31 October, 2020

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Current Position Regarding The Yahapālana Debt Crisis

By Mahinda Rajapaksa

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

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Latest comments

  • 13
    2

    Uncle leave the debt crisis to real experts and focus on the alternate Rajapaksa candidate.What about Namal ????. Uncle I have a suspicion that Ranil Uncle helped in getting a NIC/Passport in time , but tipped the press/public, soon after , to screw your family. Think twice when you deal with him. The rumor is even the UNP,ers do not trust him.

    • 5
      5

      Chiv, MR is right. US puppet Bonscam Ranil must be impeached for looting the Central Bank and putting Sri Lanka into the ADB_IMF-WB Washington Co.ncensus Debt Trab an bailout business with international banks .

      The Debt crisis is part of US Economic Terrorism, like the Easter Sunday attacks to force Sri Lanka to sign MCC land grab project and SOFA to set up US military bases and asset strip the island and its marine resources.

      Bottom line is US puppet Bond Ranil must be impeached for looting Central Bank and treason.

  • 11
    0

    Who is his ghost writer? Cabraal I presume. But his last sentence really is a Freudian slip that tripped.

    • 2
      0

      Craig,

      Cabral May be the ghost writer, but are the facts and numbers correct? This needs independent verification, as they all are liars. The ghost writer/NR did not mention that the commissions MR and cronies got from the products worth US $ 4.3 billion amounted to slide to US $ 1.0 billion.

      Did the Yahspskanaya hook the country to the IMF and World bank as the ghost writer claims? Didn’t the MR regime with the ghost writer issue bonds as well?

    • 2
      0

      I was thinking of a ghost writer. The style of presentation is certainly not of Percy Mahendra Rajapakse aka MR. MR may say that during his time the loans were taken only for infrastructural development. Whether it this Yahapalana cacophony or the “Suba Anagathayak!” Greeting era (instead of the Ayubowan) [Reminds me Heil Hitler or Amaih Kurvitasch! as in Tin Tin series] the whole purpose of getting loans is to pocket a part of it to one’s overseas accounts. Benefit to people? That is, if any, is the byproduct.

  • 9
    0

    Uncle you created all this crisis .
    You have looted public funds not you but your cohort; friends and relatives .
    You did not take action against them all..this government inherited all loans and interest now you blame this government and yet…your failure to publish thieves made this situation..what about commission on Chinese contracts..what about mega projects …some of them waste of money ..
    You know that well and now people pay back with high interests.

  • 10
    0

    The repayments of high interest loans from China, only started after 2015. Hence, Rajapaksha has no right to talk about the same. NPM has all the rights, due they are not accused of any fraudulent activity.

  • 2
    0

    “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”. Is your ‘Medamookalan Museum’, Mattala paddy storage facility and Hambanthota fish lake generating any income????

    For your information, ‘Sabbe Sankhara Anichcha’. I am pretty sure you do not know the meaning of this uttering by the greatest human being ever, who gave up every luxury for the benefit of the fellow humans, as you are not a follower of the path. ‘Suwapath Weva’ maha jaranani!

  • 1
    0

    This comment was removed by a moderator because it didn’t abide by our Comment policy.

    For more detail see our Comment policy https://www.colombotelegraph.com/index.php/comments-policy-2

  • 5
    2

    pot calling the kettle black

  • 5
    0

    Uncle didnt you also tell us that you will control Oil and dollar from appreciating ,as though it is coming out of your back yard.

  • 4
    0

    My friend no country develops without debt. Debt is good provided it’s been put to good and productive use which should increase the size of the economic cake, in turn it makes each individual of the country to get a bigger slice of it. Only the petroleum exporting gulf countries funded their development through their own funds but they too are now going to debt market after the low oil price. Debt of countries like Japan, Singapore etc are more than their GDP, since all being put to good use, and their economies have tremendous capacity to service it. Where as all of you bungled everything, and the people are going beggery on daily basis. Please don’t talk as if you were a saint, and you too should get huge blame for this miserable situation. Most of the debt money being looted and parked in safe heavens in proxies name. Just please explain to the people from where so millions came for your son’s extravagant wedding of several banquets running into many days.

  • 6
    0

    Mahinda Uncle,
    the Mattala Airport was not needed. It is a white elephant unless you can paint it green.
    Any fool can see it was a waste of good money, money that could have been put to better use.
    The Hambantota port was not needed. It is a white elephant unless you can paint it green.
    The Galle port should have been expanded with all facilities and if done it would have been a big boost to the city of Galle and the entire South.
    In your time you were big headed truly big headed totally overblown with power and that was the cause of your downfall. If you were humble and shown humility with prosperity today you would have still been the President and a President whom every man, woman and child would have wanted.
    Its still not too late for you to realize your mistakes and learn from them for humility is power real power and not arrogance.
    Finally stay away from conmen and fraudsters. All your so called advisers were conmen, idiots and fraudsters not dignified people. Look around for genuine friends who will steer you to prosperity not for gain but for genuine friendship. As a leader who could rule with intelligence, humility and dignity you will be a million times better than the Yahapalanaya Yakkos we have in power at present.
    Think a lot before you decide to come back to power and if your brother GR comes into power pass this advice on to him. He too needs a lot to learn before ruling a country.
    By the way your three sons are good boys not like the son of one of your former ministers who was involved up to to his eyeballs in drugs, thuggery and narcotics like his father.
    Advice your sons to stay away from bad company and sure that they are intelligent enough to know that.
    Good luck to you.

