21 July, 2018

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Third Anniversary Of The Incompetent Government Responsible For The Worst Debt Crisis In Sri Lankan History

By Mahinda Rajapaksa

Mahinda Rajapaksa

On 9 January 2018, the so-called yahapalana government completes three years in office. During this short period they have created numerous crises running through virtually every sector in Sri Lanka. The main subject of public discussion today is the bond scam and the attempts being made by the yahapalana leaders to sweep it under the carpet. We are awaiting the release of the full report of the Bond Commission. The bond scam is only one of the many disasters brought upon this country by the yahapalana government. As this government marks its third anniversary, I wish to draw the attention of the public to another danger they have brought upon this country.

During the short period of 36 months that this government has been in power, they have borrowed over USD 14.6 billion in foreign currency loans alone, the breakdown of which would be as follows – USD 7.2 billion through the issue of Sri Lanka Development Bonds from January 2015 onwards, USD 3.6 billion from sovereign bonds issued in 2015 and 2017, USD 2.2 billion through currency swap arrangements with India in 2015 and 2016, USD 1.7 billion through syndicated loans arranged through several international banks in 2016 and 2017 and USD 1.5 billion from the IMF Extended Fund Facility in 2016. No previous government has borrowed so much money through foreign currency loans in such a short period of time.

Even though 14.6 billion USD would suffice to build five Norochcholai power plants, five Hambantota harbours with enough money being left over to build two more Southern Expressways, the yahapalana government has not built even a culvert with that money. I have made reference so far only to foreign currency loans. From January 2015 to date, the yahapalana government has borrowed well over Rs. 5.7 trillion in Rupee loans as well, through the issue of treasury bills and treasury bonds. The government commissioned the Moragahakanda project and opened the Rajagriya flyover to coincide with its third anniversary so as to answer the critics who say that the yahapalana government has not built anything tangible despite massive foreign borrowings. However, the Moragahakanda project was planned, financial allocations were made and construction commended under my government way back in 2007 in accordance with the 2005 Mahinda Chintana programme.  Likewise the Rajagiriya flyover was planned and money was allocated for its construction by my government. Cabinet approval was granted to call for bids to select contractors for the construction of the flyovers in Rajagiriya, Polgahawela and Ganemulla at the cabinet meeting held on 4 December 2014. 

The yahapalana government has marked its third anniversary by claiming credit for projects for which money was allocated and started by the previous government. They came into power in 2015 claiming that there was a debt crisis in the country due to the loans taken by my government to build power plants, harbours, airports, expressways etcetera.  However the total cost of these major development projects were as follows: USD 1,350 million for all three phases of the Norochcholai power plant; USD 740 million for the Southern Expressway from Kottawa to Matara; USD 1,300 for phases I and II of the Hambantota harbour and its bunkering facility; USD 292 million for the Colombo-Katunayake expressway and USD 209 for the Mattala airport.

All these development projects put together cost less than USD 3.9 billion. The claim that the present government has been forced to borrow heavily to repay the project loans taken by my government is a complete lie. With the 14.6 billion USD in foreign currency loans that this government has borrowed up to now, the loans taken for all the above mentioned development projects could have been repaid four times over. The debt now being incurred is used to meet the day to day expenses of the yahapalana government and not to repay the project loans taken by my government. From January 2015, there was a massive and unplanned increase in government expenditure as a result of state funds being utilized to meet political objectives. The present debt crisis came about due to the yahapalana government borrowing heavily in Rupees and in foreign currency in order to meet this increased expenditure.

Foreign currency loans should always be taken with the utmost care. Since it is necessary to purchase foreign currency to repay such loans, even a slight change in the exchange rate can give rise to a massive increase in a country’s indebtedness. According to the 2015 and 2016 Central Bank reports, due to the depreciation in the value of the Rupee as a result of the economic downturn that took place after the yahapalana government took office, an extra Rs. 478 billion has been added to the national debt. It should be noted that the increase in the interest rate by about 50% due to the bond scam, has also added to the debt burden.

