Abrogate India FTA and Sign FTA With China to Overcome Economic Crisis
Posted on October 7th, 2018

Dilrook Kannangara

Sri Lanka’s economic crisis is due to the inability to repay loans fallen due after grace periods gradually come to an end. This cannot be overcome without earning or saving $4 billion a year for this year and the next 3 years. This cannot be earned or saved no matter how much taxes are imposed as taxes only earn rupees.

Sri Lanka’s trade deficit with India is $4 billion and rising. This has destroyed local industries as India’s exports can be made locally. Investments in motor vehicles cannot be be made in Sri Lanka because the same can be imported from India at a cheaper price thanks to the FTA. Indina Oil Company that controls over 18% of the local petroleum market is also a massive drain on Sri Lanka. This was a profitable sector before privitsation by Ranil’s UNF in 2002. What these figures don’t reflect are service exports from India. A very large number of Indians work in Sri Lanka and they take out scant dollars out of the country. This must end if Sri Lanka plans to manage its forex reserves.

Sri Lanka must also consider defaulting on interest payments on certain bonds issued in western capitals. Some local politicians and their clans are said to be large investors of these. Out of all loans these bonds carry the largest interest burden at time exceeding 6%. It is insane to offer such high interest rates for US dollar loans.

On the other hand Sri Lanka must sign its long delayed FTA with China. This has been delayed since 2008 due to fears of India. China and Sri Lanka do not compete on the same products. Chinese investments will flood Sri Lanka at least in the initial years which can ease the dearth of dollars. Chinese motor investments can be made in the island which can replace Indian imports. Sri Lanka can also access China’s petroleum which China gets at bargain prices due to its economic clout.

As Sri Lanka is saddled with the garment industry, a FTA with China will be able to source material at cheaper prices increasing local value addition. It will also open up a massive market for local tea which now goes begging. Massive Chinese shipping can benefit Sri Lanka. None of this can happen without a FTA with China.

Sadly all Sri Lankan leaders play the blame game without taking bold action. India sides with alternating political clans to destroy Sri Lanka. If this countinues the nation will disintegrate by internal collapse. Sri Lankan people are very shortsighted which is exploited by politicians. The current crisis is due to loans we borrowed over 5 years ago. However, blame goes to the government in power during repayment time! Batterd by blame, the UNP regime is doing the same. Ranil has launched a massive borrowing spree to copy what Rajapaksas did as a desperate bid to become popular, temporarily ease the economic crisis and most importantly burden the next government. These loans too have a grace period of about 3 years. They will become payable in 2021 when the next government is in power. This retaliatory borrowing madness must end. For that to happen people must realise the concept of grace period and politicians must not play the brinkmanship game at the expense of the nation’s future.

Abrogate India FTA and sign an FTA with China to overcome economic crisis, else get ready for the nation’s collapse. Rioting and civil war will become the norm in Sri Lanka in the next few years if people are sqeezed by unending economic hardships.

2 Responses to “Abrogate India FTA and Sign FTA With China to Overcome Economic Crisis”

  1. Christie Says:

    We have to stand up to Indian imperialism and colonialism.

    There is nothing wrong with borrowing if than money is invested properly.

    At the moment we are borrowing for consumption.

  2. Hiranthe Says:

    I fully agree with Dilrook.

    But who has the guts to do it. Even if MR comes to power he will not do it.

    If JVP comes to power, it will be worst as they are now acting according to Indian instructions.

    Gota without MR could be ideal but will not happen.

    Only Nagananda will take such blunt a decision along with the abrogation of 13A , without any fear of India because he doesn’t have experience dealing with such diplomatic issues.
    But it will be good for Mother Lanka.

    The problem is he will not come to power. People will go with the populist parties and next turn is on Pohottuwa.

    We don’t know what MR promised to India this time!

    If he is a true Nationalist, this is the time to kick the ass to 13A since he has no obligation to India at personal level.
    The 13A was forced unto us under duress and it should be challenged and made null & void.

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