{"id":41496,"date":"2015-02-14T10:26:47","date_gmt":"2015-02-14T16:26:47","guid":{"rendered":"http:\/\/www.lankaweb.com\/news\/items\/?p=41496"},"modified":"2015-02-14T03:24:31","modified_gmt":"2015-02-14T10:24:31","slug":"5-billion-from-imf-to-pay-off-chinese-loans","status":"publish","type":"post","link":"https:\/\/www.lankaweb.com\/news\/items\/2015\/02\/14\/5-billion-from-imf-to-pay-off-chinese-loans\/","title":{"rendered":"5 billion from IMF to pay off Chinese loans"},"content":{"rendered":"
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Courtesy The Daily News<\/em><\/span><\/h2>\n<\/div>\n<\/div>\n<\/div>\n
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The Sri Lankan government will approach global lenders including the World Bank and the International Monetary Fund (IMF) to borrow from them to the tune of US $ five billion to restructure expensive loans, obtained from China, by the previous regime for infrastructure development projects in the country.<\/p>\n

According to Reuters, the Central Bank Governor has said that the country had borrowed more than US $ 6 billion, mainly from China, for a massive infrastructure drive under the Rajapaksa government at the end of a 26-year civil war which ended in May 2009.<\/p>\n

The new government, under the leadership of Maithripala Sirisena has already ordered a review on all projects initiated by the previous government.<\/p>\n

The new government claims that the Rajapaksa administration had to borrow money, on unfavourable terms and the Rajapaksa government agreed in respect of some public projects without following the proper tender procedures.<\/p>\n

“We have to look at what options are available in the agreements and we should try and reduce the high borrowing cost, obviously with longer-term low cost borrowing,” Reuters had reported quoting Deputy Minister for Policy Planning and Economic Affairs Harsha de Silva.<\/p>\n

According to Deputy Minister de Silva, in 2008 the country had secured a loan of US $306 million from China’s Ex-Im Bank to develop the first phase of a port in the southern\u00a0city of Hambantota, since completed, had been signed at a fixed interest rate of 6.3 percent. That was despite an option to go for a floating rate of LIBOR plus 90 basis points.<\/p>\n

“If we had a floating rate, we would have been paying 1.3 percent today. But now we are paying 6.3 percent per annum. The fixed rate was due to a request made by the lender. I don’t think we should be paying 6.3 percent on a 15-year loan,” de Silva added. China financed most of the post-war infrastructure projects, ranging from ports to airports and highways, railways and coal-fired power plants. Central Bank Governor Arjuna Mahendran is on a visit to Washington with a delegation for talks with the IMF.<\/p>\n

Finance Minister Ravi Karunanayake had told Reuters on Monday that Sri Lanka was looking to tap international capital markets to borrow up to $1.5 billion through a sovereign bond before the end of April, and also plans to seek a new IMF programme.<\/p>\n

“We are also asking for development aid from the IMF,” Minister Karunanayake told reporters in Colombo.<\/p>\n

“We are asking as a new government that has come in. We want to try and reduce the gap because our debt amortization is roughly about 1.3 trillion Sri Lankan rupees ($9.8 billion) a year.”<\/p>\n

A top government official who wanted to remain anonymous had said, that the government was looking to borrow $4 billion from the IMF at very nominal rates for balance of payments support.<\/p>\n

He said that he expects Sri Lanka could secure IMF loans at an interest rate of around 0.01 percent to 0.5 percent, as “opposed to Chinese loans at 7-8 percent”.<\/p>\n

Foreign Minister Mangala Samaraweera now in Washington urged the US Government to assist Sri Lanka through increasing trade and investment. “Encourage your entrepreneurs to make the best use of the new environment conducive for investment in Sri Lanka,” Minister Samaraweera asked the audience present to hear him speak at the Carnegie Endowment for International Peace, in Washington.<\/p>\n<\/div>\n<\/div>\n<\/div>\n

– See more at: http:\/\/www.dailynews.lk\/?q=local\/5-billion-imf-pay-chinese-loans#sthash.3igsKVei.dpuf<\/p>\n

Further Reading<\/span><\/h2>\n

The Financial Missiles of the IMF that made sovereign countries indebted..<\/span>
\nPosted on August 30th, 2014<\/span><\/h2>\n
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By Garvin Karunaratne, Ph.D.(Michigan State University)<\/strong><\/span><\/h2>\n

