Third anniversary of the incompetent government responsible for the worst debt crisis in Sri Lankan history
Posted on January 9th, 2018

Mahinda Rajapaksa Former President of Sri Lanka

On 9 January 2018, the so-called yahapalana government completes three years in office. During this short period they have created numerous crises running through virtually every sector in Sri Lanka. The main subject of public discussion today is the bond scam and the attempts being made by the yahapalana leaders to sweep it under the carpet. We are awaiting the release of the full report of the Bond Commission. The bond scam is only one of the many disasters brought upon this country by the yahapalana government. As this government marks its third anniversary, I wish to draw the attention of the public to another danger they have brought upon this country.

During the short period of 36 months that this government has been in power, they have borrowed over USD 14.6 billion in foreign currency loans alone, the breakdown of which would be as follows – USD 7.2 billion through the issue of Sri Lanka Development Bonds from January 2015 onwards, USD 3.6 billion from sovereign bonds issued in 2015 and 2017, USD 2.2 billion through currency swap arrangements with India in 2015 and 2016, USD 1.7 billion through syndicated loans arranged through several international banks in 2016 and 2017 and USD 1.5 billion from the IMF Extended Fund Facility in 2016. No previous government has borrowed so much money through foreign currency loans in such a short period of time.

Even though 14.6 billion USD would suffice to build five Norochcholai power plants, five Hambantota harbours with enough money being left over to build two more Southern Expressways, the yahapalana government has not built even a culvert with that money. I have made reference so far only to foreign currency loans. From January 2015 to date, the yahapalana government has borrowed well over Rs. 5.7 trillion in Rupee loans as well, through the issue of treasury bills and treasury bonds. The government commissioned the Moragahakanda project and opened the Rajagriya flyover to coincide with its third anniversary so as to answer the critics who say that the yahapalana government has not built anything tangible despite massive foreign borrowings. However, the Moragahakanda project was planned, financial allocations were made and construction commended under my government way back in 2007 in accordance with the 2005 Mahinda Chintana programme.  Likewise the Rajagiriya flyover was planned and money was allocated for its construction by my government. Cabinet approval was granted to call for bids to select contractors for the construction of the flyovers in Rajagiriya, Polgahawela and Ganemulla at the cabinet meeting held on 4 December 2014.

The yahapalana government has marked its third anniversary by claiming credit for projects for which money was allocated and started by the previous government. They came into power in 2015 claiming that there was a debt crisis in the country due to the loans taken by my government to build power plants, harbours, airports, expressways etcetera.  However the total cost of these major development projects were as follows: USD 1,350 million for all three phases of the Norochcholai power plant; USD 740 million for the Southern Expressway from Kottawa to Matara; USD 1,300 for phases I and II of the Hambantota harbour and its bunkering facility; USD 292 million for the Colombo-Katunayake expressway and USD 209 for the Mattala airport.

All these development projects put together cost less than USD 3.9 billion. The claim that the present government has been forced to borrow heavily to repay the project loans taken by my government is a complete lie. With the 14.6 billion USD in foreign currency loans that this government has borrowed up to now, the loans taken for all the above mentioned development projects could have been repaid four times over. The debt now being incurred is used to meet the day to day expenses of the yahapalana government and not to repay the project loans taken by my government. From January 2015, there was a massive and unplanned increase in government expenditure as a result of state funds being utilized to meet political objectives. The present debt crisis came about due to the yahapalana government borrowing heavily in Rupees and in foreign currency in order to meet this increased expenditure.

Foreign currency loans should always be taken with the utmost care. Since it is necessary to purchase foreign currency to repay such loans, even a slight change in the exchange rate can give rise to a massive increase in a country’s indebtedness. According to the 2015 and 2016 Central Bank reports, due to the depreciation in the value of the Rupee as a result of the economic downturn that took place after the yahapalana government took office, an extra Rs. 478 billion has been added to the national debt. It should be noted that the increase in the interest rate by about 50% due to the bond scam, has also added to the debt burden.

My government was always very careful in taking foreign currency loans. According to the Finance Ministry, the repayment of foreign loan installments plus interest during the period 2008-2014 was as follows:

2008 – USD 881 million

2009 – USD 1,041 million

2010 – USD 826 million

2011 – USD 971 million

2012 – USD 1,620 million

2013 – USD 1,160 million

2014 – USD 1,306 million

Since these are not unmanageable amounts, my government never had a problem with foreign loan repayments. The present crisis is entirely a creation of the yahapalana government. The foreign loan instalments and interest thereon that have to be paid after 2015 is as follows:

