3 July 2024 12:00 am Views - 242
Last week, the government very proudly signed a debt restructuring agreement with the Paris Club and India and China which gives the country some breathing space to pay up its loans.
After defaulting on our loan payments in 2022 and declaring bankruptcy, this news was welcomed as the government will be able to breathe a sigh of relief to allocate funds for essential public services and secure concessional financing for development needs.
It also gives some hope that people will not run out of basic essentials such as fuel and medicines and could avoid the queues - well at least for a while.
With these agreements, Sri Lanka will be able to defer all bilateral loan instalment payments until 2028. Furthermore, Sri Lanka will be able to repay all the loans on concessional terms, with an extended period until 2043.
All this positivity is fine, but what really happens after 2028?
With this latest agreement reached after defaulting payments, the next government will have a critical five years to sort many things in order to re-pay and ensure there is never an economic crisis like 2022 ever again.
For years, the Sri Lankan political circles, its bureaucrats and its lackeys have been popular for their corruption, with some amassing wealth solely through bribes and commissions.
As a result Sri Lanka, despite its attractive geographical location and rich resources has failed to attract notable Foreign Direct Investments and convert into a booming international trading hub, as promised by past governments.
The only notable FDIs we have received are also hampered by political bickering with projects being stalled every time governments change, or successive governments have fallen under geopolitical pressure and have not allowed the projects to reach their full potential.
Furthermore, it is a known fact that when an international giant approaches our shores with FDIs, before even the proposals can be discussed, the list of bribes and commissions are so vast by the Sri Lankan side that the FDIs are automatically diverted to other more attractive markets. And it is not that Sri Lanka even offers any easy investment laws for FDIs which only drives the investors away before even stepping foot.
Corruption within all spheres of our society has been a plague killing this country for several years. And not one leader has, to date the courage to end it within his/her government or bureaucrats.
In fact even now, while the country is scrambling to save the dollars and has resorted to taxing the common man in every way possible, what the government is conveniently refusing to acknowledge is where the bulk of the foreign loans received during 2023 has disappeared to.
According to the Auditor General’s audit report, the bulk of these loans are missing and not accounted for in the Finance Ministry’s annual report for 2023.
With so much corruption, will the new government, which will be sworn in later this year, be able to ensure a strong economic recovery and strengthen the size of our GDP?
Then it comes to the question of strengthening our markets such as exports and tourism which contribute heavily to generating income for the country. To date, while Sri Lanka’s export market has been performing well, it still falls short of the country’s capability to capture the international markets. It has more potential but unfortunately Sri Lankan products are not marketed well. The lack of manpower in some of these crucial areas such as agriculture, fish, tea, rubber etc is also one of the contributing factors and while our products are top notch even when compared to the products in neighbouring countries, it still falls short of being marketed well.
Tourism right now, is our only solace with the sector being one of our highest income generators. To make it more attractive, the government should soon look at implementing a free visa policy for several lucrative markets which some competitive countries have already done but instead, we are still shrouded in controversy over the VFS visa fiasco.
With all these bottlenecks going on for years, will Sri Lanka be able to perform a miracle in the next five years and strengthen its economy once and for all so that we can keep our commitments and repay what we have already borrowed or will we once again be left with loans, loans and more loans? If this negligence continues, one day we will once again face a crisis so deep that our children will be left struggling in a land that was once called the ‘Miracle of Asia’.