3 March, 2024

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The Origins Of Sri Lanka’s Economic Crisis

By Mahinda Rajapaksa

Mahinda Rajapaksa MP

A heated discussion is now taking place about those responsible for the present economic crisis. Central Bank reports will show that during my nine years as President, economic growth averaged 6% a year during the four war years from 2006 to 2009. This increased to 6.8% in the five post-war years from 2010 to 2014. Hence Sri Lanka’s per capita GDP increased threefold from USD 1,242 at the end of 2005 to USD 3,819 by the end of 2014. The contribution that my government made to Sri Lanka’s per capita GDP was well over twice that of all other post-independence governments from 1948 to 2005 put together. Though the per capita GDP came down to USD 3,474 in 2022 as the pandemic caused the economy to contract, that statement remains valid to this day.

The debt to GDP ratio was a very healthy 69% at the end of 2014 having being brought down from 90% at the end of 2005. The All Share Price Index rose from 1,922 at the end of 2005 to 7,299 by the end of 2014. This economic boom was achieved despite the war, the global food crisis of 2007, the global financial crisis of 2008-2009 and the highest crude oil prices in world history. Crude oil cost an average of USD 74 per barrel throughout the entire period from 2006 to 2009 and an average of USD 103 from 2010 to 2014. The IMF Country Report No. 14/285 of September 2014 stated firstly that Sri Lanka’s “Macroeconomic performance has generally exceeded expectations”. Secondly that “Sri Lanka has made notable advances in recent years, and appears to be on its way to joining the ranks of upper middle income countries”. Thirdly that “Sri Lanka’s economic growth has been among the fastest in Asia’s frontier and developing economies in recent years”.

Hence the fact that I left behind a very robust economy in January 2015 is well documented. After I was voted out, the economic growth rate dropped to 4.2% in 2015 and ended up in the negative range at 0.2% below zero by 2019. Sri Lanka’s total outstanding external debt had increased by nearly 28% from USD 42,914 million at the end of 2014, to USD 54,811 million by the end of 2019. The debt to GDP ratio which had been brought down to 69% by the end of 2014, had increased to nearly 82% by the end of 2019. The All Share Price Index declined from 7,299 at the end of 2014 to 5,990 by the end of October 2019. Yet during the entire five year period from 2015 to 2019 the average price of crude oil was USD 60 per barrel – the lowest in recent history.

There were no external reasons for Sri Lanka’s economic decline between 2015 and 2019. India and Bangladesh experienced average growth rates in excess of 7% and the Maldives over 6% during this period. Even developed countries like the USA and Germany experienced robust economic performance during those years. However, Sri Lanka’s average growth rate between 2015 and 2019 was just 3.5%, equal to the growth rate recorded in 2021 at the height of the pandemic. The accumulation of foreign commercial debt between 2015 and 2019 particularly in the form of International Sovereign Bonds (ISBs) was by far the worst disaster to befall us during that period.   

When I was defeated in January 2015, outstanding ISBs amounted to USD 5,000 million and it was amply covered by our foreign reserves of USD 8,208 million. However, between 2015 and 2019 outstanding ISBs increased threefold to USD 15,050 with borrowings of USD 2,150 million in 2015, USD 1,500 million in 2016, USD 1,500 million in 2017, 2,500 million USD in 2018 and USD 4,400 million in 2019. Of this, USD 2,000 million was used to rollover ISB’s taken during my tenure, thus the total amount in new ISB’s issued between 2015 and 2019 is USD 10,050 million. Despite the build-up of the stock of outstanding ISBs to USD 15,050, Sri Lanka’s total foreign reserves was just USD 7,642 million at the end of 2019. 

Thus, when I became Prime Minister again in November 2019, our government inherited an economy that was already on its last legs. It was in this weak and vulnerable situation that the Covid-19 pandemic hit Sri Lanka in early 2020 – the consequences of which needs further discussion. In any discussion of the economy, it is vital to note that the per capita GDP is the most fundamental economic indicator used to judge the economic situation of a country and the contribution of my 2006-2014 government to increasing Sri Lanka’s per capita GDP is more than double that of all other post- independence governments put together. The people of this country should base their decisions on proper data and facts and not on noise, lies and propaganda. Sri Lanka cannot afford another political mistake like that of January 2015.  