2015 –  USD 1,828 million

2016 – USD 1,604 million

2017 –  USD 2,132 million

2018 –  USD 2,891 million

2019 –  USD 4,217 million

2020 –  USD 3,699 million

2021 –  USD 3,344 million

2022 –  USD 3,743 million

2023 –  USD 2,120 million

2024 –  USD 2,067 million

2025 – USD 4,155 million

2026 – USD 2,758 million

2027 – USD 3,448 million

These figures amply explain the difference before and after the change of government in 2015. The immediate increase in repayments from 2015 onwards is due to the huge short term commercial loans taken by the yahapalana government to be repaid in a few months or one or two years. What Sri Lanka experienced in 2015 was a borrowing frenzy. Central Bank records indicate that before the yahapalana government came into power, Sri Lanka Development Bonds were issued only twice a year with the amount borrowed per year not averaging even USD 350 million between 2010 and 2014. It should be borne in mind that this was at the height of the biggest infrastructure building programme in recent history. But in the year 2015 without a single new infrastructure project being initiated, the yahapalana government issued Sri Lanka Development Bonds on no less than nine occasions. The number of SLDB issues made in 2016 were six, with four being made in 2017.

The government has now obtained cabinet approval to borrow a further USD 5 billion in foreign currency commercial loans in 2018 as well. In order to repay these loans taken for consumption purposes, the government has increased the tax burden on the people to an unbearable level by increasing the VAT, vehicle import duties, commodity import taxes, various levies and fines and stamp duties etcetera. From April 2018 onwards, the government will commence a programme to bring virtually every adult in the country into the income tax net.

Since the massive loans taken by the yahapalana government cannot be repaid simply by increasing taxes, they have now started selling off all available national assets ranging from government owned hotels to harbours, expressways to power plants. Though the government claims that the Hambantota port was sold off because the loan taken to build it could not be repaid, the proceeds of the sale have not been used to repay the project loan but is to be sent instead to the Treasury to be spent on consumption – which reveals the actual motive in selling off these assets. Since the Hambantota harbour was built with long term loans at concessionary rates of interest, the government is in no hurry to repay the loan taken to build it.

However there is an urgent need to repay the short term foreign currency commercial loans taken by this government for consumption purposes even if the payment has to be made with the money realised through the sale of national assets. If such commitments are not met on time, Sri Lanka will get locked out of the international financial markets. I request all voters to use the opportunity that will come their way on 10 February to register their protest at the disaster brought upon the financial system of this country by this corrupt, incompetent government.

Mahinda Rajapaksa

Former President of Sri Lanka

22 Responses to “Third anniversary of the incompetent government responsible for the worst debt crisis in Sri Lankan history”

  1. Dilrook Says:

    Incompetent – yes; but it was not this regime that landed the nation in a spiraling debt trap. By 2014 (the latest), Sri Lanka was in a debt trap. Even in 2012 over 103% of government revenue went on to repay debt and interest. Since then it remained over 94%.

    This will be the future trend as well no matter which party comes to power.

  2. Susantha Wijesinghe Says:

    WHY WAS NOT THAT ARZ OLE BUGGER NOT ARRESTED BY THE FCID. ? IS IT BECAUSE THE BLOODY SCUM BAG OWNS IT ?

  3. Christie Says:

    A very good understanding of our finances. Most of the money finally ending up in India.

  4. Sirih Says:

    Mr President, as some one who knows you and the family, i can only say your greatest contribution to the country was ending the terror war… Historically you are suppose to be a great nationalist… But what happen on your 2nd term?
    Nationalist fathers don’t allow their children to import super cars and also waste army resources to go for night races and also cheat their law exams.. Your wife ran the Sri Lanka air to the ground and use expensive hotels to visit corrupt catholic pope on tax payers money..
    Even a movie that suppose show church shenanigan was banned in SL by you.. What right you have to that insult the nation and its people. Your eldest is a crook and a great liability to your name and even after getting warnings about this idiot and a thief you ignored the warnings..
    My advise is , retire gracefully and ask your stupid children to stay away from politics and get Gotha to be a statesman since we need people like Gotha but not your family of crooks..

  5. Nimal Says:

    All regimes in the past pitilessly borrowed and put us into debt. All stolen money should be sought and brought back. Rouges must face justice.

  6. Fran Diaz Says:

    Lanka is in the worst money debt trap with the Yahap govt. and nothing to show for it. Where has all that money gone ?

    Yahap leaders are having grand ‘openings of projects’ started by earlier govt and others, now completed.
    Election gimmicks & show !

    The earlier govt had to face the heavy war expenditure, and the war with the LTTE completed, to relief of ALL in Lanka.
    The war finished, but Yahap has taken/stolen vast amounts of savings of the People (EPF etc) from the Central Bank through the two scams, plus now having heavy borrowings too.
    Will the EPF etc ever be restored to the People ?

    Hold also those who supported the LTTE and the huge expenses incurred in war/s, destruction of property, funds, lives, reputation, etc. for loss govt funds in Lanka.

  7. Christie Says:

    “Third anniversary of the incompetent government responsible for the worst debt crisis in Sri Lankan history”

    For the Indian Empire and Indian Colonial Parasites the best Indian Colony.

  8. Charles Says:

    Dilrook some times distorts the truth.