My government was always very careful in taking foreign currency loans. According to the Finance Ministry, the repayment of foreign loan installments plus interest during the period 2008-2014 was as follows: 

2008 – USD 881 million

2009 – USD 1,041 million

2010 – USD 826 million

2011 – USD 971 million

2012 – USD 1,620 million

2013 – USD 1,160 million

2014 – USD 1,306 million

Since these are not unmanageable amounts, my government never had a problem with foreign loan repayments. The present crisis is entirely a creation of the yahapalana government. The foreign loan instalments and interest thereon that have to be paid after 2015 is as follows:

2015 –  USD 1,828 million

2016 – USD 1,604 million

2017 –  USD 2,132 million

2018 –  USD 2,891 million

2019 –  USD 4,217 million

2020 –  USD 3,699 million

2021 –  USD 3,344 million

2022 –  USD 3,743 million

2023 –  USD 2,120 million

2024 –  USD 2,067 million

2025 – USD 4,155 million

2026 – USD 2,758 million

2027 – USD 3,448 million

These figures amply explain the difference before and after the change of government in 2015. The immediate increase in repayments from 2015 onwards is due to the huge short term commercial loans taken by the yahapalana government to be repaid in a few months or one or two years. What Sri Lanka experienced in 2015 was a borrowing frenzy. Central Bank records indicate that before the yahapalana government came into power, Sri Lanka Development Bonds were issued only twice a year with the amount borrowed per year not averaging even USD 350 million between 2010 and 2014. It should be borne in mind that this was at the height of the biggest infrastructure building programme in recent history. But in the year 2015 without a single new infrastructure project being initiated, the yahapalana government issued Sri Lanka Development Bonds on no less than nine occasions. The number of SLDB issues made in 2016 were six, with four being made in 2017.

The government has now obtained cabinet approval to borrow a further USD 5 billion in foreign currency commercial loans in 2018 as well. In order to repay these loans taken for consumption purposes, the government has increased the tax burden on the people to an unbearable level by increasing the VAT, vehicle import duties, commodity import taxes, various levies and fines and stamp duties etcetera. From April 2018 onwards, the government will commence a programme to bring virtually every adult in the country into the income tax net.    

Since the massive loans taken by the yahapalana government cannot be repaid simply by increasing taxes, they have now started selling off all available national assets ranging from government owned hotels to harbours, expressways to power plants. Though the government claims that the Hambantota port was sold off because the loan taken to build it could not be repaid, the proceeds of the sale have not been used to repay the project loan but is to be sent instead to the Treasury to be spent on consumption – which reveals the actual motive in selling off these assets. Since the Hambantota harbour was built with long term loans at concessionary rates of interest, the government is in no hurry to repay the loan taken to build it.

However there is an urgent need to repay the short term foreign currency commercial loans taken by this government for consumption purposes even if the payment has to be made with the money realised through the sale of national assets. If such commitments are not met on time, Sri Lanka will get locked out of the international financial markets. I request all voters to use the opportunity that will come their way on 10 February to register their protest at the disaster brought upon the financial system of this country by this corrupt, incompetent government.  

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Latest comments

  • 12
    0

    Wow, look whose talking. Mahinda, old pal, I am impressed.

    I didn’t know you were a numbers man. I thought all the numbers you knew were of your bank accounts & even that I was not sure, being so many all over the place too. As for the value of you assets & your portfolio, do you know how many zeros are there at the end?

    • 7
      1

      Raj

      Is there a simple uncomplicated independent way of confirming the figures stated by Dr Mahinda Rajapaksa (LLD)?

      Remember this was the man who as Finance Minister in addition to being President refused/failed to submit National Budged for two consecutive years, between 2008 and 2010 if I remember correctly. Its very rich coming from this man.

      Where are the University of Colombo professors past and serving? Please note Dr Mahinda Rajapaksa (LLD) deserves another PhD or DSc.

      • 6
        0

        Mahinda,

        Buddy, My admiration for you is boundless!

