Civil society organisations urge govt. to cancel all illegitimate debt

• Demand public audit on controversial foreign-funded projects
• Stress Sri Lankans should not be held accountable for illegitimate debt
• Urge govt. to provide relief to people hit by economic crisis 

The civil activists and environmentalists demand a public audit on the controversial foreign-funded projects and to take measures to declare such borrowing as illegitimate debt owed by the country to foreign creditors.

Thirty three civil society organisations, led by the National Fisheries Solidarity Organisation (NAFSO), FIAN Sri Lanka, Law Society Trust, Movement for National Land and Agriculture Reform and Friends for Earth International, yesterday urged the government to move forward with measures to cancel such foreign debt identified as illegitimate debt, instead of  imposing additional taxes on the population and  by selling national assets to settle these external debt owed to bilateral and multilateral creditors.

“Although all debt Sri Lanka owes is taken by democratically elected governments, they may not have spent in a transparent way. Some of the projects implemented with loans have created social and environmental impacts. Some projects have not archived any ground work even though money is borrowed and spent or costs are exaggerated,” Friends for Earth International Chairperson and the Centre for Environmental Justice Senior Advisor Hemantha Withanage told reporters in Colombo, yesterday.

In particular, he noted that there have been corruption and irregularities pertaining to Chinese-funded projects such as Gin Ganga Nilwala Ganga diversion project, Lotus Tower project, Aruwakkaru Solid Waste Management project, Mattala International Airport project, Norocholai Coal Power Plant project, Hambantota Harbour Development project and Hambantota Mahinda Rajapaska Convention Hall project.

China accounts for around 44 percent of Sri Lanka’s bilateral debt at the end of 2021. In addition, he pointed out that the land reclamation of Chinese-backed Colombo Port City project commenced and completed without the completion of a proper environmental impact assessment (EIA) while alleging that the Chinese company failed to settle royalties for the sea sand mined for the project to Sri Lankan authorities, which is estimated at around Rs.625 million.  

He stressed that Sri Lankans should not be held accountable for such “illegitimate debt” owed to external creditors. “Some of these projects would have been rejected, if proper procedures were followed. Some costs would have been saved and environmental impacts would have been less.  These loans come within the definition of illegitimate debt that one cannot justify why people of Sri Lanka need to pay,” he added.

However, Withanage admitted that it’s difficult to find out the exact purposes for which the loans were granted by commercial creditors, which include US-denominated international sovereign bonds (ISBs) raised in global capital markets. Concluding, the civil society organisations demanded to initiate actions to cancel all illegitimate debts of Sri Lanka and provide relief to the people who have been hit hard by the ongoing economic crisis and to avoid passing this unwarranted debt stock over to the future generations.