Three years after losing power MR says country facing crisis

Three years after losing power, former President Mahinda Rajapaksa says the country is facing the worst debt crisis in Sri Lankan history.

He said that during the short period of 36 months that the current Government has been in power, they have borrowed over USD 14.6 billion in foreign currency loans alone, which includes 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.

He said that 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,” he said.

Rajapaksa said that the current Government came into power in 2015 claiming that there was a debt crisis in the country due to the loans taken by his Government to build power plants, harbours, airports, expressways, etc.

However he say the total cost of these major development projects were 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 Hambantotaharbour 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,” he said.

Rajapaksa noted that foreign currency loans should always be taken with the utmost care. He says 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. (Colombo Gazette)