        I don’t think you know the top or bottom of a financial-statement; just like your son doesn’t know the first two clauses of civil-law ………. but you guys have got the Lankan voters – even some “educated” ones – by the balls. They’ll believe anything you say.

        Jim Jones convinced 600 to drink Cool-Aid with him ………….you can get 6 million fully-grown Lankan adults to open up Cool-Aid factories …….. That’s talent pal !

        I wish I can do with gals what you do with the Lankan voters ………… get them to eat out of my hand………….sitting here, just the thought blows my mind!

      • 1
        2

        Native Vedda, my mate …your comments kind of dim down when you see truth, may be a bit of conscience does exist, deep, really deep, down there?
        Don’t worry mate our Harsha with the PhD from US of A will checkout the numbers and come up with some convoluted math to say MR is wrong. Poor dear Harsha will have a tough time this time.

        • 2
          0

          wannihami

          “Don’t worry mate our Harsha with the PhD from US of A will checkout the numbers and come up with some convoluted math to say MR is wrong.”

          Is there a simple uncomplicated independent way of confirming the figures stated by Dr Mahinda Rajapaksa (LLD)?
          Where are the University of Colombo professors past and serving?

          • 0
            0

            N V
            Math is complicated.
            Only bright people understand math.
            Nothing to worry about. Sri Lankans are bright, no worries.

      • 0
        0

        Raj
        Not only MR but RW & MS deserve “accolades”. How about ” Masters” at duping the people of Sri Lanka.”
        They have been “batch mates” at the ” governance college” for a long period.

  • 10
    1

    MaRa, You are 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. 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

    2. Raping girls in villages from down south on the promise of jobs

    3. 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

    4. 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

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

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

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

    8. 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

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

    10. Killing the most famous rugby player on behalf of another moron son

    • 3
      2

      Maharage: You accuse, but horapalanaya is silent. They did not do anything. They are not honest even with their own thefts. They emptied the banks. Now Ranil goes every where, talk about good governance and giving better lives to women and men when the truth is he increased the number of politicians in order to accommodate women. What good governance CLEAN MAN RANIL GAVE. within the 40 days of the 100 day govt he emptied the banks. Not just one almost every state financial institution.

  • 2
    5

    It is true. corruption is common to both parties.Yet, with Mahinda Rajapakse, there some thing to show for the money spent. Horapalanaya has not done anything. Yet, they have borrowed every way possible. It is unbelievable. for the 2018 year too, they have released printed money which will increase inflation. they increased taxes to people but they reduced taxes to fossil fuels. They also want to borrow new bonds woth $ 5 billion. this is for the year 2018. What else will come. There are additional loans from countries for construction projects. Horapalanaya had three years to catch Mahinda Rajapakse’ govt’s thefts. they did not do. Instead they worsened what is happening Sri lankan air lines. The rumour is Yahapalanaya politicians, at least several prominent politicians, are also part of that.

    • 2
      0

      Jimmy,
      What exactly has Mahinda got to show? I will tell you:
      1 A lot of expensive and unnecesary highways. Due to this, people who live in outstations come to Colombo and cause traffic jams. It is impossible for anyone in the suburbs to visit Clombo.
      2. A useless port at Hambantota which survives only because Indian trans-shipments are diverted from Colombo.
      3. A useless airport at Mattala.
      4. A useless airline called Mihin Air.
      Only Mahinda and his cronies benefited . You call this development? We are the ones who have to pay.

      • 2
        0

        oldcodger

        Dr Mahinda (LLD), his brother Basil (10, 20, 30%) Dr Gota (DSc) …. have to show how much commission, kickback, backhanders …… did they receive in the 10 years of their misrule on every contract?

        You have forgotten Lakvijaya Power Station (Norocholai Power Station) a very large Chinese white elephant. It was opened in early 2011. Could the minister responsible at the time Achchige Patali Champika Ranawaka tell us how much power it has generated from 2011 to date and how many hours it was really open for business between 2011 and now?

