Surviving on borrowed money: Per capita debt Rs. 308,000

Government leaders and self-styled economic pundits in the Central Bank and the Treasury are often boasting of reaching the goal of a per capita income of some US$ 4200 annually for every Sri Lankan. This means at the current rupee rate every Sri Lankan will be able to earn about Rs. 540,000 a year or about Rs.45,000 a month. It will sound like a Christmas pie in the sky for millions of Sri Lankans who are struggling to manage by earning even half that amount because the cost of living is soaring to Mars. As an independent economist recently pointed out, the rising cost of living, the heavy balance of payments deficit and other economic negatives are likely to create a monstrosity where about 15% of our people – largely the rich and ruling elite – will be able to illegally amass not just US$ 4200, but even more than US$ 42000 annually. For the rest of the population comprising about 85% of the people, it will be a case of struggling for existence or surviving on or below the poverty line and depending on ‘ginipoli’ from high interest sharks. On Wednesday the Central Bank gave Sri Lankans a gift which reminded people of that hilarious Christmas song, “if you wonder why I shiver, I fell three times in the river because the hat I got for Christmas is too big”.
 

Whatever the per capita income may be, the Central Bank said the per capita debt of every Sri Lankan is more than Rs.308,000. This debt has gone up from Rs 250,000 in January this year, and at the rate we are taking huge loans at commercial interest rates, the per capita debt is likely to reach about Rs.400,000 by the end of 2013. That means every man, woman and even the innocent little child in Sri Lanka is indebted to the tune of an unbearable Rs.400,000. If this is not grave economic news, then we need to speak to the ghosts at Kanatte.
 

Instead of big talk or double and deceptive talk, the Government’s economic advisors need to propose ways of reducing the balance of payments deficit by cutting down imports and increasing exports. Additionally we need to produce our own food starting with milk.