Debt trap not from loans obtained by my Govt: MR

14 March 2016 09:12 pm Views - {{hitsCtrl.values.hits}} 16 Bookmark

CHATURANGA PRADEEP SAMARAWICKRAMA Follow

A A A

Join our WhatsApp Channel

In the wake of the Government proposing to increase taxes, former President Mahinda Rajapaksa said the country was now facing an unprecedented economic crisis and it should be examined how and why things came to such a pass.

In announcing increases to VAT and income tax and the reintroduction of the capital gains tax the Prime Minister said in his special statement to parliament last week that the Government has been compelled to increase taxes in this manner because my government had got the country into a debt trap.

In a statement Mr. Rajapaksa said, “After coming into power, the present government obtained 400 million USD under a currency swap arrangement with India in March 2015. It obtained another 650 million USD through a sovereign bond issue in May 2015. Another 1,100 million USD was obtained from India in July under a currency swap agreement. A further 1,500 million USD was obtained through a sovereign bond issue in October. Between March 2015 and March 2016, the government issued short and medium term Sri Lanka development bonds on 12 different occasions borrowing over 2,711 million USD. Thus in the 15 months they have been in power, the present government has obtained 6,361 million USD in foreign loans.

"To put matters into perspective, this is enough to meet the entire foreign loan components of the Mattala airport (190 million USD) the Hambantota Port (426 million USD) Norochcholai Coal Power plant (1,340 million USD), The Colombo-Matara Highway (630 million USD), The Colombo-Katunayake Highway (248 million USD) all put together, and there would still be enough money to build not one, but two Port Cities (1,400 million USD each) one 500 megawatt Sampur Coal power plant (500 million USD) and yet another Mattala airport with the final leftovers.

"This government enjoyed foreign exchange savings of around USD 2,500 million in 2015 due to the precipitous drop in oil prices after they came into power. But they could not build up foreign exchange reserves or even make the Petrolem Corporation and the Electricity Board profitable. All these colossal borrowings including the massive savings from petroleum imports have been spent on consumption. It is because of the almost comic fiscal irresponsibility shown by the government that Sri Lanka’s credit rating was downgraded by Fitch and Standard and Poor’s recently.”

Comments - 16

words Tuesday, 15 March 2016 06:09 AM

Excellent analysis.. not like wishy washy statements on debt via DM Android App

1 2

sss Tuesday, 15 March 2016 06:17 AM

Debt trap is mainly due to middle and upper middle class and the rich trying to lead a middle income country living style on an economy run on earning of housemaids. Fuel bill alone is 405 of dollar income and if oil price recover the country will go bankrupt

1 2

Kokila Tuesday, 15 March 2016 07:15 AM

When did MR make any analysis?

1 2

Lalu Tuesday, 15 March 2016 07:59 AM

Infrastructure development on borrowed money alone without manufacturing activity for export will lead to this.

2 0

Abey Tuesday, 15 March 2016 08:10 AM

The above is not an economic analyses but just a smart statement to convince the public that MR regime is not responsible for the economic mess the country is in. Ranil, despite the fact that you are known to be a top class strategist/ tactician, your Govt is a disastrous failure in PROVING to the public the extent of failures, corruption, economic mismangement, nepotism (your govt started doing it as well), attacks on media etc during MR regime. Todate you keep making accusations and continue to fail to prove any of them. I, for one am fed up of listening to accusation any more. You should make coordinnated effort to prove to the public all those allegation or just shut up.

2 0

Poorna Tuesday, 15 March 2016 08:22 AM

We remember when you were in how the cost of living was sky rocketing and you never cared but some things were atleast going ok where as now its much much worst than before.

2 0

Alamof Tuesday, 15 March 2016 08:42 AM

There is a famous proverb, which goes as;"No credit is given to a liar even when he speaks the truth" -unknown

1 1

Economist Tuesday, 15 March 2016 08:50 AM

Government servants were given increments, cost of the increments for the year may be for 1,400,000 employees Rs. 10,000.00 per employee cost would be Rs. 168 Billions per a year. government may have paid these increments from the loans obtained by them not from the revenue generated from the system. Election promises have cost the economy to a greate extent. Loans should use only for capital expenditure but not for recurrent expenditure, that is the debt trap, created by their own.

0 3

TONY Tuesday, 15 March 2016 09:12 AM

MR is giving the amount borrowed by the present govt., but he doesn't state how much money was left in the kitty, how much loan was outstanding and the interest payable to lenders at the time he handed over the treasury.

1 1

Mangala Tuesday, 15 March 2016 09:27 AM

PM it is your turn now to reply your tormentor. Instead of making statements in parliament and blaming the others for economic crisis, do your part well. Punish those who have done wrong and grill those who have plundered the country. MR says you have taken loans and sold bonds but you have not delivered anything. MR should have told this in parliament. Why is MR silent in parliament?

0 2

Nihal Amarasekera Tuesday, 15 March 2016 09:48 AM

Yeah! Economist has a very valid point.

1 2

BuffaloaCitizen Tuesday, 15 March 2016 10:09 AM

You are absolutely correct. All governments have been pampering Govt. Servants because this is their vote bank. In the end we have a Govt. Service which is overloaded, incompetent, lethargic and undisciplined. The power cuts we are facing with CEB is just how bad this situation is.

0 2

Manuel Benjamin Tuesday, 15 March 2016 10:17 AM

Mister please stop your nonsense. You looted the country and ruined it. Get lost.

1 1

ECON 101 Tuesday, 15 March 2016 10:26 AM

To make matters worse the Govt. has just approved an increase to all Ministers Monthly Allowances!!!

0 2

Mohamed Tuesday, 15 March 2016 10:35 AM

There is nothing to examine. Naturally when huge loans were taken during your tenure and with no returns on the white elephants that were completed to repay the debts and when it is time to repay the debts, there are only 2 ways to do so. One is by taking further loans to settle the debts taken by your regime and get further indebted and the other is by taxing the people.

1 1

Buwa Tuesday, 15 March 2016 12:31 PM

Have some respect. because of this man you come home walking instead in a box.

0 2

222

Add comment
Comments will be edited (grammar, spelling and slang) and authorized at the discretion of Daily Mirror online. The website also has the right not to publish selected comments.