No wonder we are seeking another $1.5B from the IMF
Here is an excerpt from today’s (Feb10th 2013) Sunday Times:
“They announced for the first time that the US holds 75 per cent of rupee denominated and 40 per cent of the foreign currency denominated debt, making it possibly the single largest international investor in the Government’s securities market. As revealed in the Sunday Times, this means, of the total US $ 3 billion worth of rupee denominated Government securities held by foreign investors, US investors hold a massive US $ 2.4 billion. Ms Areas-Vogel was quoted as saying that “in terms of international and foreign currency dominated debt, the US holds US$ 1.4 billion worth of the total US $ 3.5 billion issuance in Sri Lankan sovereign bonds”
At present US$800M of US$1B coming up for maturity in July is held by one US investment fund. If they do not renew, then SL has to find another larger buyer on the renewal of a new issue. On the other hand due to the credit rating worsening the same investor may wish to renew at a “Higher Rate” of interest!
So in order for the Govt. to keep on profligate spending, the SL citizen is forced to pay high rates of interest first to Chinese and now to US private investors. If the money from these borrowings are NOT invested wisely, wasted or used up in commission and bribery for contracts, the SL citizen suffers further.
No country owes us any favors and will not give us any favors as they put their own self interest at heart. We in Sri Lanka must never forget that. Therefore we must safeguard our own interests ourselves, and realize that the US and the Chinese wish to make profits from lending to us, and when our credit rating drops, they demand ever higher rates of interest, putting our citizens further into debt.
As my previous blog entry showed our individual debt burden due to the profligacy of the Government rose by 25% last year and how much is it going to rise in 2013, unless, drastic action is taken to lower the burden and hopefully reduce the effective rate of interest we pay on our borrowings.
The above is NOT rocket science, but good housekeeping in being able to manage our household budget ourselves and not have others hold our hands, stroke them and suck our blood. SL has rulers interested in fattening their bank accounts at the expense of the people, and until that stops we are heading to a point of no return.
So please take heed, don’t say you have not been warned, we don’t have those who really care enough about Sri Lanka running our Government and managing it today, understand that first. We therefore have no option but to seek a change.