By Asoka Seneviratne –
Asoka Seneviratne
After the war ended, both Rajapaksa and Ranil/Sirisena administrations went on a spending spree like a bunch of drunken sailors. True all governing parties are under pressure to show results and they could only spend if they would borrow. Borrow they did as you can see in chart below.
Per Macrotrends, our external debt in 1970 was zero. In 2000 it shot up to $9.3B. By 2010 it shot up again to $ 21B mostly due to war. By 2015, it doubled to $32 B when MR went on a spending spree and invested on non-rewarding assets including Hambantota airport, harbor and the rest. This was a mammoth blunder why because the leadership investment judgments were flawed. The borrowed million we squeeze out should have been spent wisely. During the following 4 years, by 2019 the debt increased by another 33% to $56B. This is only external debt not accounting for the million GOSL borrowed locally. Today our total eternal debt hovers around $ 70 billion and counting.
Source: Macrotrends
Finally chickens have come home to roost. SL is engulfed in a massive debt trap that we can’t afford to pay. To be fair, Gota inherited this fiscal mess. To his great misfortune, Covid hit and our problems quadrupled. Companies closed, obs disappeared and tax revenue tanked. We continue to borrow to keep afloat.
To add to all this economic pain, Central bank was robbed to the tune of $ 268 million. A silly investment on Greek junk bonds cost the public $6.6 million. By the way public servant who masterminded this silly deal is now a member of parliament. The MIG deal in 2006 cost an extra $6 million over the purchase price. Then last year another $ 83 million lost to people due to the famous sugar scam of which almost all that money went to a private individual while the average Lankans paid almost the entire $ 83 million to him via their daily sugar purchases. It was a double whammy as on one hand coffers lost $ 83 million and on the other people paid extra $83 million to buy sugar. That was gigantic gut punch. Then again the import duty scam at BMW cost another $ 84 million to the SL public. The grand total of all these losses to the SL public mounts to $ 530 million. This staggering amount is only what we know. This loot amounts to 0.5% of our GDP. Worse, nobody has gone to jail on any of these.
The total loss to our coffers – Sri Lanka public – should be a whole lot worse. These are only that went public thanks to a few brave MP’s and the somewhat free media thanks Sirisena/ Ranil duo.
God only knows that cost of toxic coconut oil to our healthcare system when everyday Lankans come down with terminal cancer. Imagine the misery in those families watching their loved one wither away with cancer through no fault of their own. This coconut oil scam should have been going on for a long time. Who is responsible? Where is our justice system? Why are leaders silent ?
Now slowly but surely China is making serious inroads into Sri Lanka, pretending to be our friends and dishing out as much money as we ask. Soon there will be parts in SL that we need to get a Visa from China to enter, or go to jail. Port city surely might bring some investments and benefit. But at what cost ? US and India are not going to allow China to dominate this vital sea route around SL. They will get involved. Three super powers involved in tiny SL for supremacy will bring a Lebanon like situation in SL. There will be fighting every day by clandestine groups.
Imagine the day, a born and bred Sri Lankan step into port city and some Chinese police kid tells him to get out, what will follow. There will be rebellion definitely from the southern youth, and right so? Did we fight; lose life and limb for freedom from European powers for 350 years only to be subjugated again by an Asian power?
The Chinese have gotten us right from where is hurts thanks to the gross mismanagement of our county in this millennia. Those who created this mess will be long gone when the future generations will be fighting guerrilla war to rid Lanka of China.
Could we have been better off with Suddha? One might ask.
Nathan / June 3, 2021
For those who are poor with #s and hence confused:
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$ 9.3B, by 2000.
$21.0B, by 2010.
$42.0B, by 2015. (doubled)
$56.0B, by 2019. (33% increase)
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The numbers add up.
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Nathan / June 3, 2021
Could we have been better off with Suddha?
We would have been better off even with Prabha!
