Loans on top of loans, and White Elephant projects - Sri Lanka's fall

COLOMBO (News 1st) - Sri Lanka's Central Bank Governor Dr. Nandalal Weerasinghe, and the Finance Secretary have both echoed that the process to stabilize the economy is going to be a painful process.

However, the Minister of Mass Media, Dr. Bandula Gunawardena, pointed out that the economic growth of the country is expected to be negative seven or eight by the end of the year. 

He stated that Sri Lanka has never had a negative economic growth post-independence, and now, the country has neither rupees nor dollars in its reserves.

"We do not have any expert with the required intellect and skills to solve the crisis that has been brewing for 62 years. Sri Lanka's debt status currently depends on heavyweight financial services company Lazard. Sri Lanka cannot access loans internationally for any project until the debt crisis is solved. This is not a crisis that was created because of a decision by one politician," he said. 

He also mentioned that the Government obtained loans to repay previously obtained loans, however, the result of overdoing it led to the crisis in the country.

"It is the same with a single person because when you obtain a loan and are unable to pay it back, you obtain another at a higher interest rate. When you cannot pay that as well, the person writes a letter blaming himself, and commits suicide. The government cannot do that." 

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That was Sri Lanka's Minister of Transport and Highways and Minister of Mass Media.

He had held various positions as Minister, and Deputy Minister since 1989.

He was once the Trade Minister, and the Deputy Finance Minister as well.

It is a matter of concern when he comments in a nature claiming that he was not present when decisions were being made to push Sri Lanka to the brink of total collapse.

So, who is responsible for the present status of Sri Lanka? Here's an example.

At the end of 2005, Sri Lanka's total debt was just over US $ 9, 367 Million, according to the Auditor General's Special Report on Sri Lanka's Financial Management and State Debt Control.

According to this report, as of 31st December 2021, Sri Lanka foreign debt was 245% greater than what it was in 2005. 

Sri Lanka's foreign debt which was US $ 9, 367 Million in 2005 increased to US $ 33,390 Million by the 31st of December 2021.

Why is Sri Lanka in so much debt to the world?

Did Sri Lanka divert funnel these funds into projects that generate revenue, or were they simply dumped on projects that generate no income but line up the pockets of the few?

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Mattala Airport

Sri Lanka boasts of an airport and a port, two projects that make headlines whenever a plane and ship arrive.

Sri Lanka obtained a loan of US $ 210 Million at a very high interest for the Mattala Airport, however, its return on investment is extremely low.

When the government changed this state-owned property was used for paddy storage, depicting a strategy of making policy decisions to allow airport infrastructure to decay.

Sri Lanka is now hunting for investors for Mattala Airport.

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Hambantota Port

The Hambantota Port was constructed at a cost of US $ 307 Million at an interest rate of 6.3% in 2008.

When Sri Lanka failed to service the debt, the best section of the port was offered to a Chinese Company in 2015 for US $ 1.12 Billion.

So, what Sri Lanka doing by offering the best section to foreigners and defaulting on the debt? 

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Magampura International Convention Centre

The Magampura International Convention Centre was declared open in 2013 after construction cost US & 15.3 Million.

Has this convetion center served any purpose to-day?

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Lotus Tower 

Sri Lanka obtained a loan of US $ 67 Million as a loan with a high interest rate for the construction of the Lotus Tower, which we today visit by obtaining tickets.

Later it was revealed that an advance of Rs. 2 Billion that was paid to a company for this project, and it had ceased to exist.

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Colombo Port City

The Colombo Port City is another massive project that does not have any clear form of investment.

What happened was that Sri Lanka was compelled to deliver lands rights for the sea area that was filled to create the Port City.

A separate law was introcuded awarding special benefits for the Colombo Port City.

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These are just a few projects in Sri Lanka that was launched after obtaining massive loans.

However, did the people ever ask for them? Or, were these projects implemented so that someone could make a quick buck?

Nevertheless, every single Sri Lankan is now compelled to pay for these laons.

When will necessary action be taken against those responsible for this situation?