By Mahinda Rajapaksa –
The debt crisis created in this country by the yahapalana government has now reached a critical stage. The total government debt which was Rs. 7.39 trillion at the time this government came into power in January 2015, had skyrocketed to Rs. 12.64 trillion by the end of July 2019 – an increase of 71%. The high proportion of foreign currency commercial loans in the debt taken by the yahapalana government increases the risk to the country. The international ratings agency Moody’s issued a warning recently with regard to this matter. From January 2015 to date, this government has taken a staggering 26 billion US Dollars in foreign currency commercial loans through Sri Lanka Development Bonds, Sovereign Bonds, Syndicated Loans, Currency Swaps and the like.
Foreign currency loans have to be repaid in foreign currency. Hence the debt burden increases automatically when the value of the US Dollar increases in relation to the Rupee. The value of the US Dollar which was Rs.131 when this government came into power, has increased to Rs.183 today. The depreciation of the currency from 2015 up to the end of 2018 alone, had increased the government’s debt burden by Rs.1,709 billion. The most salient feature of the debt that the present government has taken on, is that none of it has been utilised to develop the country but only to meet the day to day expenses of the government.
Whenever the yahapalana camp refers to the debt taken on by my government, they refer only to various project loans that we took to build infrastructure. It should be noted that during the past five years, the yahapalana camp has never referred to any debt taken by my government which was not related to a project. The reason for this is that it was very sparingly that my government took commercial loans through Sri Lankan Development Bonds, Sovereign Bonds, Currency Swaps or Syndicated Loans. The project loans taken during my time were long term loans taken at concessionary rates of interest. Furthermore the amounts that we took as project loans are very small in comparison to the yahapalana consumption borrowings.
The cost of the Norochholai power plant was 1.35 billion USD. The entire loan taken to build the Hambantota harbour was 1.26 billion USD. The Expressway up to Matara cost 740 million USD, the Mattala airport 209 million USD, the Colombo Katunayake expressway 292 million USD and the loan taken to build the Lotus Tower was 67 million USD. Even if the loans taken to build all these projects are put together, the amount taken does not come even close to the 4.4 billion USD that the yahapalana government borrowed in 2019 alone through the issue of two sovereign bonds.
That would place in perspective the proportions of the debt crisis created by the yahapalana government in less than five years. This is why I have kept the public informed about this issue from time to time. My government took loans for investment. Today the Norochcholai power plant is a very profitable enterprise. The Auditor General stated last year that the expressways are also making profits. Last Sunday, the newspapers reported that the nine story administrative building of the Hambantota Port now has a 95% occupancy rate with companies engaged in various operations related to the port renting space in the building. This means that before long the Hambantota Port will also be making profits. The government can also derive a large income from the Lotus Tower which was opened recently.
In contrast to this, the yahapalana government has not built anything of lasting value or anything that would generate an income from the staggering 26 billion USD that they took in the form of foreign currency commercial loans since January 2015. The reason why my government did not have to take foreign currency loans for consumption while the yahapalana government has had to do so, is because the latter threw government money into political endeavours to win elections and to retain power. The money spent by the yahapalana government to keep themselves in power will finally have to be paid by the people of this country. Economic crises have occurred under previous governments as well. However, this is the first time that an economic crisis has come about due to the mismanagement of state funds. Never in the 71 years since independence have we had a government that has been as irresponsible as this in the handling of government finances.
*Mahinda Rajapaksa – Leader of the Opposition