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SarathP / June 3, 2021
Most of these debts can be repaid if we can compel Mahinda to bring back the $18 billion (according to Forbes magazine) that he has stolen or taken as bribes, mainly from China. But, first, the Rajapaksas must be overthrown, imprisoned, and forced to reveal and repatriate the money. Namal’s cryptocurrency, too. Chamal and Basil have also stolen millions.
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Won’t be easy. The Marcos billions have still not been returned to the Philippines, after decades.
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But worth trying.
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Mahila / June 3, 2021
Sarath,
That is good idea and must be done.
US $ 18 Billion = 18 x 200.00 = SL Rs. 3.6 Trillion
However not for the next 3 years, before they could be changed (end of 2024)
When a new government is elected (Provided it is not Ranil W UNP/SJB) they may agree to prosecute the miscreants and that to finish it will be another 5-6 years to conclude and an attempt is made to repatriate.
Going by past trends 1995 US$ was SL Rs 45.00. 2021 the US $ is SL Rs. 200.00 a period of 25 years..
Devalued 4.5 times over as of now. The purchasing power of the US$ has declined a lot, resulting in higher loan repayments or we may be compelled to pay in Yuan.
So when the money, if, ever is repatriated by the so called patriots would have devalued 6 times from the US$18 Billion.
i would expect the SL Rs,, to devalue to SL Rs. 300.00, which equals US$ 12 Billion. Not 18 Billion.
However, if Gamini Lakshman is the Finance Minister with our present Foreign Minister, they may claim a well-earned victory, because according to their mathematics they would stand to gain SL Rs. 5.4 Trillion in payment! Gain of SL Rs. 1.8 Trillion, similar to the vote count at UNHRC in March.
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Raj-UK / June 3, 2021
SarathP
Who will try? its like belling the cat.
Although I am a sceptic, I like to believe in ‘karma’ or the judgement day because that would be the only way justice will be served. However, considering that Marcos family enjoying the good life, Mugabe kicking the bucket happily when the time comes, as well as, others like Zuma enjoying retirement with ill gotten wealth, I have my doubts. Still, Gadhafi died in a ditch like a street dog, so I live in hope.
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Naman / June 3, 2021
It is time for the QUAD Force (USA+UK+Australia +India)to provide human rights to the minorities.
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Rajash / June 3, 2021
man made mess?
you mean Rajapaksas made mess
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Truly Independent / June 3, 2021
An unbised article written in plain English with sufficient information. well done
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Mahila / June 3, 2021
The question they will not answer however is how to pay in SL Rs. A loan taken on commercial interest in US$.
Perhaps China would be magnanimous and generous towards their greatest Rubber-Rice Pact friend in South Asia. Hope so.
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SJ / June 3, 2021
“Could we have been better off with Suddha? One might ask”.
The Suddha is forever ready to take over, and arrived will a 480 million USD gift horse.
But has not given up on ACSA & SOFA.
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RBH59 / June 3, 2021
Chinese efficiency is the supreme in the world but the way they do it is by borrowing the technology/Skill from abroad, either by joint schemes or other means. Us/we the borrowing money technology skill
And giving space and future generation pay continues borrowing goes sorrowing
Chinese think Don’t miss opportunities: time doesn’t come round again.
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Ajith / June 3, 2021
“Could we have been better off with Suddha? One might ask.”
Who is Suddha? I think the author refers to British not any other country.
To answer this question we should know how the country was performed before British, Dutch and Portuguese and what would have changed not only in Sri Lanka and in other countries without Suddha administration.
Therefore, we have to look at our performance between the start of the rule up to now by Ceylonese or Sri Lankans or Sinhalese in a Single administrative structure in terms of rule of law, justice, corruption peace and economic welfare. Don’t blame on Suddha or any other for our failure.
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Dilshan / June 3, 2021
Well presented in a short article.
What is the solution. How do we get put of it.
We all know the problem. How do we solve it. CT authors should indicate and probably lead to get the solution
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soma / June 3, 2021
What is good for Sri Lanka – one super power or two super powers.?
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Soma
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Rajash / June 3, 2021
What is good for Sri Lanka – one super power or two super powers.?
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Soma
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you mean Eelam and Sinhala South?
