365.

 http://www.econstats.com/weo/V003.htm

 Both the recurrent cost and the election cost (in the years where there were elections) could have been invested at a very prudent interest rate of 10%. This earns interest over the years.

 This is the true cost of provincial councils which comes to 2.3 trillion rupees at the end of 2011. With 120 rupees for one US dollar, it is equal to $ 19 billion. Total public debt is $ 18 billion. In other words if not for the cursed 13A and provincial councils it created, this country would be debt free.   

 So much about sharing power with Tamils through devolution!

 Needless to say a similar amount was invested to bring peace through a successful military campaign. What a waste in using two alternative means to bring peace “”…” one succeeding while the other failing.

 This is the financial cost of the 13A. It costed the nation dearly for 24 years since 1988 and continues to bleed the economy.

 People of this country paid $ 19 billion over the years for PCs. Unable to find this money, governments resorted to borrowing from the IMF and sold off profit making state owned entities. $ 19 billion does not take into account the cost of borrowing from IMF, World Bank and Donors; interest thereupon and the cost of selling off family silver.  

 The calamity of the situation is further aggravated by the fact the entire parliament has only a handful of economists or people with economics knowledge. 

 Going by the expense trend, PCs will have a recurrent expenditure of 140,278 million in 2012. If there were no PCs this money could have been invested at 10% interest (at least). Therefore the total cost of PCs in 2012 is going to be 154,306 billion rupees. That is $ 1.3 billion. If the 13A is scrapped tomorrow, every Sri Lankan would have an additional 7,500 rupees in their hands this year and save over a million rupees (adjusted for annual increase) over their life; sufficient to allow them undertake an expensive study course that will uplift their living standards; or to invest in anything else.

 13A was a deliberate plan by India to stifle economic progress and impose its policy on the island nation. People sensed the danger in July 1987 and protested. However, the government with the help of invading IPKF and gun boats brutally murdered peaceful protestors. Soon protests turned violent but the invaders managed to constrain Jayawardena and his UNP government and forcibly conceive the 13A with them.

 There is absolutely no benefit of Provincial Councils. All work done by PCs was performed by the central government and local government bodies previously with better efficiency. People felt absolutely no improvement in governance through decentralisation or devolution “”…” absurd words that have no worth whatsoever.

 It is time to scrap the Provincial Councils and the Constitutional amendment (13A) that allows the creation of provincial councils.

 ITAK, TULF, ACTC and TNA demand for devolution is aimed at bleeding Sri Lanka to the tune of $ 1.3 billion every year so that their Indian and IMF counterparts can ruin the rest of the country.

 Obviously a federal system would cost many times more than Provincial Councils. District councils, regional councils and any other devolution model would be as costly as Provincial Councils. If addressing Tamil grievances and/or aspirations is so costly, Sri Lanka should flatly refuse to address them. Simply put it Sri Lankans cannot afford it. Money wasted to address Tamil grievances and/or aspirations can be better utilised for development that benefits all. There is no justification for 20 million to sufferer just to meet the aspirations of a mere 3 million people. And they are certainly not willing to be so damn generous. If insatiable TNA wants the Indian model there is no need to reinvent the wheel; India is just across the sea!

 Scrap the 13A now and abolish all Provincial Councils. Political, economic and social factors are all stacked up against them.

 Annexure (All figures in millions)

Year

Recurrent

Election cost
(estimate)

Interest on spend
(based on 10% interest rate)

Total

1988

 4,709 (e)

630

                               534

             5,873

1989

 5,477 (e)

 

                            1,135

          12,485

1990

 6,370 (e)

 

                            1,885

          20,740

1991

 7,409 (e)

 

                            2,815

          30,964

1992

 8,617 (e)

 

                            3,958

          43,539

1993

 10,022 (e)

1,416

                            5,498

          60,475

1994

 11,656 (e)

 

                            7,213

          79,344

1995

 13,557 (e)

 

                            9,290

        102,191

1996

 15,768 (e)

 

                          11,796

        129,755

1997

 18,340 (e)

 

                          14,810

        162,905

1998

 21,331 (e)

 

                          18,424

        202,660

1999

 24,810 (e)

