15 October, 2018

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Increase In Fuel Prices & Economic Mismanagement

By Mahinda Rajapaksa

Mahinda Rajapaksa

Following the recent increase in fuel prices, transport costs and the prices of goods and services have started rising. Fishermen are up in arms against the sudden increase in the price of kerosene by more than double the earlier price and the creation of a coupon system to distribute subsidized kerosene. In the midst the agitation and unrest resulting from this fuel price increase, members of the government have been trying to justify it by saying that fuel costs were higher during the Rajapaksa government. Today the price of a barrel of crude oil is around 70 USD. When I assumed office as President back in November 2005, it was around USD 73. It reached the highest point of USD 160 in June 2008 and even as late as August 2014, the price was over USD 103. It was only in the last three months of 2014 that oil prices started declining and by the time the government changed in January 2015, it had gone down to USD 51 per barrel. 

From that point onwards, oil prices remained at a low level for three years. The prices kept declining and reached a low of USD 33 by February 2016. Thereafter oil prices increased slowly but even as late as October 2017, it was less than USD 55. It is only in the last few months that oil prices have steadily risen to reach the present level of USD 70. During the nine full years in which I ruled the country we never had the benefit of low oil prices. The present price of USD 70 per barrel is quite low compared to the average price of crude oil during my government. Despite the highest global crude oil prices in history during those years, we not only won the war against terrorism which many people thought was unwinnable, but also successfully concluded the biggest infrastructure building programme ever seen in this country since the colonial era. We were able to do all that while maintaining the fertilizer subsidy so as to shield farmers from the increasing prices of fertilizer. Despite high oil prices, my government was able to maintain the highest growth rates in Sri Lanka’s history and the per capita GDP increased threefold during my tenure in power.

The yahapalana government has had the benefit of very low crude oil prices and savings totaling more than USD five billion were made in foreign exchange over the past three years. Yet the economy has been in steady decline and development work ceased completely during that period. Last Saturday, the present finance minister said that if he had been holding that position in January 2015, he would not have given concessions to win ‘applause from the gallery’. Thereafter a UNP backbencher echoed much the same views. The reference made by the minister to ‘concessions given to win applause from the gallery’ was probably to the Rs.10,000 allowance for government servants and the reduction in the prices of fuel, gas and certain foodstuffs that were made by this government soon after winning the presidential election. All these were in fact pledges given in Maithripala Sirisena’s presidential election manifesto to win votes. 

What they told the people was that all these concessions can be given once the Rajapaksa’s were ousted and corruption was stopped. After winning the Presidential election, they carried out the pledges given in order to win the Parliamentary elections that were to soon follow. What we are seeing now is the result of using government finances for political purposes. Any government can give any concession they like to win elections. What usually acts as a restraint in this regard is the question as to how they are going to find the money to fulfill those commitments after winning. The present government thought only of winning the election – not about what happens afterwards. Having committed public funds to win elections, this government then began the biggest borrowing spree in Sri Lanka’s history to meet the increased expenditure. From January 2015 to date, this government has borrowed a total of around USD 19.5 billion in foreign currency commercial loans and well over six trillion in Rupee loans.  Even though the Prime Minister claims at every gathering he addresses that the present economic situation is due to the project loans taken by my government, it is really due to the short and medium term consumption loans taken by the present government. 

According to the finance ministry, the foreign currency loans that have to be repaid in 2019 alone amounts to USD 4.2 billion. That is much more than the combined cost of all three phases of the Norochcholai coal power plant, the two phases and bunkering facility of the entire Hambantota port, the Southern highway up to Godagama, the Colombo-Katunayake highway, and the Mattala airport all put together. Members of the public may have noticed that when the Indian Oil Company increased the price of petrol by Rs. 9 per liter, the Ceylon Petroleum Corporation increased the price by more than twice that. Today even at USD 70 a barrel, world crude oil prices are much lower than they were when I was in power and the government can provide fuel at a lower cost by reducing the tax on petroleum products. But that is unlikely to happen because the yahapalana government needs the money to pay for the concessions given to win the last presidential and parliamentary elections. When power hungry politicians literally pledge the Treasury as collateral to achieve their political goals, it is the people of the country who will finally have to pay the price.  

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Latest comments

  • 6
    10

    Very well written and detailed analysis on the Sri Lanka’s current economic situation.

    • 7
      4

      Shenali,

      Very well written with the help of Dayan, Bandul Gunawardena, Cabraal, and PB.

      Three years of Yahapalanaya rule still no killings had taken place and thats what we call democracy at its best.
      The Sinhala Buddhist village idiotic morons will keep on voting for the Medamulana warlords.