  9. Charles Says:

    Sirih You had been here before with a different name and I thionk you are a shameless crook, you are like a tiger that cannot change its stripes.

  10. Fran Diaz Says:

    There are no PERFECT LEADERS or PERFECT GOVTS.
    To me, the best leader for the People of Lanka, savvy, educated, courageous and not vengeful, is MR.

    Consider the confused times that MR came as President : MR & Family, including Gota, have made great sacrifices for the sake of saving Lanka from the dire fate of falling into the hands of terrorism permanently, & separatism in Lanka, and for that we are eternally grateful.

    We still say that a Group of proven PATRIOTS ought to lead Lanka – such are the nasty times.

    Comments welcome.

  11. Charles Says:

    Dear Fran,

    The difference is that Sri Lanka that MR saved from being divided by the terrorists , has been divided by the Yahapalanaya bigots.

  12. Senerath Says:

    Charles,
    Siri Hewavitharana was always here with the acronym “Sirih”. I am deeply hurt when your mind full of hatred called him a “crook” without knowing the services he provided for Sri lanka, just becuase he wrote what he knew.
    Likewise please call me a “crook” too.

  13. Sirih Says:

    @ Charles, I always use this name and you may have confuse me with some one else..
    Having servile mentality does not help the nation and its people… It may be fashionable to lick up to crooks and thieves for personal gain and this is the curse of the nation..
    My contribution is for the nation and its dispossessed people and will go after any crook that hurt the nation..

  14. Dilrook Says:

    @Charles

    I have nothing to add to Sirih’s reply.

  15. Fran Diaz Says:

    Dear Charles,

    Thank you – you are truly PATRIOTIC and truthful re the MR govt and times.
    Unshaken.
    Best wishes,
    Fran

    ————

    Lanka is a very hard country to govern.
    Why ?
    Due to :
    Nearly 500 yrs of Colonisation
    Effects of two World Wars
    Effects of the Cold War
    Effects Tamil CASTE Wars
    Proximity of INDIA & Tamil Nadu
    Ports of Lanka in the main Trade Routes
    High diversity (ethnic & religions), for such a small area (25,000 sq miles)
    etc.

  16. Charles Says:

    Sirih I am sorry I apologise for the confusion.

  17. Nimal Says:

    Fran
    Lanka is a very hard country to run because since the independence the people have been made ignorant, foolish and even stupid while the politicians robbed the country.

  18. L Perera Says:

    Let’s hope that the Sri Lankan voters have realised that a robust opposition is essential to achieve good governes and cast their vote with this goal in mind. The move away from the two party system in the last election has put the the county’s economy and progress in a downward trajectory.

  19. Fran Diaz Says:

    Nimal,

    There are many factors why Lanka is in trouble. I have already stated some of them in the entry before.

    Re Politicos : Some Politicos merely do survival tactics, and “surviving well” (i.e. plus $$s) is even better for them. They have no idea what Public Service means.
    There has to be MINIMAL QUALIFICATIONS put into the Law of the Land before people are allowed to contest elections. By that I mean not only education, but also serving in the Public sector. Suggestions ought to be made by the Public on this topic and debates held in Parliament too.

    The size and location of Lanka is a major factor that is negative for an ex-colonised country.

  20. Fran Diaz Says:

    It is mainly COLONISATION that has ruined Lanka.
    Nearly 500 yrs of COLONISATION is a long time of negative rule.
    COLONISATION meant Rule by the GUN !
    COLONISATION means NO Patriotism/Nationalism.
    COLONISATION means assets are leached out of the Country.

    Lanka has to undo all those very negative times, starting mainly with the schools of Lanka.
    UNP (RW led) led Yahap can do that …. ??? !!!

  21. Fran Diaz Says:

    Curiously, the COLONISATION factor has been forgotten by most of Colombo.
    Also, curiously, Colombo has forgotten that it was COLONISATION mainly, and indirectly, that pushed the formation of both the LTTE & the JVP.

    Also curiously, Colombo has forgotten that America, INDIA & Sri Lanka, are all earlier COLONISED countries.

  22. Naram Says:

    I hope Sri Lankan particularly Colombians too will recognise in the coming election, the confidence and prosperity your policies brought to the country and their mistake in bringing the current administration behaving with venom trying to find faults often with no provable case while going to great lengths to hide their own guilt.

    We saw the Central Bank figures proving Gross National Product increase of three fold [$ 25 B to $ 75 B] and per capita income rise of $1200 to $3400. Attendant rise in property prices is all too easy to see. What is more the fall in fuel price in 2015 made ideal conditions for investing in the infrastructure projects that are sorely needed particularly for urban transport. But what we have seen is more scams, beginning with the great bond scam, followed by more on the road building contracts. Motorway build cost per mile seems to keep on rising despite the massive fall in fuel price; only way the brainless Yahapalana could find to raise money required was by selling off of crown jewels or going to local loan sharks at massive interest rates, not by making justifiable economic cases to international finance bodies specially PRC as in the past.

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