3,134

                          23,060

        253,664

2000

 28,856 (a)

 

                          28,252

        310,772

2001

 33,562 (e)

 

                          34,433

        378,767

2002

 38,268 (a)

 

                          41,704

        458,739

2003

 42,288 (e)

 

                          50,103

        551,129

2004

 46,308 (a)

             5,729

                          60,317

        663,483

2005

 61,368 (e)

 

                          72,485

        797,336

2006

 76,428 (a)

 

                          87,376

        961,141

2007

 89,774 (e)

 

                        105,091

     1,156,006

2008

 103,119 (a)

 

                        125,913

     1,385,038

2009

 111,366 (a)

           13,219

                        150,962

     1,660,585

2010

 120,273 (e)

 

                        178,086

     1,958,944

2011

 129,891 (e)

 

                        208,883

     2,297,718

2011

 In US$s

          19,148

 

12 Responses to “If Not For the 13A Sri Lanka Would be Debt Free”

  1. Dilrook Says:

    [Quote] Therefore the total cost of PCs in 2012 is going to be 154,306 billion rupees. [Unquote]

    Should read as 154,306 million rupees.

    Special thanks to Kanthar Balanathan for pointing out the cost benefit of PCs.

  2. Leela Says:

    I write to thank Dilrook for enlightening us with some important figures to show the wastage and thereby the futility of the PCs. I must say, he has phrased aptly where TNA could get what they want. “If insatiable TNA wants the Indian model there is no need to reinvent the wheel; India is just across the sea!”
    Leela

  3. nandimitra Says:

    Sri Lanka cannot afford the luxury of maintaing such a lot of corrupt politicians. The rulers ignore that this amendment was forced on Sri Lanka by India and then forced on the country by JR who had the resignation letters of all the MPs in his pocket in other words the MPs were held to ransom. The lesson to learn is that except for one mp Gamini Jayasuriya the rest went along with it for their own personal interest. They first to hell with the country or opinion of the constituents. Mps are no different today. The moral thing to do is put the amendment forward as a referendum for the people to decide if the parliament cannot put it to a free vote in parliament. The long and short of it is that the countries politicians will sell the rights of the Sinhalese and unless the Sinhalese unite and force the politicians to do the right thing, the 13th amendment will be in the statute book for another 30 years by which time it will be gradually implemented. If you trust the politicians then the Sinhalese will deserve what they get.

  4. lingamAndy Says:

    Dilrook Kannangara
    If Not For the 13A Sri Lanka Would be Debt Free- No 13A cost this much !!!
    Why not implement 13A to see what cost & benefit ?

    Unit our diversity- 13A is only & final solution !

  5. Christie Says:

    Foreign debt and Government debt are two different things.

    The cause for the massive foreign debt is the people who control the economy of the island.

    The economy of the island is in the hands of Indian colonial parasites. They are the people who arrived from India since 1792 and their decendants. They comtrol the economy of the country and more than half of the income from verseas end up in India or in the hands of Indians in the West.

    Where did Raj Rajaratnam get his money from?

    These Indian colonial parasites arrived in the country with nothing.

    Please go for a walk in Fort or Pettach.

    Srl Lanka gets massive amount of foreign exchange from its people working overseas. All these money end up in the hands of Indian colonial parasites and finally ends up in India.

    The government must monitor currency movements in out and within.

  6. Lorenzo Says:

    Indian colonial parasites are Indian colonial parasites. There is no other word that fits. Too bad if you don’t like it.

    That is the punishment for arming and training the LTTE.

  7. Lorenzo Says:

    Jimmy,

    Stop personal attacks on other commentators. This is the 10th time I’m telling you. You show LTTE’s attitude to other views.

  8. Dilrook Says:

    Christie

    Sri Lanka had a big governance structure before PCs comprising of GS, PS, UC, MC, Cabinet, Parliament and President. That was costly enough. Then PCs that were not in need was added.

    Take 2009 loan transactions.

    Government borowed $2.7 billion from IMF in 2009 for development to be drawn over 3 years. That is on average $ 0.9 billion a year.

    If PCs were dissolved in 2009 that would have saved $ 1 billion (Rs 111,000 million / 120).

