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 now.

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.

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