Dilrook Kannangara

In a recent statement by former President Mahinda Rajapaksa, he alleges that the former Yahapalanaya regime (2015-19) was responsible for the economic crisis. This begs the question, then why was the prime minister of the Yahapalanaya regime, Ranil, appointed to the post of Prime Minister by Gotabaya Rajapaksa in May 2022 and just 3 months from then Mahinda-led parliamentary majority elected Ranil as the president!

That’s not all, Yahapalanaya president, Sirisena was also given nominations by Basil Rajapaksa from his SLPP political party which Sirisena won.

Surely the statement does not match up to their action.

The crux of Mahinda’s statement, written by someone else, is that $10 billion was borrowed in International Sovereign Bonds (ISBs) from 2015 to 2019 and that landed the nation in a debt trap. That is manifestly false. Sri Lanka was in a debt trap by 2014. The following report published in July 2015 based on economic data until December 2014 (the latest available data then) clearly shows Sri Lanka was in a debt trap by 2014. Please refer to Page 13 where Sri Lanka is listed as a country already in debt trap by then.

Jubilee Debt Campaign is an organization that has relieved developing countries over $150 billion of their debt over the years and is a credible campaigner against debt burden on third world countries.

Sri Lanka first borrowed International Sovereign Bonds in 2007 an amount of $500 million for a period of five years at very high commercial interest rates. However, when it matured in 2012 (5 years), Sri Lanka was unable to repay it without borrowing more from ISBs. This is the debt trap.

There is a reason why no Sri Lankan government until 2007 obtained ISB debt despite it was an easy way to get a loan. That was because ISBs are commercial debt with commercial (market) interest rates which are very high. Once a nation falls into the ISB debt, it is nearly impossible to come out of it. That is their business model – to trap any borrower who borrows ISBs and load them with more and more debt. Sri Lanka fell into the ISB trap in 2007 and the trap’s grip tightened in 2012. Since then, the island nation is in a debt trap.

ISBs worth $10 billion were borrowed from 2015 to 2019. They were used to repay 2010 to 2014 ISB debts ($2 billion), the $2.6 billion IMF loan facility Sri Lanka obtained from 2010 to 2012, their interest and bilateral foreign loans, particularly loans from India. The interest total of all foreign loans in 2014 was $890 million. They relate to all loans that existed on 31 December 2014. Five years of that equates to $4.5 billion. These repayments alone total $9.1 billion out of $10 billion. The rest (and more) were used to repay bilateral loans, particularly loans from India that were obtained from 2009 to 2013 for reconstruction purposes in war affected areas.

The Supreme Court identified the persons responsible for economic ruin. Trying to negate or challenge the Supreme Court verdict is unwise and is also an offence referred to as contempt of court. There is no higher court than the Supreme Court in the country and its decision is final and binding. The Supreme Court arrived at its decision after considering all defences presented by legal counsel of the persons it found guilty of economic mismanagement. They have nothing more to say.