{"id":93735,"date":"2019-10-10T13:04:56","date_gmt":"2019-10-10T20:04:56","guid":{"rendered":"http:\/\/www.lankaweb.com\/news\/items\/?p=93735"},"modified":"2019-10-10T13:04:56","modified_gmt":"2019-10-10T20:04:56","slug":"yahapalana-as-a-puppet-regime-part-11","status":"publish","type":"post","link":"https:\/\/www.lankaweb.com\/news\/items\/2019\/10\/10\/yahapalana-as-a-puppet-regime-part-11\/","title":{"rendered":"YAHAPALANA AS A PUPPET REGIME Part 11"},"content":{"rendered":"

Kamalika Pieris<\/em><\/span><\/h2>\n\n\n

ECONOMIC GROWTH\n(1)<\/p>\n\n\n\n

Under my\npresidency, the economy grew at an average annual rate of 6% from 2006 to 2009\ndespite a raging war and at 7.4% in the five post war years from 2010 to 2014,\nsaid Mahinda Rajapaksa in April 2019. No government in post-independence\nhistory has achieved an average growth rate of 6% leave alone 7.4%. Because of\nthat growth, the economy was able to absorb the relatively modest annual\nincreases in taxation under my government, said Mahinda Rajapaksa in April\n2019.<\/p>\n\n\n\n

The total\noutstanding government debt increased from Rs.7,391 billion in 2014 to more\nthan Rs. 11,859 billion by the end of 2018 – an increase of 62%. These enormous\nborrowings were not spent on any development work. The national debt has risen\nby Rs. 4 Trillion in these three years, as against Rs. 5 Trillion in the\nprevious 10 years, despite war expenses. <\/p>\n\n\n\n

Prime Minister\nRanil Wickremesinghe admitted that Sri Lanka\u2019s economy is in a dire state,\nwhile endeavouring, as always, to lay the blame on loans taken by MR\u2019s\nGovernment, said Tissa Vitarana in January 2019.<\/p>\n\n\n\n

 He conveniently plays down the fact that the\nloan repayment of USD 5.9 billion due in 2019 is the outcome of loans taken\nover about 30 years. He also hides the fact that the loans acquired in the last\nfour years of the UNP-led Government, without doing any national development,\nmore or less equals the debt incurred by the MR-led Government over nine years\nto win the war against the LTTE and develop infrastructure concluded Vitarana.<\/p>\n\n\n\n

ECONOMIC GROWTH\n(2)<\/p>\n\n\n\n

Milton Rajaratne has looked at the economic\ngrowth after Yahapalana. One of the main pledges of Yahapalana was\nto improve the economy of the country. The tenure of the Yahapalana government\nis drawing to a close and thus it is timely to investigate whether the\ngovernment has been able to manage the economy, and bring about the proclaimed\nresults in both macroeconomic and socioeconomic spheres, Rajaratne said. <\/p>\n\n\n\n

Rajaratne has\ncreated a table presenting data for 25 economic indicators, from the year\n2014 to 2018, of which 2014 is considered the reference year. Four year\naverages of economic performance have also been calculated. The data were taken\nfrom the Annual Reports of the Central Bank of Sri Lanka. <\/p>\n\n\n\n

The 25 economic indicators include Growth\nrate, Domestic investment, Domestic savings, \nwages, exports, official reserves, Share price Index, Budget\ndeficit,  Manufacturing,\nunemployment,  Consumer prices,  imports, \npublic debt, foreign debt, \nexchange rate, interest rate. <\/p>\n\n\n\n

All the 25 criteria, given in the table,\nindicate that the average performance of the economy during the past four years\nis a failure compared to the performance of the year 2014. Economic performance\nof the first two quarters of the year 2019 has also been disappointing, as all\nthese criteria have further deteriorated. <\/p>\n\n\n\n

In the past there was a common belief that UNP\nregimes were good at economic management, and as a result the economy gained a\nboost every time a UNP government came to power. However, this time around,\nthis belief has been proven wrong. <\/p>\n\n\n\n

Due to the mismanagement of the economy\nbetween 2015 and 2018, the expectations of the business and households sector\nhave been shattered, and the economy is caught in a low investment-low economic\ngrowth trap, low export-high import trap, low public revenue-high expenditure\ntrap, debt-development trap, debt servicing trap, high tax-low real consumption\ntrap, high production cost-competitiveness trap, low exports-high imports trap,\nand many other traps, concluded Rajaratne. (Milton\nRajaratne island 26.9.19 p 9)  <\/p>\n\n\n\n

GOVERNMENT DEBT<\/p>\n\n\n\n

The government is\ntrying to use the debt repayment issue in order to conceal their inability to\nrun the economy. From the time this government was elected to power, the Prime\nMinister has been saying that they cannot repay the loans taken by the previous\ngovernment. They were talking about a mountain of debt, a debt trap and even\nclaiming that some of the loans taken had not been documented. That is a lie,   said Bandula Gunewardena in April 2019. If\nloans have been taken without any documents, there is no need to repay such\nloans, either. <\/p>\n\n\n\n