      • 0
        2

        You silly man – do you think Ranil sits and writes his own media releases?

        • 5
          0

          Kevin Jamis Banda – “You silly man – do you think Ranil sits and writes his own media releases?”

          Ignoramus, do you think that Medamulana Meeharaka can write or understand the nature, effect and content of any document? Don’t compare this bugger with Ranil

      • 0
        1

        Thengai Srinivasan,

        No killing does not equate to the democracy and you cannot compare the first term of Mahinda with the current Yahapalanaya as it was during the height of the war. Compare it with Chandrika’s terms or Premadasa’s or JRJ’s.

    • 7
      0

      When will Sri Lankans get off their entitlement mindset?
      They want everything subsidized.
      Food
      Health
      Education
      Transportation

      And with all this they do not have respect for what they get.
      They think they are entitled to free education but half the time they are on strike mostly for political reasons. After graduation they think its the states responsibility to employ them so we got over staffed public service draining the economy without anything to show for.

      Doctors think they are gods now they are turning to be more of politicians than medical practitioners.

      Bank of Ceylon Fx selling rate for imports:
      US$ 159.9500
      CAD$ 126.1744

      Gas price 87 Octane:
      US Gal = 3.799 Per ltr in Rs.160.55
      Canada per ltr = 1.579 in Rs.199.23

      So what are you guys complaining about?

    • 6
      0

      Shenal:

      Our economy was/is just like the salary of a “honest” state-sector employee. The state-sector employee took a big loan, built a huge villa, and pays about 80% in repayment from his so fixed income. Now the the essentials went up, how could he afford from remaining 20% ?

      Rather than pointing fingers and suggesting to master the art of making both ends meet (typical Bandula style), I guess collective efforts is needed here to improve our economy

      • 0
        0

        Isharath,

        We have not built a huge villa from the loan but a service station and office space right on the main highway where thousands of people passes each day. It is the duty of the breadwinner of the house to utilize this property wisely. Blaming the person who has built it will not help a bit.

        • 0
          0

          Shenal:

          You forgot to list Mattala International Airport, Magampura Deep Sea Port and
          Mahinda Rajapaksa International Cricket Stadium were also built to get into Guinness as World’s Emptiest…..list to compete with Dubai’s Biggest list…

    • 3
      1

      Rajafucksa is the biggest crook in SL history.

    • 2
      0

      Yes Shenal

      It is very well written to blame Yahapalanaya after Chitanta doing everything.

      Anyway that is old and boring. Let’s move to something new. Now, is there, so far any well written story on Durham Thomases’ death? At last, after 6 years, Khuram Shaikh has now let us alone; but how did these Durham Thomases caught us? Is there a way out to this anyway? All the CT pundit commentators and writers kept claiming how could a Sri Lanka invent something that Pfizer or Merck could not do? Do they know how treat the enemy players with Kerala Vonda beheth?
      (The Rapist team, also known as Lankawe Scotland Yard or even as INTERPOL, is trying to channel it into a drug overdose. Well, how the drug overdosed players came to hotel back to complain about that? Did they accepted during their conscious testimonies – they complained breathing problems – that they might have consumed some unfamiliar substances?)

      • 0
        0

        Mallaiyuran,

        Rowdy thugs do indeed commit crimes. But that should not be tangled with concurrent government. The murderers of the late Mr. Khuram Shaikh is remanded and tried according to the existing law. Mahinda never intervened to save the thugs. The same will happen to the Durham Thomases’ death, if he was murdered.

    • 3
      0

      Shenal,
      Correct! 100% correct. Finally Mahinda realized and came out with the crux of the gist and tenor for the miserable performance of the Yahapalan! Those shamefully free hand-outs is the one and only misguided stuff that broke the back of the nation.

      • 1
        0

        Yes Grandma,

        You too 100% correct.

        The free handout will break back of the nation, that is made up of the smalls, who has weaker back. Free handout is only for Royals, whose back are strong to carry it.

        Grandma why Old King still had not paid the SLCTB fare; 4 years after losing the election?

    • 2
      0

      Shenali

      Did you know as Finance Minister Dr Mahinda (LLD + 3 X PhD) refused to submit annual budget to the parliament for more than two years from 2007 to 2010. Annual Buddget preparation, submission, debate, amendments were and are supposed to be mandatory in this island. Did you know how, why, ………. Dr Mahin got away without Budget for two or more years? Why did it take so much time to balance the books?

      Did he need a lot time to cook the books? Was there a huge whole he was unable to fill with what he had?