*Mahinda Rajapaksa M.P. – Leader of the Sri Lanka Podujana Peramuna 

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Latest comments

  • 20
    1

    Appachi is going to “Make Lanka Great Again, and again and again……….”. Waiting for next article on “missing money “. Need Sinhala translation for 6.9 million.

    • 8
      0

      Blatant lies ruled this country for 20 years. Sensitive learned men predicted, it would oneday end this way.

      It was like driving against the wall. However, sinhala buddhist dominated society (no different to hinduistic falsehoods) was on their side to transport the “myth” as they wanted it to be. Those stupid masses were injected and fed with lies but in a fine form for their political gains. It was just a trickery played with the gullible psyche of the average stupid masses.

      The masterminds of the pre-planned economic collapse of Sri Lanka are again looking for new fabrications to mislead the nation.MaRa WOULD HAVE BEEN HANGED by his balls, if the law and order would have powerful in this country. Their next goal is to prevent them from throwing the ball to their opponents in the next election. This ball-game should be stopped like a viral disease being prevented from spread.

      As everyone knows, by the end of 2014, they wanted to go for early elections based on their economic collapse like never before. Their Goebells like Wimal Weerawansa publicly attacked the former President’s Secretary (Arthika Ghaathakaya) for abusing and wasting the public treasury beyond estimation. High level CHOGEM wastages were highly criticised by even european leaders, as another MUGABE style extra vaganzas.

      • 7
        0

        cont.
        As investments of various natures (loans, swaps, grants and all other forms) fly into a country, all indicators used to show rise.It is a natural process.
        Shamelessly, these rising numbers were misused and misinterpreted to show economic development where there was no increase in employment or any such gains as in Vietnam and Ethiopia.

        Those rulers cheated wasting public money for their own popularity rather than the good of the nation. No records left but they abused the funds. People have been fooled as no other country for their political survivals. Political power is a drug effect to them. These men should be put in jail forever. if the nation to see it right. Need of the hour is to punish these men and share the clarity with the PUBLIC who are in permament anxities today.
        .
        They avoided smuggling drugs into the country because their mechanism for popularity was funded by drug-money. There is enough evidence material on the web or in circulation to prove this. Even today, the Mahendra (Mahinda) man is struggling to hand over the power he has gathered over them to his son. To make a real difference to the progress of this country, this kind of feudalism needs to be kicked out. It is like introducing a new crop to a field to rid it of harmful vegetation.

        • 8
          0

          cont.
          False patriotism in the guise of nepotism has repeatedly led this island nation astray. Rajapaksa misused it.a s nobody else. We don’t need repeats, this is an open secret by now.
          Ironically, under Rajapaksa they had the audacity to show that this country is on the right track for progress. People are stupdier than appeared to be. Lies and untruths are rooted and has made rooted for their self gains. May this country be free from Rajapakshe parasites.

  • 6
    9

    The article does not address the reasons that many critics, including the opposing politicians, point out to as the causes of economic crisis. Would be good to see someone challenging the narrative presented here.

    • 12
      0

      Ruchira,
      This is not the first time that MR has purportedly written an article on CT. But this was probably written by the infamous Cabral.

      • 12
        0

        “The people of this country should base their decisions on proper data and facts and not on noise, lies and propaganda. Sri Lanka cannot afford another political mistake like that of January 2015. “
        Now, that’s very interesting, if it is indeed MR talking. Is MR saying that voting in Yahapalanaya under Ranil was a mistake? And that Ranil ruined MR’S economic miracle?
        OK, if that was true, why did Gota invite the very same Ranil to rescue the bankrupt country in 2022?
        There is no mention at all of Gota Malli’s role in the matter. Reading between the lines, this seems to be an attempt to distance the godly MR from the disastrous Gota.