\u00a0<\/strong>Argentina is in the dog house once again. This time it is hounded by the Vultures\u201d- the Hedge Funds\u00a0 who have obtained a ruling from the US\u00a0 Supreme\u00a0 Court that the debts amounting to $ 1.5 billion on bonds has to be paid at full value immediately.\u00a0 That decision made the Argentinian Economic Minister Kicillof remark that the Hedge Funds were Vultures as they refused to negotiate terms for payment and instead obtained the Court Order.<\/p>\n

Back to 2001,\u00a0 Argentina\u00a0 had a massive debt of $ 132 billion and failed to pay up. Then they had to freeze bank accounts, workers were not paid for months all because under the IMF\u2019s neoliberal model- the Structural Adjustment\u00a0 Programme(SAP) which Argentina had closely followed they did away with exchange controls, freed imports and allowed the people to raise foreign loans and when it came to paying\u00a0 up the loans in foreign currency the economy crashed. . Then I wrote:<\/p>\n

In its 2002 Budget Argentina agreed to implement budget cuts of\u00a0 $ 8 billion, tighten the stomachs of the people further. This did not satisfy the IMF to release funds. Riots erupted and the Government of\u00a0 President De La Rua gracefully resigned. Mounted Police charged the unarmed crowds and bullets rained in vain. (The Island: 3\/1\/2002)<\/p>\n

Since then Argentina tried hard and actually paid up all its dues to the IMF , but Two Hedge Funds \u2013The Vultures led by a US billionaire \u2013 who snapped up Argentinan bonds at rock bottom prices following Argentina\u2019s\u00a0 $ 95 billion foreign debt default in 2001 (went to the US Supreme Court.) . The US Court in Washington decided that the debt should be paid in full\u201d(Argentina fears new crisis as Vultures Circle after US Supreme Court ruling\u201d in The Guardian 18\/6\/2014)<\/p>\n

Let us see what this Lesson holds for Third World Countries.<\/p>\n

Full Report and Comments<\/p>\n

https:\/\/www.lankaweb.com\/news\/items\/2014\/08\/30\/the-financial-missiles-of-the-imf-that-made-sovereign-countries-indebted\/<\/a><\/p>\n

IMF-World Bank Structural Adjustment Programs (SAPs) ruined countries \u2013 fate of Sri Lanka?<\/span>
\nPosted on October 16th, 2014<\/span><\/h2>\n
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Shenali D Waduge<\/em><\/h2>\n

Latin American socially oriented governments have rejected IMF\u2019s neo-liberal policies after realizing that neither IMF nor World Bank have any solutions or wish to give any solutions to raise developing nations from their poverty. Have the World Bank or IMF raised a single developing nation to a developed level to date through their policies and formulas? NO, not from Structural Adjustments or new nomenclature of Poverty Reduction Growth Facility (PRGP). All preconditions for loans and debt relief have been to benefit only the rich shareholders that they represent and who elect officials to office. World Bank\u2019s president is always an American, IMF director is always a European. If World Bank and IMF says it can reduce poverty but they have not why have developing nations continue to be slaves to these rich nations destroying their own crops for local consumption to grow items that the West wants to eat and thus contributing inadvertently to poverty of their own people?<\/p>\n

IMF \u2013 World Bank with their corporate elite backing naturally enjoys using media to their advantage so countries never really are informed by the media the catastrophic results of the decisions that IMF-World Bank officials force countries to take because developing countries cannot survive or run without loans. There is little point blaming the leaders \u2013 even if one changes and another is replaced they all find themselves in the same soup unable to get out of the trap until and unless the developing nations unite to create their own terms. The West has mastered the art of keeping the developing nations divided by allowing for the weaknesses in excesses of politicians of the Third World whom the First World sees as the wagons to securing their own benefits. Puppet regimes are created because of the weaknesses of the third world leaders and not because of any ingenuity of the First World. They have only mastered the art of providing the incentives to increase corruption so long as it benefits them.<\/p>\n

IMF & World Bank<\/strong><\/p>\n

Created in : 1944 at Bretton Woods Conference, New Hampshire.<\/p>\n

Based in: Washington DC<\/p>\n

Original intention:<\/strong> Promote international economic cooperation and provide member countries short-term loans so they could trade with each other.<\/p>\n

Current role<\/strong> : \u2018bailing\u2019 out countries caused by currency speculation in global casino economy and giving loan packages tied to conditions known as structural adjustment programs (SAPs). IMF is like a loan shark because for getting loans countries have to follow IMF policies even for debt relief. IMF will decide how much a debt country can spend on education, health, environmental protection etc.<\/p>\n

World Bank\/IMF \u2013 Objectives of Structural Adjustments<\/strong><\/p>\n