  • 10
    3

    MaRa, You are a CURSE for our country and the most corrupted leader in the history of Sri Lanka and what you have written is non-sense. People know that you pay DJ and a few others for writing things in English. How can you write in English without the ability form a couple of correct sentences in English? What you did during your 10 year reign of terror and corruption is not a secret. Here is brief snapshot of your despicable record:

    1. Stealing $800 million of Tsunami funds through fake NGO called Helping Hambantota set up with assistance from Willie Gamage and depriving poor families of their right to rebuild their lives devastated by Tsunami

    2. Taking 19 billion US dollars as commissions from Chinese government corporations through white elephant useless development projects such as Hambantota Harbour, Airport, and southern expressway

    3. Putting Sri Lanka economy into an endless misery by taking high interest loans from China and pocketing in 40% of that money

    4. Nurturing an unprecedented culture of corruption and political victimization with immunity

    5. Killing and attacking journalists, judges, innocent civilians for 10 years

    6. Appointing an uneducated GoTa as defence head and stealing the credit of ending the 30 year war from SF, the true hero who led the final war against LTTE

    7. Making a synthetic lawyer of an idiotic son who couldn’t even pass his GCE (OL)

    8. Killing the most famous rugby player on behalf of another moron son
    9. Soliciting sex from girls of the families that lost their loved ones due to Premadasa Terror campaign in exchange of your service as a human rights lawyer in 1980s
    10. Raping girls in villages from down south on the promise of jobs

  • 7
    3

    Aiyo Mahinda

    “Increase In Fuel Prices & Economic Mismanagement”

    Be reasonable, the state and the government are expected to balance the books. How could you expect them not to increase prices of goods, when they are bound by your agreements with various
    lenders who lent the country during 2005/2015 period. Most loans included a large element of commissions paid to your clan and projects were over priced and as a consequence the current rulers in a dilemma. There is an easy option, if you can collect every penny your clan stole and the cash and gold your brother stole from Vanni and those suppliers who over priced their war related goods and services ……………. not only the government can repay the loans with interests but invest in education, training and job creation. As a result the ad hoc price increases can be prevented.

    Please help the people.

    • 7
      4

      Brilliant NV.

      All the Rajapaksa brothers, sons nephews, relations, henchmen are bloody stinking rich. All the looted money put together of these rascals we could build 5 highways 2 airports 2 harbours and 5 Hospitals.

      Wonder how much was spent for the viyath Maga show at the Shangrila!?? and who funded

    • 6
      0

      NV
      “This Govt has Borrowed US $ 19.5 Billion in Foreign Currency Loans and Over Six Trillion Rupee Loans Since January 2015” – Ex-President Mahinda Rajapaksa

      And the guy still wants to subsidize the price of fuel. Employ the graduates that the private sector will not touch and pay the full salary to the crippled military men.

      Where does he think the govt should get the money from?

      • 3
        0

        Housemaids!!!

  • 4
    3

    ” …When power hungry politicians literally pledge the Treasury as collateral to achieve their political goals, it is the people of the country who will finally have to pay the price.”

    Mahinda, old pal, glad that you got it right but during your time, I would say it was personal goals than political goals. Anyway, wasn’t it you who showed the way to hock the country to the hilt to finance your white elephants & very expensive high ways? As for the fuel prices, was it because a barrel of crude selling at over $100 that prompted your Minister to buy substandard stuff from a blacklisted broker? Also there is talk about a colossal loss to the country by a stupid hedging deal that went wrong. Didn’t they happen during your watch & were any held responsible for the blunders & obvious underhand dealings?

  • 5
    3

    Mahinda Rajapaksha
    Hik…….hik…….hiks biggest economist in the world.

  • 6
    3

    Dear former President, Prime minister and current Joint Operation leader,
    Do you know you lost your Presidential and parliamentary election in 2015?
    Do you know why you lost it? Can you write an article about why you were not successful in your effort to become a permanent king illegally? Can you also highlight how your brothers pocketed billions and how many billions you spent to put your blocks all over the island? If you and your brothers, and children worked together to eliminate Lasantha and the Rugby player Washim?

    • 0
      2

      Ajith,

      How can Mahinda become a permanent king illegally by contesting in a fair election? If people want to keep him as the president who are you to oppose that mandate? Anyhow, people have democratically rejected him from being a president again and he had conceded it as a mature politician compared with the so called gentlemen politicians who don’t even resign after soundly been defeated.

      If he had cheated the country and siphoned billions of ruppees (or dollers? who knows) it is the duty of the present government to expose it and try him in the court. As for now, not even a single penny has been found from the so called robbed public money. Do you think we are as foolish as yourself?