        • 13
          0

          O C ,

          ” The people of this country should base their decisions on proper
          data and facts ……………….” A former Senior D I G who was not
          known for any misconduct , sent his son to Australia on a forged
          bank statement to prove that he had five million rupees on his
          account . A bank statement was provided for this . A third party
          help was obtained for the job and the third party was a relative of
          his wife . Son is an Australian citizen today . So , this innocent ,
          highly respectable and Noble Citizen MARA never knew How Data
          and Facts work in his paradise ? Ranil does not know , AKD has no
          idea and Namal is ‘ Baba’ . Look where his finger is directed to !
          The people , corrupt people who choose the rogues to fulfil their
          criminal desires ! MARA brothers are never alone !

        • 5
          1

          “…why did Gota invite the very same Ranil to rescue the bankrupt country in 2022?”
          Have you considered the possibility that he may have expected Ranil to screw up the country to a point that the people will become more forgiving of him?

          • 6
            0

            SJ,
            “that he may have expected Ranil to screw up the country to a point that the people will become more forgiving of him?”
            Deviousness within deviousness?
            Perhaps it has happened. There are lots of people comparing MR favourably to Ranil.

            • 3
              0

              But not GR yet.
              That will take a lot more effort.

          • 0
            0

            OC and other readers,

            These are just assumptions. However, at that critical moment, who was the best candidate to restore what the criminal Rajapaksa left behind, but Ranil? My problem is that people in that our country deliberately mix it up again and again.

            They are though champions at fiction rather than respect the factual basis of uncertainty.
            -#
            I think the silent majority today understand that the Rajapaksas made Ranil the bad guy for their comeback, but the truth is becoming clear to the people today. The results of the elections in 2019 and 2020, the complete defeat of the UNP and the complete victory of the Sri Lanka Podujana Peramuna are both unacceptable.

        • 8
          24

          Just insulting or name calling will not take us anywhere..

          Yes Cabral or PB has written this.

          However if the facts are correct, I think either Mahendran or Ranil ( the central bank of all human knowledge-hence a fool !) himself must answer.

          Gota did not call RW to be president because of any high performance in economics. Before that he called Premadasa .

          The Rajapaksa family was chased away , the idiot soldier to Maldives the other jokers to a navy camp in Trincomalee.

          Who could save them ? Dulles or Ranil ? The Rajapaksa family knew the right man for the job.

          The fool without principles.

        • 13
          0

          OC, logic doesn’t apply in Silly / Stupid / Sorry Lanka, whereas racial / religious sentiments do. If anyone bothered to read the Great Cabral’s book, will know the source of this article. ( like how Namal aced Low exams). Can fool all SB’S most of the time, and 6.9 million all their lives , but can’t fool the whole world

          • 14
            0

            Thanks to our political, economic wizards, (special thanks to Appachi and family ), according auditor General report, as of 2022 year end, Silly Lanka’s net per-capita debt (individual debt burden ) has reached an alarming Rs 1.2 MILLION, marking a staggering increase from 264,211, in YEAR 2012.

            • 12
              0

              It never surprises me to see Lankans dating back issues as per their convenience. People like Mahinda takes advantage to fool them with such article. ( actually speech made in parliament). Mahinda keeps discussing about” how wonderful the GDP and growth were during his time” without a word on Debt to GDP ratio. Current being more than 100 % does it matter how good is the GDP ??? It’s not rocket science. The debt history FROM 1990 shows until Mahinda came to power it was between $ 10 to 15, 000. Two years prior to Mahinda becoming PM was the LOWEST in a decade below 10, 000. The very next year crossed
              20, 000 for the first time in history , reaching to one of highest per capita debt in the world. Current State minister for finance had this to say ” it’s not real debt but depreciation of LKR” .

              • 12
                0

                Truth is Lankan economy has been resilient throughout, even during 30 years of war until Mother of all KAPUTAS took control of treasury. ( after diverting Tsunami funds ???) MR did not do a thing to improve GDP but good at taking credit which he dosen’t deserve, like single handedly winning the war.

