13 November, 2018

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Yahapālana Government’s Irresponsible & Destructive Borrowing Spree

By Mahinda Rajapaksa

Mahinda Rajapaksa

The government has introduced in parliament the Active Liability Management Bill seeking authorization to borrow over Rs. one trillion from local and foreign sources, over and above the yearly borrowing limit set by parliament. The yahapalana government has been irresponsible and reckless in borrowing money from its inception. Under my government, Sri Lanka Development Bonds (SLDBs) were issued only twice a year to borrow an average of around USD 350 million per year. This too, was at the height of the biggest infrastructure building programme since independence. However in the year 2015, without any such projects, the yahapalana government issued SLDBs on no less than nine occasions, followed by six in 2016 and four in 2017 and have up to now borrowed USD 7.7 billion from this source alone.

In the past three years, a further USD 9 billion has been borrowed through sovereign bonds, currency swaps, syndicated loans and the IMF Extended Fund Facility – a total of USD 16.7 billion in foreign currency borrowings alone. During this same period they have made Rupee borrowings of around Rs.6 trillion as well. Even though a part of this massive volume of debt, like the Indian currency swaps and the shorter duration SLDBs and rupee bills and bonds have been paid off, from their first year in power this government has been borrowing and repaying, and borrowing to repay in a vicious cycle that has been rapidly gaining momentum. The Debt to GDP ratio which my government managed to reduce from 91% in 2005 to 71% by the end of 2014, had shot up to nearly 81% by the end of 2015 according to IMF report No: 16/371 and a Peradeniya University don estimates it to be bordering on 90% by the end of 2017.

The yahapalana government’s borrowing spree was occasioned by the huge increase in expenditure in 2015 due to the special allowance given and the reduction in the prices of

fuel and gas and certain commodities made to win the last parliamentary election. Even though the government claims they have been forced to borrow in order to pay back the loans taken by my government for infrastructure projects, the biggest such projects including the Norochcholai power plant, the Southern Expressway, the Hambantota harbour, the Colombo-Katunayake expressway and the Mattala airport all put together cost less than USD 3.9 billion and repaying these long term loans taken at concessionary rates of interest was never a strain on the economy.

On 26 January, President Maithripala Sirisena stated at a meeting with media heads, that my government had taken Rs. 10 trillion in local and foreign loans but only 1.1 trillion of that is accounted for as assets and that there is no record of what happened to the remaining Rs. 9 trillion. Later, on 7 February, just as campaigning for the local government elections ended, the Auditor General suddenly called a media conference and stated that nobody knows what our real national debt is because debt had been concealed over the past ten years, by being shifted to state owned enterprises and other government entities without being included in the public debt. He also stated that Sri Lanka’s total debt amounts to Rs. 10 trillion but the balance sheet indicates only Rs.1.1 trillion in assets. Everyone knew that the government would come up with some kind of a gimmick at the last minute with a view to influencing the election result. This time, the gimmick meant to mislead the voter came in the form of this talk about debts and assets. 

According to Article 154 of our Constitution, the Auditor General’s Constitutionally mandated task is to audit all agencies of the central government, all provincial councils and local authorities and every enterprise in which the state owns more than 50% of the shares and he is the last person in the country who can claim that he does not know how much is owed by each of these institutions. His claim that we have borrowings of more than Rs.10 trillion and assets amounting only to Rs. 1.1 trillion was even more insidious and misleading. Sri Lanka’s state accounts are prepared on the ‘modified cash basis’ which is consistent with international standards and is accepted by multilateral bodies like the IMF. This system records receipts and payments and places no emphasis on the balance sheet or on the valuing of a state’s assets. The ‘accruals accounting system’ which places emphasis on the valuation of assets is not used in our country in the preparation of state accounts.

Appointments to high posts are now made by the yahapalana President on the recommendations of the ten yahapalanites sitting in the Constitutional Council – which explains the conduct of the Auditor General on the eve of an election. Through his irresponsible comments, the Auditor General basically condemned in public the audits of his predecessors of the past ten years. The Central Bank had to step in to reassure the financial markets by issuing a statement contradicting the Auditor General’s claims and pointing out that Sri Lanka’s debts are accurately recorded and that we have an unblemished

record in servicing that debt. It is in the middle of all this insanity that the government has introduced the Active Liability Management Bill in order to give wings to their borrowing spree.

Parliamentarian Bandula Gunawardene has already petitioned the Supreme Court pointing out among other things that this Bill undermines the authority of parliament over financial matters, undermines the Central Bank’s management of public debt and vests the executive arm with unrestricted power in utilising the money borrowed. Under this proposed law, the executive will be able to raise over Rs. One trillion in debt and make regulations about how that money will be used. Even if Parliament subsequently refuses to endorse the manner in which the money has been utilized, what was done on the authority of the Minister in the intervening period, would still be legally valid. Furthermore, so long as it can be established that they acted in good faith, no civil or criminal liability whatsoever will attach to those involved with regard to the manner in which this money is used.