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soma / June 4, 2021
Rajash
I am the only Sinhalese in this forum who supports a SEPARATE Homeland for Tamils (All Tamil speaking people scattered across the island irrespective of their religion or the date of arrival).
Is that the Ealam you have in your mind?
Which do you prefer – a SEPARATE Homeland OR the right to live anywhere?
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Soma
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Sinhala_Man / June 5, 2021
Bloody hypocrite, Gamini Somaratne!
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Emboldened, no doubt, by the acquittal of the Ukrainian Captain and Senadhipathy.
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I do not support the separation of Eelam from Lanka, but if it is forced upon the people of the North owing to the foolish actions of people like soma, I will not encourage the starting of another War. I will keep pleading with our Tamil-speaking brethren to remain with us.
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Mahila / June 4, 2021
Eelam and Sinhala South are superpowers indeed if you use declining order of merit!
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Nathan / June 3, 2021
Soma,
The number that counts Sri Lanka also as a super power would be good.
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Pon Lanka / June 4, 2021
Sri lanka has been ruled by major political parties and politicians since independence all of whom had failed on their election promises made to their voters. They are not only responsible for all these bankrupt policies the country has faced with, but also for robbing the country’s wealth ultimately for their own personal uses and gains.
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chiv / June 4, 2021
Here is a question?? How many Billion out of those hundteds, would have seen the minorities have their rights amd treated equal so that no outsiders are needed to manage our own economy. This Lankan BS started even before Mahaweli project.
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SJ / June 4, 2021
” How many Billion out of those hundteds…”
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Here is another question: How many billions are there in “those hundteds” ( I guess hundreds)?
Shom konfushion…or is it New Arithmetic?
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chiv / June 5, 2021
Thanks. Prof KIA. It was my 2 year old sitting on my lap and typing in between, which I do not mind at all. She is amazing. I am sure soon she will be able to tell me 2 × 75 = 150.
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SJ / June 6, 2021
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
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soma / June 4, 2021
This anti Chinese propaganda must STOP.
Being anti Rajapaksa is one thing, being anti Chinese is quite another.
This anti Chinese humbug should refuse the Chinese vaccine.
Definitely the oxygen on the way.
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Soma
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SJ / June 4, 2021
Soma
Anti-China campaign and anti-Rajapaksa camps find common ground with purpose.
The Port City has consolidated an alliance. The calculation is that the Sinhalese are jealously defensive of the territorial integrity, regardless of attitude towards minority ethnicities.
Much effort has gone into to convincing a sizeable section of the Sinhalese that part of their territory is going of their hands. This, they hope, will turn the Sinhalese against China.
Such politics of desperation is like the WMD campaign against Iraq. The campaigners knew the truth but kept the story alive until war got into full swing. After that, the truth made no difference.
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China is not socialist. It is predominantly state capitalist– capitalist, unlike the imperialist West.
It draws on strong features of its socialist industrial growth and socialist attitude towards other nations. How long this can be sustained is another matter. But it will not fall apart soon enough China’s enemies. Hence the desperation.
China is not imperialist yet. If it becomes so, it will not be a copy the much resented Western model.
(ctd. below)
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SJ / June 4, 2021
Your point about the Chinese vaccine is trivial. Everybody uses many Chinese products, even the household of the White House.
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We blundered in the power plant matter. It was bad policy to go for an unknown and environmentally hazardous technology.
Hambantota harbour was a good idea because India was planning to deepen Palk Strait to divert ships to its harbours. It has potential, as trade across the Indian Ocean will grow. No wonder that no rival was willing to help with the project.
The Mattala Airport would have made sense after the harbour and adjoining areas developed. It was premature.
The Port City has various implications for the country’s economic and socio-cultural future. A global economic centre of that nature was first mooted by the UNP. (Not my cup of tea though.)
It need not be Chinese dominated, especially if it develops with multilateral international involvement. It is too soon to predict. I do not think that the US or even India is worried about it as long as there is no risk of Chinese military presence.
That is something we should guard against. But creating panic is not the way to set about matters.