    • 0
      0

      Bandara, my dear child,
      “Its still not too late for you to realize your mistakes and learn from them for humility is power real power and not arrogance.”
      [The Deity:]

      “1. About the declining man we question thee, Gotama. We have come to ask the Blessed One: What is the cause of his downfall?”

      [The Buddha:]

      2. “Easily known is the progressive one, easily known is the declining one. The lover of the Dhamma prospers. The hater of the Dhamma declines.”

      23. “We understand this as explained by thee; this is the first cause of his downfall. Tell us the twelfth, O Blessed One. What is the cause of his downfall?”

      24.” He who having but little possessions but great ambition (greed), is of warrior birth and aspires selfishly to (an unattainable) sovereignty — this is the cause of his downfall.”

  • 4
    0

    From where did you suddenly obtain the economics knowledge? I doubt your law education which I hear was possible thanks to Sirimao who made it possible for MPs to enter the law college. Is it from the cost accountant Cabral who was instrumental in the Greek bonds, Hedging and parties to investing EPF funds in high risk stocks?. Not only high interest loans from China were used to build white elephants without doing any feasibility studies some of these projects were constructed by SOE who were already running at records losses. Then obtaining domestic borrowing to run the SOE.
    Unfortunately the so called “Mr Clean” came and hit the economy with the bond scam.
    Rise in the dollar was partly due to the strong US economy.
    You can fool the baiyyas but not the educated community.

  • 5
    1

    GLP has no idea about the meaning of the word “Economy” . That man conducted the election two year early because he could not do anything the falling down economy. Here GLP writing an essay thinking he is a Nobel Prize winning Economist & all other are only Sinhala Buddhist Modayas. GLP probably yet has to win a case in a court of law. But teaching Economics in CT.

  • 4
    0

    The early court findings indicate you personally issued a fraudulent NIC and Passport to your dear brother soon after you were sworn in as President, when no such ministry of authorizing personal existed, during that window of time. Because of that reason now there is no files or papers found , to support your dear brother,s claims. In short the first act you performed becoming a President (in a hurry) is to break the ” low and odor”, believe and act, as though you had the powers to do what ever you wanted, by appointing your criminal brother illegally you further assisted him, in committing heinous crimes, against your own citizens. Appointed a foreign citizen who held government position, acted as an representative of government in and outside of country, (if not for ours) putting other countries security at risk,made military deals with foreign countries, owned and operated illegal weapons supply to foreigners,abused his position in ordering ransom, kidnap, abduction, murder and disappearance (Suka is vindicated) . The million dollar question is what is Gothas ROLE IN EASTER KILLINGS. ????. .Voters this is for you. What ever BS, uncle may say , THINK BEFORE YOU VOTE on election day.

    • 0
      3

      Chiv,
      ” what is Gothas ROLE IN EASTER KILLINGS. “

      4/21 is a clean job of Yahapalanaya. Old Royals might have had a knowledge of what was about to happen. They might have hidden that from Old Brother Prince. He was busy with many things that time, including Ahimsha’s case.

      Please give that credit to New King & Ranil, who desperately need it, before they descend from the throne.

  • 1
    0

    This crisis started with the Rajapakses borrowing large amounts from China. Having said that it has to be admitted that Yahapalana just made matters worse. For example look at Ranil handing over Hambantota harbour to China on a 99 year lease. Who does such stupid things? He did not even have it debated in Parliament. He could have said “Look this is my proposal to reduce the debt. If you don’t like it suggest something else” . At least he would have been able to share the blame. Now it is all on his own record.

  • 2
    0

    Bawa, if you really mean what you say. the explanation is pretty simple. If I built a mansion borrowing money at a very high interest and then find my self loosing my job unexpectedly, then I am left with only few choices. 1) The bank takes away my home for non payment which is not an option here 2) lease it so that at least I can cover the monthly payment and then I have enough time to work out a plan to pay back capital., In this case port being a sensitive issue for all neighbors, it was given back to China. 3) Sell it and dispose is not an option here.Is there any other suggestion?? If we go with Uncle,s bullshit , it will lead us to bankruptcy as in Venezuela. Uncle stole Tsunami money before becoming PM. Uncle,s first act as President , was breaking the low and odor. Same uncle is back now giving advise on finance management. Only possible in Lanka.

  • 0
    0

    Chiv, anything would have been better than handing a part of the country to China. I cannot think of an alternative apart from borrowing from another nation. This single act of Ranil’s is going to cause problems for years to come.

  • 0
    0

    for once i have to agree with mahinda.Not only where debts were concerned,in competiveness too we were ranked 71 when mahinda handed over the country to yahapalanaya.Now we are 85th.

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