Given the scandals that have already taken place in the issuance of public debt under this government, the danger inherent in this proposed law is obvious. Therefore, the Active Liability Management Bill should be resolutely opposed by every citizen of Sri Lanka.

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Latest comments

  • 10
    5

    MaRa – according to Forbes Magazine you have assets worth $18 billion… in other words you have swindle the country to a cool $18 billion including the LTTE assets. That’s just you. Add to this the rest of your clan. Now the country is bankrupt and they have to borrow to pay back to the foreign govts what you and your clan. swindled.

    Nevermind the Active Liability Management Bill ….what the country needs is to use the bill already available to put you guys in the galore and freeze all your assets

    • 9
      5

      It is time for take legal action to bring back all the $18 billion worth of money and assets stolen money by Mahinda back in to the economy.

      • 7
        1

        Dunno about $18 bil ………..but all the Rajapakses are a lot richer than when they started out in 2005.

        I sure the salaries would have helped!

        Let’s give them the benefit of the doubt.

        The way Mahinda has written this piece ….it looks like he knows his onions about finance ……….so perhaps he is a good investor….

        It took Warren Buffett 35 years to reach $18 bill and Mahinda less than 10 ………who is the better investor?

        what’s wrong with all you guys? ……….We should all be proud of Lankans with world-class talent………….

      • 3
        4

        “the Colombo-Katunayake expressway and the Mattala airport all put together cost less than USD 3.9 billion and repaying these long term loans taken at concessionary rates of interest was never a strain on the economy.”
        Concessionary terms? From commercial Chinese Banks?
        Is there no end to tail-praising by persons signing as Mahinda Rajapaksa?

        • 5
          1

          Oh C’mon OC!

          Mahinda never lies.

          Why is it so hard for people to believe him? ………He is always visiting temples………..How can a person in lockstep with the Buddha can ever be accused of lies, murder and corruption?

          I believe him ………..even more than he himself! ………I’m his greatest fan…………

          Long live Lanka ……… at least for another 70 years……………

          The problem with Lanka is it has too many patriots…..people with too much love for the country…..people should learn to control their passions…………then we’ll be alright………….

    • 8
      6

      Rajesh,

      You fool. If MaRa had 18 Billion dollars then he would be among the top ten Billionaires of the world. And so, Forbes could lead our own authorities to find this looted money. Why haven’t they done it yet? So do not freck about these things as no one believes the lies Yahapalanites chant anymore.

      • 4
        2

        Shenal ….its obvious who MaRa and his clan has been fooling ….

      • 5
        3

        Shenal
        It is true Mahinda has not reached to top 10 billionnaires but he is in top of Srilankan billionnaire list. I know he spent lots of money to buy number of people around the world to cover up his crimes. Where did that money come from? even now he spend like a king?
        http://michitimes.com/category/richest-list/

    • 2
      2

      Mahinda Rajapaksa,

      Re:Yahapālana Government’s Irresponsible & Destructive Borrowing Spree

      “The Debt to GDP ratio which my government managed to reduce from 91% in 2005 to 71% by the end of 2014, had shot up to nearly 81% by the end of 2015 according to IMF report No: 16/371 and a Peradeniya University don estimates it to be bordering on 90% by the end of 2017.”

      Yes, agree on the Yahapālana Government’s Irresponsible & Destructive Borrowing Spree, and the CAUSE was Mahinda Rajapaksa and Cronies stealing, well over $18 billion.If you give back the stolen $18 billion, the Debt ton GDP ration will drop to 71%.

      Would you and your cronies give back the stolen loot that belongs to the People?

      After all Bill Gates and Warren Buffet donated well over US $ 100 billion to charity, globally.

  • 5
    1

    Shenali

    If I were you I would spend all my time building Buddhists Vihares from Anuradhapura to Dondara employing Tamil Nadu sculptors, well paid by Dr Mahinda’s loot.

    • 1
      3

      Native Veddha,

      Why use Tamilnadu sculptors? If I were you I would hire sculptors from Europe who are much better than the Tamils.

      • 5
        1

        Shenal

        ” If I were you I would hire sculptors from Europe who are much better than the Tamils.”

        Are you saying your 2500 years of heritage from Anuradhapura to Dondara are not good for your liking because they were produced by South Indians?

        • 2
          2

          Native Veddha,

          Luckily for us those weren’t produced by South Indians.

          • 2
            0

            Shenali

            If those weren’t produced by South Indians were they produced by Yavanas, Gandharans, Nabataeans, …………….. Monterchians?
            How about Buddha statue at Rambadagalla?