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soma / June 5, 2021
SJ
Appreciate your thoughtful, unbiased response.
We are too poor to be anti Indian, anti Chinese or anti American.
There is a feeling of suffocation.
So long as we can avoid getting trapped into any military alliance with any one of them none of the parties will create any uncomfortable situation for us.
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Soma
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Native Vedda / June 5, 2021
soman
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“We are too poor to be anti Indian, anti Chinese or anti American.”
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You don’t have to be rich in order to stay honest, serve justice, care for others, stop being fascist, racist, b***s carriers to the rulers, rioters, books burners, rapist, murderers, greedy pigs, being war crime deniers, ….
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Have you ever stood in front of a mirror and ask yourself questions about yourself? You should try it one of these days.
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Take care.
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nimal fernando / June 5, 2021
Prof SJ,
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How can a man of your intelligence go around daily self-manufacturing your own stupidity ………. because of your deeply held biases?
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The simple reason, the Rajapakses built any of what you mention, is for no other reasons but to rob most of the money!
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Their current economic viability proves the point.
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I know a wee little bit about airports …….. Google “Hagerstown airport.” :))
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SJ / June 6, 2021
nf
Thank you for reminding.
I am among those intelligent enough to know that they are stupid. Are you?
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I check with slightly more intelligent people on matters outside my territory before formulating my views.
What did I say about the airport?
“The Mattala Airport would have made sense after the harbour and adjoining areas developed. It was premature.”
Please criticize my comment based on your “wee little bit about airports “.
I am always ready and willing to learn.
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nimal fernando / June 6, 2021
Prof SJ,
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Was there a pressing need for any of these “projects?”
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The simple truth of the matter is …… the port (and all the Chinese projects in Hambanthota) was build with loans taken above commercial-rates from China. The companies who built them were Chinese, the labour was Chinese, most of the materials were Chinese. It utilized very little or none of local labour/companies/expertise. It had/has very little benefit for the country/people/economy of SL. All the benefit was/is to China.
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The Rajapakses (just like now) agreed to the Chinese conditions because they could rob some of the money.
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The country cannot afford to pay the interest on the debt taken to build the Hambanthota harbour, airport and the rest of the crap because they are not generating any income …….. won’t be for years; perhaps never.
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No well run company will ever build no-productive “assets” with high-interest loans. Countries with corrupt rulers will.
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The debt-payment problems faced by the country today are because of the loans taken by the Rajapakses to build all the white-elephants with the sole purpose of robbing some of the money; nothing else. We should be man enough to accept that truth.
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nimal fernando / June 6, 2021
continued
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I am sure you have heard of feasibility-studies. The previous governments too had done the feasibility-studies and the port and the airport were not built because they were not economically viable.
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In the current Forbes list of richest people in the world most are people who have robbed the wealth of their countries who have created nothing of any commercial value.
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Answer me this SJ, are the Rajapakses in politics to serve the country?
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You are adult enough to give a direct yes or no.
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Or like the cardinal and many other eminent elders, do you want to pretend that you can’t see the elephant in the room? :))
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No more ….. Maaama …… Baaaba …… baby-talk ……… you are better than this SJ!
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Face the truth SJ ….. the truth shall set you free!
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Then we can all sing hallelujah …… and live happily ever after!!
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Amen.
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nimal fernando / June 6, 2021
Prof SJ,
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The simple point I’m trying to make is ……. every time you eminent elders/seniors ……. miss the elephant in the room!
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When Gota abruptly banned the importation of fertilizer …….. all the articles were about pros/cons of chemical/organic fertilizer …….. but none about the elephant in the room – the country has no funds to import fertilizer!
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When the country is in deep-shit unable to pay for the loans borrowed to build white-elephants …… all the comments/articles are about their “probable future viability” ……… none about the elephant in the room – the only reason to build them was to rob money.
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This is my simple prediction …… nothing the Rajapakses have ever done has benefitted the country/people: has benefitted only them. So will the port-city.
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And I’m willing to bet Native Wedda’s reputation on it.
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