    That means no need to borrow. The saving $ 1 billion is more than enough to finance development ($ 0.9 billion).

    And that is just one year.

    When we borrow we have to pay interest and retire old debt which means more debt. For IMF and WB it is business. I’m not against borrowing from them for genuine needs. But certainly not when we can save money by scrapping PCs and avoid borrowing.

    The vicious cycle this country is in was aggravated by the 13A. Every year we pay over $ 1 billion to keep PCs running. A national crime.

  9. lingamAndy Says:

    Jimmy,
    Ref:Stop personal attacks on other commentators
    I can not beleive the person( have LLTE attitude) who comments about jimmy comments

    anyway where is jimmys comments !

    As a ilankai Thamilan I can be sure from past Mr jimmy’s comments He is Geniuvin Sri Lankan Chingalavan !

  10. gamunu6 Says:

    Thanks so much for enlighteing us…Even the proponants of 13, 13 A, 13 – or any other Jargon used to cover Indian hegomany in Sri Lanka are having second thoughts because of the cost & unnessary burden on Lankan treasury..

    India has no business in getting involved in Sri lanka, A Sovereign nation with impecable credentials even before India was granted Legsilative status.

    THIS has driven through to most ploiticians, intelectuals, writers about the devastation caused by this UNPOPULAR ammendment. We do not need Indian Bribery & corruption, hunger, poverty & according to recent reports, INDIA has 68% of the population living below poverty line.

    So why go to India for adviice & moment they know the weakness of Sri lankan institutions, they get involved as providing assistance. It is time Sri lanka, enforce STRICT Immigration laws to Indian Citizens ONLY. Beacuse they are most corrupt & threatening mass coming as this country is a paradise for them.

    Paradise for us, BUT Indians are classed as parasites. So we have to deal with them enacting special laws to counter INDIA taking over not only Industry but also our valuable cities, towns & vilages.

    Dilrook, I feel learned people like you in Sri lanka & abroad should collectively petition our President & other leaders, that we will NOT implement 13 ammendment & finall to revert back to our previous system. No do we favour expanding the Free trade agreemnet for India to gouge the little independence we have. Already India has received MORE from the existing trade agreement that is why they want more.

    Why not you, Shenali waduge, HLD Mahindapala, & many others who write so eloquantly,draft the necessary structure for President to take action. If enough citizens protest even President will listen.

    Thanks again for your valuable analysis……..~ Gamunu…~ Canada

  11. sena Says:

    About the numbers, shouldn’t there be a proportional decrease in central government expenditure as some of its functions were delegated to provincial councils? Or true to their habit of splurging on public money the politicians and their in tow officials did not part with any expenditure. Another important factor for the colossal debt is related to the relatively low burden prior to 1977 (as you have mentioned). Until then the economy was largely based on plantation and rural production means. But after 1977 a non productive bogus economy, largely based on heavy consumption on borrowed money has evolved which do not produce any wealth or earn any foreign exchange for the country. This economy is still dependent on traditional productive sectors plus the news areas such as garment and blue collar expatriate labor. The demand of this consumer economy is such that these income sources are hardly adequate and the country has to borrow huge sums. Now it has come to a such a level the expenditure on luxuries has become unbearable with gasoline alone costing 42% of the import bill. Unfortunately those who are driving this economy (city folks and professionals) hardly contribute to the economy and depend on the productivity of blue collar workers and the unfortunate reality of having to send women abroad as domestic helpers. The present level of unaffordable luxury consumption has to be checked to make debt situation manageable. Also the faction of population that drive this expensive consumer economy has to contribite to the economy in productive manner by developing a knowledge based economy.

  12. Fran Diaz Says:

    It’s all about external powers controlling Sri Lanka, whether through Money (loans) or through the Law (13-A). Tamils outside of Lanka/ltte rump are being used in the game. In a Democracy, it is up to the People to take charge. Before it is too late, demand a Referendum on all the important issues by Petitioning the Speaker of the Parliament. Send in Millions of Petitions.
    GoSL will be forced to act on it. Otherwise, Lanka will forever be a poor country being sold gradually to Tamil Nadu separatist aspirations.

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