  • 4
    3

    This S.ab has the bone to publish this crap of Dayan the D….y after bankrupting our country to the core.

    Go fly a kite with your murderous and most corrupt family Sri Lanka has ever produced.

    CT you are very magnanimous in giving this moron some space in your forum.

  • 1
    1

    Yahapalanaya is increasing the Gas Price. It is not just only oil many more prices will go up. When Chitanta Government opened it Nuraicholai, it increased the electricity price by 200 % and lost the election by that. Now Chitanta government is using Oil Prices to come back to power. If they are success, then next time Yahapalanaya will use again electricity price to come back again. Soon, The Colombo Pong Cing and Hangbangtota Industrial zone will start to suck the entire country’s resources, including energy.

    GL Peiris doesn’t know the real Oil Price History, though he wrote the article. That time he was not major partner in the government. World Oil Prices went highest in 2008 about for $160 per barrel.
    In 2013-2014, because Lankawe and Iran doing many illegal acts in international markets, America had put limitation on the Crude Lankawe can buy from Iran. Thank God, Indian Oil Company saved Lankawe during that time from collapsing completely.
    None of the bastards (Chitanta or Yahapalanaya) ever formulated comprehensive energy policy. Instead they contracted to build more highways. India is about to connecting East with other parts of the country. China is pressing hard to build another $1B highway.

    Chitanta government has not left behind any plan of how to firefight or tackle in long term those energy crisis situations. $400 billion was spent on burning Tamils’ homeland as per Chitanta government Partner Shiva Shankar Menon. But no real energy policy was formulated. India wanted Lankawe to join its Grid Network. Chitanta Government protested India’s atomic plant, but it stealthy attempted buy one condemned Reactor from Pakistan (that is a real comedy.) Those are the energy policy of Chitanta government.

  • 2
    1

    An American organization asked $1.1B to retool the 50 years old Sapugaskanda refinery. A commission appointed to consider the tenders, recommended another plan, a German company offered at $1.5B. But Chitanta was trying to give it to Chinese Company at $2.2 but lost the election and the Chinese bribe by the defeat in 2015. Sapugaskanda refinery has a major handicap; it can process only low grade crude like Iranian output. It has to be fixed with retooling too. Iran asked Chitanta government to spend $500M so it will invest another $1B and retool the 50 years old refinery. But Chitanta government let Iran to do Uma Oya, for which Iran did not have even instruments to use with.
    In his essay, as GLP is half baked lawyer, has not touched the energy policy. He just dumps his propaganda in CT. If he has been reading CT, he would know at least the amount Pro. Kumar wrote here about Lankawe energy needs. That erudite imbecile is really a suck-ery servitude. He is taking only about election manipulation and money juggling but not any plans. Only three month ago his party used an ultra-racist Moto “You want one country or you want two countries” to win LG election.
    These guys have to be condemned to life time prison. But they have covered on that too. They did not build new refinery, have built a luxury prison, and have converted Prison Hospital into 7 star hotel and rent a hospital room at $300 per night.

    • 2
      0

      “These guys have to be condemned to life time prison. But they have covered on that too. They did not build new refinery, have built a luxury prison”
      Some cabinet minister is hoping to bring in a proposal to convert the ‘Luxury Prison’ in the south to another government hospital. May he succeed in his most thoughtful gesture. Oba thumata ‘Theruwan Sarani’.

  • 0
    0

    It is simply cheap politics talking about Cheap fuel. Because fuel never work for a coutnry. Jus timport it spend it. YOu send money outside and you desteoy the environment. where fuel is extractd from earth fuel is far expensive than in Sri lanka. Besidrs, Sri lanka abandoend only refinaery that Sri lanka had. that is a national crime. Because refined oil is far exensive the crude oil. Sri lanka has the capability to repair the sapugaskanda as well as to build one near Trinco Oil tanks. Only problem is politicians taking commis and scuttle those projects.

  • 0
    0

    Another Fraud that Sri lankan Govt do, I heard that is what Indian Company wants so the govt has approved it. that is using high OCtane Petrol. Sri lankan needs OCtane number 87 and nor anymore. High OCtane Gasoline is needed only for powerful sports type cars. but Sri lanka is selling the OCtane number 92 and 96 which is a wastage o money because high purity gasoline needs is expensive. So, they import gasoline only for Colombo which does not have roads for high speed cars.

    • 1
      0

      Agree with you softy, but the thing is , most of the fuel guzzlers are owned by the politicians and the fraudsters / drug dealers/ ……..,etc., so get rid of them first.