              • 1
                0

                I apologize for the error in numbers provided above. ( in year 1991) debt 7. 24 Billion USD, % of GDP 80.49, per-capita 413 USD. ( in year 2000) 12. 93 Billion , 79.2%, 689 USD, That is to say, in 25 YEARS of war , Tsunami among many other crisis debt stayed below 20 Billion USD. ( in year 2006 ) under Kaputa MR 21 Billion , 74.29 %, per-capita 1067 USD, for the first time in history debt crossed 20 Billion USD , and per- capita crossed 1000 USD mark. ( by year 2015 ) sky rocketed to 65 Billion USD, 76.33 %, per-capita 3046 USD. (year 2021) debt raised to 91.22 billion USD, 103.08% of GDP, per-capita 4117 USD. Current debt ABOVE 100 Billion , ABOVE 100% of GDP , ABOVE 4,000 USD per-capita or individual debt. Source World Data . com. Interestingly , between 2015 and 2018 debt was under control between 65 and 68 Billion. debt / GDP ratio went down from 76 to 72 % and per – capita was maintained throughout at 2600 USD .( year 2015 there was significant improvement where per-capita went down from 2600 to 2200 USD )

                • 10
                  0

                  According to Apachi’s own man , current aviation minister, Nimal , “Mattala International Airport ” incurred a loss of 2 BILLION LKR, on average between 2017 and 2023. However the loss has been reduced to 1.1 Billion this year ( by shutting down with bare minimum facility available ). He also said the airport was built after cabinet approved an unsolicited bid from China Harbor Engineering Company at the cost of USD 247.7 MILLION. The retard further added Mattala has been positive for the bankrupt country allowing air craft to land when there is adverse weather around BIA, which is just 20 minutes away, all airports in the world don’t make profits ” ???? fair enough, Mr. Minister “If weather is so bad , how better it can be in a place just 20 minutes away for aircraft to land, how many countries in the world have a 250 Million USD worth airport as stand by ??? during my recent visit to Lanka, I had the opportunity to visit this ” grandiose monument of Lanka”.

      • 2
        0

        Old Coger,
        .
        I am sure there’s some ghost who have done the writing. You could find them in dozens for a small fee these days. There appears no sophisticated economic analysis presented here, except some gross figures that could potentially hide the devil in details.
        .
        That said like many others here have pointed out the crisis occured during Gota’s period, the events of which, the article conveniently ignores.
        .
        It is also worth noting, from what I gathered, the Supreme Court verdict appears to have explicitly stated four reasons, acts of commissions and omissions, as the causes for the economic crisis; and whoever the author of this piece, has failed to addressed even a single one of them.
        .
        It’s a classic case of “Koheda Yanne? – Malley Pol!”. A sinhales saying – not sure if you are familiar with.

        • 4
          0

          Dear R,
          R,
          I read your comments with much more concern.
          #
          Despite the recent verdicts by the country’s Supreme Court, this greedy man doesn’t seem to be letting go of his ties to the nation’s underclass (70% of the voters).His focus is to see his son becoming the leader before his death.

          https://www.youtube.com/watch?v=pNY1R81ZfdA&t=27s
          Why on earth are lawyers and judges silent on this grave issue yet today ? They could take the lead of protest marches asking to arrest MaRa, GoRa, BR and all others….. why on earth are so called powerful monks silent yet on this ? Why does the other MaRa aka Rev. Malcom Ranjith the known most sacred Cardinal stay mum on this ?

          People actually are more stupid than they look. I got to know at that time, a protest was held against by some journos, however, there are still women who protect Rajapaksa in public. Why on earth, are they not attacked by Molotowcocktail yet today `? How can we clean up or rehabilitate the vulnerable?

      • 3
        0

        OC,

        Sri Lanka is the land of wonder. It is known to anyone with some sanity. And This country is full of reptiles disguised as humans.
        Although all the Supreme Court decisions of the country are made public, the people do not seem to change Rajapaksa’s grip. How is Mara Mara who was the chief guest at the hospital opening project conducted by that fake monk Umandawe Mudalali, right guys? Anyone with some sanity would have raised the issue on the “healthy awareness of the people”.

        Because nothing can easily dissolve the bond with Rajapaksa.
        I compare it to the biased nature of SM of the like senior citizens…, …..the low IQ man will never pay attention about the FACTs but always make efforts to misinterpret things on and on.