  • 1
    2

    Neither Maithripala sirisena or CLEAN MAN RANIL has done anything. but, tally that with the money borrowed by every way. that includes, loans, swaps, printing, Treasury bills, bonds. what for ?. Certainfigures Ranil says t the public in the Campbell park are lies. He says, 4 trillion was borrowed and 10 trillions has to be paid. It is he borrowed 15 or 20 billions from PTL. Last year alone the loss is said to be one Trillion.

  • 3
    1

    you idiotic roque you think we are set of fools why did you not list the foreign loans taken during your period out which the amount you have taken as commission. and loan servicing amount. if you have guts respond to this you war criminal and head thieves family.

  • 2
    3

    This govt for the first time, In Sri lankan history, increased it’s allowable debt limit. What do they have done. Clean Man only delayed the Hambanthota Project and then after three years signed the same boasted about it.

    • 1
      1

      Jimmy the Dimwit

      “This govt for the first time, In Sri lankan history, increased it’s allowable debt limit. “

      What is the allowable debt limit? How do you compute the optimum/allowable debt level?
      As usual you are talking bull. Aren’t you?

      • 0
        0

        Dumb Native Veddo: As I heard, it is a fraction of GDP. this years GDP in Sri lanka, anyway, is ZERO%.

        I think Mahinda Rajapaks’s journalist is also not honest. Because, I read, until 2013 Sri lanka grew up because there was no war. After that needed restructuring of the economy. both govt did not do that. Instead this govt is screwing up because, I think, they do not know what to do.

  • 0
    0

    Sri lanka is bankrupt mostly because of the corruption. Even during CBK’s time projects had been completed and expenses were unblievable. some contractros or soncultants had charged $ 380,000 per day. Rajagiriya Fly over I heard, spent $ 430 million. We can not believe why a steel frame and the concrete costs that much including the labour.

  • 1
    0

    I don’t care what the concocted numbers are these. But I earnest believe that there was never a waste took place like now being wasted. Whatever the excuses can be given, there was nobody ever had that much burned head like Ranil to sell off the Island’s sovereignty to China and show that cardboard check high in the air. What Ranil did on they day, not just Ehelepola or even a worst Gamaralaya Modaya wouldn’t do. He needs to answer for those actions to people. Further never anybody should practice with him the impunity he is practicing with others. When government changes, he should be removed his Civic rights and pushed in to prison, not in the Army Hospital Hotel or the Hangbangtota 5 star prison.

  • 1
    0

    08 January 2018 is also the Third Anniversary of the DEFEAT Of The Incompetent Government Responsible For The Worst Debt Crisis In Sri Lankan History

  • 0
    2

    Harsha with the PhD from US of A , it is in your court my man..go for it, but no lies or manipulative calculations as you kept doing to downgrade Growth Rate, pre 2015 that was.

  • 1
    0

    when the pot calls the kettle black and expects to get away with it we can imagine the state the country is in

  • 3
    1

    I see a lot of yahapalanaya supporters in pain here!!.. but facts are stubborn.. this is the most incompetent government EVER! They make even the CBK regime look good!

    Lets rephrase that.. most incompetent ever.. most corrupt ever!!!

  • 2
    0

    What ever it is the Citizens are living with dignity and respect without fear in the newly discovered Democratic Sri Lanka.

  • 1
    0

    you lunatic, you are completely nuts and need to have a brain replacement. The cause of the massive debt that SL is facing today is the crooked deals you and your family made by borrowing huge sums of money to be invested in worthless projects with no return except fattening the purses of the rajapukapassa criminals. Keep your idiotic comments to yourself as the people of this country know how you robbed them. The most corrupt and murderous family in the history of SL are the cursed Rajapaksas and just you wait you will soon be confined to the ottomless pits of hell where you rightly belong. Don’t forget to take all your crooked mates GLP, balurawansa, gonorispalla, DJ, Vesadeva and gonuwardene with you when you are on your journey to hell.

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