14 February 2022 12:02 am Views - 828
Hardly a day passes these days without news media publishing in emblazoned headlines that our government has managed to secure hundreds of millions of dollars in loans from India or that China has provided us another billion dollar loan. Equally big news is that we have managed to secure a loan swap with Bangladesh or with Pakistan.
Not long ago media informed us that the Chinese were providing us with mega loans for projects in Hambantota.
The sad difference between the loans of yesteryear and today is that, while in the past loans were taken to construct ‘viable projects’ (or so we thought) Unfortunately, today loans and monetary swaps are being sought and taken not for developing the country or to enhance our health or education systems, but to repay our debt burden and/or to procure much-needed food, fuel and medical supplies.
Let’s face it, our country is facing a deepening financial and humanitarian crisis. Inflation is rising, food prices are skyrocketing and the treasury is running out of foreign exchange.
According to the World Bank, in 2021 Sri Lanka’s poverty – at US$3.20 per day poverty line - stood at 10.9%. In other words over eighteen million of our citizens have to live on less than Rs. 7,000/- per month if they are lucky to find work on all 30 days
of each month.
The cost of two meals a day costs an average family of four over Rs. 25,000/- per month. This figure does not take into account the costs of education, health, transport, clothes etc.
This sad situation of the Sri Lankan masses is of more recent origin. In 2010, Sri Lanka agreed to pay a Chinese state-owned corporation US$1.4bn to build a new port at Hambantota. Other Chinese loans were used to construct a cricket stadium, an international convention centre, a new hospital, the Mattala airport and for the expansion of road network in the
same district.
The Mattala Rajapaksa Airport built to handle one million passengers each year, saw just over 50,000 people use the facility in 2017.
There does not appear to have been a business plan to make provision for a loan repayment scheme. This year Sri Lanka faces one of its worst economic crises. With foreign reserves down, the country has barely foreign exchange for a few weeks of imports. It also has foreign debt obligations exceeding US$7
billion in 2022.
With the tourist sector still to recover, and migrant worker earnings hitting the rock bottom, there is precious little foreign exchange entering the country. Imports have been curtailed. The situation today is reminiscent of the early 1970s when import controls and low production caused severe scarcity of
basic commodities.
Today’s long queues for basics such as milk, rice and cooking gas look very similar to those of ‘the bad old days’.
To make matters worse, the country faces an energy crisis in addition to a drastic shortage of our staple diet - rice. It is to meet these challenges India and China are being approached for billion/million dollar loans - a belated effort to keep the wolf from the door.
But loans have to be repaid, they come with strings and conditions attached... Very recently we saw our finance minister sign off an agreement leasing out the strategic Trincomalee oil tank farms in India’s favour for a period of 55 years.
Unable to meet loan the repayments for the construction of the Hambantota port saw that asset handed over to the Chinese for a 99-year period.
The East terminal of the Colombo port was to be constructed by India, but vested interests claiming the security of the country was at stake, halted the project. In a sudden U-turn, the port’s West terminal was handed over to an India-Sri Lanka consortium! The East terminal was later handed over to different Indian company for construction.
No matter Sri Lanka’s own security concerns, in yet another instance, a windmill farm project on islands off our northern coast was initially handed to a Chinese entity for construction. Suddenly the project was cancelled to belay Indian fears. Bye, bye
Sri Lanka’s interests.
Mismanagement, bad debts and a slice of bad luck have eroded the country’s independence to the extent that our rulers are now even unable to take decisions regarding what are basically internal matters.
Neo-colonialism or a new form of colonialism; no matter which, our country today appears not to have the capacity to take even minor decisions.