      • 1
        0

        What an idiot you are, Shenali.
        “If I were you I would hire sculptors from Europe who are much better than the Tamils.”
        How many Buddha statues have Europeans produced?
        You probably live in Australia and think the whites are superior?

  • 5
    3

    MaRa,
    You are the most corrupted leader in our history. You made billions of commissions in dollars by borrowing money from China at exorbitant rates to build while elephant projects like Hambantota Harbour, Mattala airport, and highways. You have sold Sri Lanka to stinking China. Now you Moron is talking about irresponsible borrowing spree. 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

    • 2
      0

      Maharage, N. – An eye-opener for this ignoramus M.P. from Kurunegala. The author of this article is either public racist and warmonger DJ or Geneva Loss P is. Your snapshot #7 is hilarious, namely, “Making a synthetic lawyer of an idiotic son who couldn’t even pass his GCE (OL). Maybe CT should consider forwarding a translated version of your comment in Sinhala to both the father and his prodigal son.

  • 1
    2

    “The start of repayments for expensive infrastructure foreign loans starting this year has left the island nation facing a debt crisis.” it is in NASDAQ.com

    Dear former President Sir, better not to try and take over this mess, don’t you think, although to your governments credit you did not blame previous government and try to go after Bandits. ( Bandit – Mr. Victor Ivan’s words not mine).

    It’s a blooming, growing economy we want. And a brighter future than this.

  • 0
    0

    After foundation, construction of walls and plastering are started…

  • 1
    0

    It has finally come down to a home vs home game. The teams do not wish to improve their game but foul mouth the other side. The playing field gets trampled.
    We, the long suffering Lankans can see through this.

  • 2
    0

    Mr coming from u this farticle is a joke. I will be recommending u for the nobel prize in economics after the way u have f….d up the sri lankan economy. Bandu and cabral have written this shithole of an article and the dumb nitwit that u r have tried again to con the people by placing your name as the author. At least be honest for once and admit that u know f……k all.

  • 0
    1

    Subsidizing commodities such as fuel to win votes is absolutely shameful, this government did that just after the presidential election to gain votes in the general election and it worked, in the same despicable manner they made the AG lie about a non existing missing debt records. These are acts of people who want to stay in power no matter what, and they are now trying to borrow again to make a show of reducing prices before the coming election season. I hope Bandula Gunawardhana’s efforts will come to fruition to stop this thuppahi Naya culture, and in the mean time the Sinhala and Tamil language newspapers have a responsibility to explain this to the general public.

    • 1
      0

      wannihami

      So you agree the people are as stupid as you are for falling for cheap bribes.
      Is Bandula Gunawardhana still with Sri Lanka Freedom Party as his records show he is fond of jumping from one party party to another {United National Party (2001- 2007), Mahajana Eksath Peramuna (1989 – 2001)}?

      “in the mean time the Sinhala and Tamil language newspapers have a responsibility to explain this to the general public.”

      What is there to explain? The news papers have no responsibility at all when they depend on advertising revenue from the government. If you take the leading media, their only responsibility is fear mongering, the editors never dare publish truth. In the course last 50 years I am told they have become permanent b***s carriers to the ruling class. Read Editorial/Leader Comment you will see the pattern of their patriotic behaviour.

      Once I was unfortunate to meet the Editor of a leading news paper, his Geo political knowledge or lack of it stunt me. His thesis China is a powerful country, it is basically going to take over Sri Lanka and asked me gleefully what India is going to do about it? I told him its Hindia’s problem not ours. I also reminded him China is 3500 closer to this island while India is 20 miles away from the same island. He didn’t like it at all.

      I think you should not entertain taste for luxuries, expecting media to play key role in informing and educating the masses. I am not sure the media is entertaining either.

      The media thrives on perpetuating the status quo, approves behaviour of the state, the crooks, war criminals, hatred, bigotry, ………………………… You are one of them who agrees with them.

      “You must be the change you want to see in the world.” – The old half naked Fakir Mohandas Karamchand Gandhi.

  • 1
    0

    GLP is lame duck excuser. Mangala said about $18B. Now that is coming from another source and it is all over the world. But poor GLP is only contesting New King’s Rs 10T. Somebody may contest Mangala’s $18B though it is reported somewhere else too. But contesting Rs 10T is only a myth. Now, though he is only a president of the Yahapalanaya, but once he was the vice president of the Kleptocracy. No one can fool this Judas. He has the journal on the that time president and he wrote the credit and debit, those days in the Ledger Folders.

  • 0
    0

    Ranil had gone to MODI and has asked that there is a problem with the Sri lankan banks and he has asked Javaans and Gurkas for protection. Modi has sad, “NO, there is a problem in your country. first solve that and come”.

  • 0
    0

    Active Liability Management Bill courtesy Ranil and the UNP!!! Good God! Sri Lanka is gone! This is the end, people. Prepare to become a state of India. Prepare for the partition into thirds.

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