Opinions on subjects of the day mainly as it pertains to common sense suggestions in improving the quality of life of all who are fortunate to live in this serendipitous island of Sri Lanka.
Sunday, February 10, 2013
Should people know that in 2012 Govt. borrowed Rs63K for each citizen in SL?
Whose job is it to inform everyone who lives in
this country that just last year the Govt. borrowed Rs63,000 for each person in
Sri Lanka from foreign sources? People may say they don’t care as long as they
get what they want. Is that acceptable to leave it at that, without explaining
why it is so, and what has been done with the money or worse to impose borrowing limits to safeguard future generations from bankruptcy.
It amazes me how people attribute progress to
Govt. whilst not realizing that it is solely because they borrowed so much
money and about 50% of what they borrowed was stolen and the balance used
up in one or other project. We however have to repay the loans with interest at
rates higher than could be achieved if we were careful in choosing our sources.
This recklessness has helped China to be lender of last resort, as they lend money to the US at less than
1% interest, whilst they lend to us at 8% + and make a hefty profit from it.
At the heart of the issue is whether the
transactions are in the best interests of the country, and how we are able to
repay these loans when the money it has been spent on is not giving the rate of
return to pay the loan. This is leading SL into a classic debt trap of borrowing to
repay earlier debt, with a progressive increase in overall liability to our
lenders. The citizen never cared how the money was raised for a project they wanted
the Govt. to spend. This issue lies at the heart of being able to repay loans. The
Govt. credibility rises with the amount of spend, not decrease, and they are still
riding the wave as the populace does not care a rat’s ass for how these loans will
eventually be paid, or where the money comes from to repay!
I believe that we must set up laws with borrowing
limits that prevent the Govt. from getting into excessive debt, which will have to be paid
by future generations. It is very sad that a profligate administration has set aside
prudent borrowing and investment principals in favor of the imprudent and later on, when the day of reckoning comes, borrowing are overdue, and there is no chance of rolling over as done
For the national debt per person to rise 25% in one
year is downright treacherous and it is important that these facts are explained
in detail by our media to educate people as to the real consequences of the mirage
of growth they are led to see.
The opposition has not been able to get any traction on
this subject due to the ignorance of the general public about the way projects are
funded, and the lack of concern amongst our populace as to how the loans are finally
repaid, and over what period. It is the duty therefore of everyone who understands
the issues to explain to whomsoever is willing to listen, and thereby spread the
word before it is too late.