  • 1
    0

    Yesterday’s price for Canadian Gasoline (for one province) was about Rs 225 per liter, in the USA Rs 138. both the canada and the USA extract and purify gasoline. Why Sri lanka importa with those maid’s moey and sell it for Rs 148 ?. who money is wasted.

  • 1
    0

    This Rs 10,000 Allowance is also coourtion and FRAUDS in Politics. Peoples. income should be based on the minimum income that one person, or a family can live. But, in Sri lanka people are struggling because of poverty. govt just increase the salaries to gove servants because that is votes. So, both Mahinda Rajapakse govt and Maithipala govts are/were fraduient and are not working for the public.

  • 1
    0

    It is the Same PResident who spent US $ 4000 pe rnight to spend nights ASTORIA HOTEL in NEW YORK for the United NAtions’ annual journey. IT is the Same president who asked a Sri lankan Ariline JEt from Britain to be divertd to Japan becaause he wanted to go back to UK to watch is son’s passing out. Sajin Vass gunawaradana who is a multi-billionair eon behalf of Mahinda Rajapske was fined only Rs 10oo. Now he is talking about economic mismanagement. IT is the same person who paid Arjun aloesisus 29% interest rate for bonds because Above 29% is financial CRIME.

  • 1
    0

    Fuel price increase will be the norm from now on. Time to consider growing our own like chilli, pulses, paddy and the like. It is the Colombo elites who gouge on imported polythene packaged frozen food stuff.
    Will MR consider taxing such obvious luxuries?
    Depreciation of the rupee has a good side too – the Lankans slaving in Mideast will gain but the elites have the power to help themselves.
    Stop electioneering MR. Tell SLPP to get off the language/religion-divide band wagon.

    • 1
      0

      Depreciation of the rupee has a good side too – the Lankans slaving in Mideast will gain

      You need to know that inflation cannot go much beyond the internal Salary Increase. They all are correlated. When the Middle East remittances come in, they cannot escape inflation. Remember they did not receive the 10,000 increase, which Ranil gave to local employees. One good thing is currency rate will try to be parallel to local inflation. So they do not lose a gain a lot. But Internal salary is not attached any mechanism like that, other than the election dates. Inflation is the sickness of the local economy. Currency exchange needs not to pick it at its full impact. So, if the infection is 15% and exchange rate devaluation is 10%, then Middle East remittance need a 5% compensatory increment on their family remittances from Central Bank. Earlier, Central Bank used to identify the purpose of the remittances and give better rate for special purposes. But now it is fully flexible. Family remittances cannot get better rate.
      Further, government keeps borrowing heavily. When loan Dollar comes in and imports Dollar goes out, net out flow is brought down by loans. This, now keeping the dollar value smaller than it should be. Say just for example, if government stops browsing dollar loans, then $ would jump up to 180 Rupees. If the loan is starting to be net payment, then dollar may shoot out through the roof at 250-300. There is a chance by 2019 when their first $4.5B falls due, rupee showing a firework. But, you know, Old Royal borrowed beyond their nose and conducted election and ran out of Temple Tree house. Like that Yahapalanaya Guys too, if something goes wrong, and then they will vacate the Diyawanna Lake Palace and run away. Citizens only will shoulder loans and bribes that time.

  • 3
    4

    Very well articulated article. Thank you Mahinda. Except, most reading the Colombo Telegraph has no understanding or interest in economics and they are motivated only by either an elitist agenda or a hate towards Rajapakshas. I have no interest any more in rebutting those imbeciles. On the other hand, Gotabhaya needs to come up with specifics of his economic plan (his recent talk was far too broad) so that we who support progress of this country can contribute our two cents worth.

    • 3
      0

      wannihami
      You type:
      “Very well articulated article. Thank you Mahinda.”

      Shenali types:
      “Very well written and detailed analysis on the Sri Lanka’s current economic situation.”

      Very well, now tell us why do you think Mahinda has very well articulated his typing.
      Why does Shenali and yourself have to agree to and praise Mahinda’s typing?

  • 4
    0

    Mr. Rajapakse, most of us know that both, Chintana and Yahapalanaya are incapable guys to develop the country. Just the difference is, one is UNIMAGINABLE CORRUPTION and the other is REGULAR CORRUPTION. And they both with their own side-dishes to add extra like, Bond-scam, RK, media freedom, journalist killing, racial tensions, white vans, thuggery etc…etc…

    When both are useless, lesser the side-dishes, better the taste.

  • 0
    0

    Fake Godpersons exploit religion. At some stage they get exposed.
    We now have these fake-Economists exploiting the people. These fakes have made corruption/nepotism/impunity respectable and as the necessary lubricant to run our economy!

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