When  the Rajapaksa government  took office in November 2005, the total\noutstanding government debt was Rs. two trillion. When we left in 2015, it was\n7 trillion, said Bandula Gunewardena. During those nine years, we went through\nthe world food crisis of 2007, the world\u2019s worst recession since 1933 in\n2008\/09, and experienced the highest oil prices ever, for a number of years.\nThen we had to face the Eelam war. An unprecedented amount of development work\nwas also done during those years. With all that, indebtedness rose by only Rs.\nfive trillion, continued Bandula.<\/p>\n\n\n\n

Towards the end\nof 2018,  Yahapalana  government bought  2.5 billion USD sovereign bonds. Then they\npresented the budget for 2019 to Parliament and before it was passed they took\nyet another 2.4 billion USD through a sovereign bond. Then they took one\nbillion USD from the China Exim bank for the Central highway project. In that\nmanner, they have taken about six billion USD in foreign loans in just the past\nfew months.Today the total outstanding government debt is Rs. 12 trillion. It\nhas gone up by five trillion without the government doing anything to show for\nit, within a short period of just four years, continued Bandula. <\/p>\n\n\n\n

When the\nRajapaksa government was in power, there was enormous restraint exercised when\nmaking foreign borrowings. Indeed one could say that all previous governments\nwere much more careful in that regard than the present one. During the\nRajapaksa era, Sri Lanka Development Bonds were issued only twice a year and\nthat too never in excess of an average of about 350 million USD per year. But\nunder the present government SLDBs were issued with reckless abandon. <\/p>\n\n\n\n

During our time,\nan additional one billion USD would have sufficed to take things forward very\ncomfortably. We have never taken amounts as large as 2.5 billion USD at a time\nthrough sovereign bonds,  concluded\nBandula Gunewardena. <\/p>\n\n\n\n

BUDGET 2019<\/p>\n\n\n\n

The budget for\n2019 was a fraud perpetrated on the people, said Bandula Gunewardena. It is one\nbig lie.  Parliamentary Committee on\nPublic Finance report on this Budget \npointed out that the  assumptions\nand calculations on which the budget was based were faulty. Whether the Easter\nSunday attacks took place or not, the economy is going to take a nose dive this\nyear, said Bandula Gunewardene. <\/p>\n\n\n\n

TAXES<\/p>\n\n\n\n

Mahinda Rajapaksa\nsaid in 2019, the government hopes to collect Rs. 2,077 billion as taxes, twice\nthe amount that was collected 2014. All that money is to be wrung out of the\npublic in a context where the annual growth rate has declined to 5% in 2015,\n4.5% in 2016, 3.1% in 2017 and it is expected to be around 3% in 2018. <\/p>\n\n\n\n

INTEREST RATE<\/p>\n\n\n\n

Every economist\nin the world knows that a country can never be developed with a double digit\ninterest rate. The interest rates went\ndown to single digits during Mahinda Rajapaksa era. In Sri Lanka, the interest rate went up to\ndouble digits after the Central Bank bond scam. If the cost of capital is 15 percent, a\nbusiness will have to make a profit of at least 40% to make his business viable\nafter meeting operational costs, taxes and the cost of capital etc. So a person\nwho takes a loan now is in deep trouble, said Bandula Gunewardene in April 2019. <\/p>\n\n\n\n

SALARIES<\/p>\n\n\n\n

Any salary\nincrease given by this government disappears almost immediately. The Rupee\ndepreciated from Rs. 131 to the Dollar at the end of 2014 to reach around\nRs.180 under Yahapalana rule, driving up the prices of all imports. Under my\ngovernment, taxes were much lower, and the exchange rate was controlled to\nprevent increases in the prices of imports. So whatever was given by my\ngovernment as salary increases actually stayed in the hands of the recipients,\nsaid Mahinda Rajapaksa. ( Continued) <\/p>\n","protected":false},"excerpt":{"rendered":"

Kamalika Pieris ECONOMIC GROWTH (1) Under my presidency, the economy grew at an average annual rate of 6% from 2006 to 2009 despite a raging war and at 7.4% in the five post war years from 2010 to 2014, said Mahinda Rajapaksa in April 2019. No government in post-independence history has achieved an average growth […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":true,"template":"","format":"standard","meta":{"footnotes":""},"categories":[104],"tags":[],"class_list":["post-93735","post","type-post","status-publish","format-standard","hentry","category-kamalika-pieris"],"_links":{"self":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/93735","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/comments?post=93735"}],"version-history":[{"count":0,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/93735\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/media?parent=93735"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/categories?post=93735"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/tags?post=93735"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}