By Mahesh Senanayake –
It is no exaggeration to say that the successive governments in the post independence era in Sri Lanka have contributed to the “debt plight” the islanders are made to bear with today. If one examines the statistics available at the Central bank and the ministry of Finance, that shall be proved beyond reasonable doubt .
Once called the pearl of the Indian ocean, the old Ceylon was an epitome of economic success for many other countries and specially for the countries in the Asian region with self-sustenance in many ways and in many trades. Today, it is sad and worrisome to mention that the once self sustained country today has become an example for being “debt trapped” with no mercy towards its dwellers who have been mislead and misguided by not all but many successive leaders whom the dwellers appointed to guide and lead them and the nation.
A review of the total debt taken from 1950 to date and the pay capita debt repayment reveals startling facts of an economy which pushes its every citizen to pay Rs 25,000 as interest, in addition to bearing another Rs 40,000 for the repayment of the principal amounts of the loans, per annum.
In 1950 the total debt the country was liable for was Rs. 654 billions that only demanded Rs 86 from a Ceylonese to pay back the debts. In 53 years the total debt climbed up to Rs 2,139 billions in 2003 compelling every sri Lankan to bear Rs 111,563. In modern Sri Lanka which is bestowed with many white elephants, deal wheelers, a crooked public service and a confused society, every Sri Lankan has to pay Rs 425,000 to the cover the cost of loan repayment of a total debt of 8,503 billions.
In 2015 Government revenue was in the region of Rs. 1355 billion while the expenditure was at Rs 2290 billion , the deficit between revenue vs expenditure was Rs 829 billion . A total of Rs 509 billion has been paid as interest while Rs 808 billion was required to repay the principle amounts of the loans taken, in installments or in full.
Any nation or a government in the world tend to borrow in order to invest in projects that are meant to better the lives of its people. Yet in Sri Lanka’s case most loans have been obtained for consumption or bear the cost of subsidies and for that matter even if the money taken through loans have been directed to mega projects as investments, most of the mega projects have turned out to be white elephants of the which the brunt will have to be born by the green elephants whether they like it or not. The amounts of money spent on Mattala Airport, Hambantota Harbor and Hambantota International convention center are classic examples where no considerable amount of return on investment shall be forecast in the near future. Had there been a prudent study of these projects, there would not have been unpleasant economic impacts stemming from these white elephants. The experts have pointed out many times that instead of investing in the sleeping Hambantota harbor, the authorities at that time could have considered to invest in a off shore bunkering business, thus meeting the refueling requirements of the ships sailing in the regional sea. In stead of building a conventional center spending millions and millions which has not done any good to the people in the tsunami battered port city, the authorities could have diverted the money spent to a project like either mass cultivation of organic fruits or vegetables or assisting the fishermen in the area.
These are few examples which has contributed to the heavy debt Sri Lanka is facing today and immediate action will have to be taken to reverse the trend even though it would give some hardships to the people in the short run. However the government should look at beyond merely imposing high rates of taxes or imposing new taxes in order to reach a permanent solution to the burning economic issues.
A country shall obtain loans to develop the nation and repayment is expected and respected in a civilized modern world, the sad or the worst side of it is that the citizens who are made to repay are unaware of the fact that they pay for “vices” of the “unwise”.