        • 0
          0

          leelagemalli ,

          L M , how much does he , S M owe you ? Just in case , some
          outside help could deal with the situation .

    • 5
      0

      R
      That the GG regime messed up things is true.
      But what was done by the GR rule in its first two years alone was worse than anything in the country’s history.

      • 2
        5

        SJ,
        .
        Not clear if your comment was directed at me. I do agree it was Gota and his gang that messed things up big time. See my response to old coger above.
        .
        Cheers!

        • 3
          10

          R
          I do not direct comments at individuals, but in response to unduly personal comments. There too I avoid personalities, and least bother with the identity of ones that resort to personal abuse.
          I do comment on all or part of a comment for various reasons.
          The item concerned was based on a question that you sought answer for, but based on what the writer has written.
          One is a happy person if one avoids taking his/her personality too seriously.

  • 14
    1

    Mahinda old pal

    Wow, SL was flowing with milk & honey during your time, a country like no other in terms of economic progress. Probably you were so blinded by the success that you ventured into white elephant investments with borrowed money the country could not afford & sent us up shit creek. Then there is the little question of you & your cronies plundering the country’s wealth. Maybe you thought it was a small price to pay for the prosperity you have brought to the country.

    You may want us to believe that you were the best President SL had but you were PM later when your brother held the high office & he seemed to have had more faith in his bunch of ‘viyathmaga’ intellectuals than you. Didn’t he want your experienced guidance? I am sure Cabral should also get some of the accolades for your economic success but he seems to have sent Gota up the garden path as well. So, is it your wisdom or your magic touch you want us to believe that brought all that prosperity ?

    Anyway, why don’t you help your pal RW to get us out of this mess you created initially with a massive debt? I am sure a little of that loot you syphoned out would help, instead of milking the poor citizens dry with taxation.

    • 2
      2

      Dear Raj-UK,
      .
      Please see the comments below this article:
      .
      https://www.colombotelegraph.com/index.php/four-new-universities-a-premature-budget-proposal-for-cheats/
      .
      I’m writing this in Bandarawela at 16:12 Sri Lankan time. Only two comments are visible to other readers at this time. However, two other comments submitted by me are visible on my computer. I’m sure that you know how these pages on CT work.
      .
      Please digest the contents of the three videos that you see there. Tamil readers may understand only two of them. Unless you are the stubbornest mule, you will see there the refutation of the reservations about the NPP that you so often voice.
      .
      And who are you? A thoroughly decent British and Lankan dual citizen who is seriously searching for answers to questions that you pose, but is far too fastidious. Come on, man!
      .
      Esto Perpetua!
      .
      That is now the motto even of the school where I was born, although the other school founded by my godfather still has “The Lord is My Shepherd”.
      .
      https://stps.edu.lk/about-us/

      • 6
        0

        Sinhala_Man

        Maybe I am fastidious & it maybe because it is expected in my job. The average SL votes for the opposition at elections hoping the newly elected party will be better but it is time we realise that it is merely to vote with your head & not your heart

        • 0
          0

          Raj,
          .
          You’re right. If you work in a European country, you can be picky with information.
          Btw, I have been traveling around my home country again for two weeks and with foreigners having to deal with this, I am also very nervous and cannot understand how chaotic Sri Lanka has become. however, i have the feeling people are not that poor, when buying their meals at kiosks or road side restaurants, because they are accessed to them as we do.

          I have never worked in Sri Lanka, I only went to school in Sri Lanka. I haven’t spent much time with them in the country, even though I’ve just started university education at Peradeniya. The 2 years I spent at Lanken University was chaos. I don’t have any fond memories of that either.
          :
          Incidentally, Weligama and Mirissa seem to have developed well in recent years with more and more tourists flocking to the area. Today, homestays have become commonplace in all parts of the country. I also visited Madolduwa island, however we lost our way inside. There were not directions marked or set inside how the visiters should have to follow. That is the latest situation regarding that island. Boat ride to the island was horrible and unsafe, but I risked it with a few of my friends.

  • 11
    1

    Some ‘cooking’!

    • 14
      0

      Nathan, Appachi is the “master chef”, like the rest , has whole lot of his own recipe for ethnic, race, religion….. economy, scams, nepotism………crimes, corruption, political murders……………… one to satisfy the palates of domestic and another for international customers ……….

      • 11
        0

        So so confident that the soothing words of his will satiate millions of starving Lankans.

  • 3
    11

    Come on! EVERYBODY knows that came 2015, debt collectors came calling. That’s why Rajapaksas lost the elections.

    2105-2019, Ranil tried the business procedure of encouraging rouges, robber-barons, and hoarders (all were forgiven), to place their money on bonds markets and such things – suffering masses to be squeezed of their last drop, and whipped to fulfill. Thus, had Lankan been placed in even more debt and suffering.

    Rajapaksas then gave Lankan masses the implicit promise (and sometimes explicit) that their off-shore investments from the money of the hardworking-suffering-Lankan-workers had come to fruition. So, they won the elections again in 2019. They tried very hard to bring it all back, but it had all vanished in the global political games markets. They are now crossing fingers and waiting for the next round.

    In the meanwhile, Ranil is waiting for the IMF miracle, and/or the China miracle, busily playing one against the other.

    So, with the above-said debacles and charades, what a relief the AKD and JBB will be when Motherland is grounded in reality and realism, working from ground up and giving much fulfillment.

  • 8
    0

    This is a futile attempt to put the icing on a bitter cake these “Rajapakses” baked for decades. So it is of no use to talk of the “Statistics” produced in this written speech (again baked on high heat).

    The answers this “Rajapakses & Gang” have to provide are in relation to the FOUR main accusations that the Supreme Court dictated they were guilty of (1) Depletion of Foreign Exchange Account in trying to maintain the Rupee exchange rate at Rs. 203.00 against the Dollar. (2) Colossal loss of Revenue to the State by giving Tax Concessions to “Political Allies”. (3) The payment of loans obtained on Sovereign Bonds to “Undisclosed” Bond Holders. (4) The continued refusal to seek the assistance of the IMF.

    The case against this “Rajapakses & Gang” was related to a period covering from 2020 to 2022 during which period the country was declared “Bankrupt”.

    What have you got to say in “DEFENCE” of the accusations you have been found GUILTY of? What you do here is, as I said, making a futile attempt, once again to HOODWINK the people by “Icing” a “Pudding” that has gone stale. Please note your TACTICS are well known and OUTDATED, the PEOPLE are no longer ready to “CROWN” you. Your days are NUMBERED.

    • 8
      0

      Douglas
      Didn’t someone say that there are lies, damned lies, and statistics?

  • 7
    0

    II – In your presentation of “Statistics”, you speak of a “Paradise” in the making during the period of the “Rajapakses” regime.

    The collapse, once again, according to the statistics presented, relates to the period under “Yahapalanaya” of “Ranil/MY3”.

    I have a proposal for you. File an “FR” petition against “Ranil W and MY3” and seek a decision from the Supreme Court to declare they too are equally “Responsible” and “Accountable” for the collapse of the economy during the period 2015 to 2019. Then we can connect the “Dots” – 2015 to 2023.

  • 7
    0

    Sinhala_Man

    Maybe I am fastidious, probably because it is expected in my job. The average Sri Lankan votes for the opposition at elections every time, hoping the newly elected party will be better but it is like changing the pillow to cure the headache. It is time we realised that we should vote with our head & not our heart. If I am to vote at the next election in SL, I wouldn’t know who to vote for. Whether it is AKD & the NPP, SP & the SBJ or RW & the UNP, there should be an official political manifesto outlining their policies, objectives & the strategy, all costed & sources of funds identified, so that voters can make an educated decision, otherwise it’s as good as pie in the sky. For you & many others, a charismatic leadership maybe good enough but as you can see, MR continues to fool people & no doubt, many would be convinced by his glib talk even now.

    If you want to bring the college motto into the subject, SL citizens are likely to be hoodwinked by politicians ‘perpetually’. In fact, under a charismatic leader, these citizens are being led just like by shepard. As for me, I dislike being ‘shepherded’ & it is time Prep School changed their motto for the students to be more independent, not ‘led’ by the ‘Lord’.

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