The Man Made Mess We Created

By Asoka Seneviratne –JUNE 2, 2021

Asoka Seneviratne

After the war ended, both Rajapaksa and Ranil/Sirisena administrations went on a spending spree like a bunch of drunken sailors. True all governing parties are under pressure to show results and they could only spend if they would borrow. Borrow they did as you can see in chart below.

Per Macrotrends, our external debt in 1970 was zero. In 2000 it shot up to $9.3B. By 2010 it shot up again to $ 21B mostly due to war. By 2015, it doubled to $32 B when MR went on a spending spree and invested on non-rewarding assets including Hambantota airport, harbor and the rest. This was a mammoth blunder why because the leadership investment judgments were flawed. The borrowed million we squeeze out should have been spent wisely. During the following 4 years, by 2019 the debt increased by another 33% to $56B. This is only external debt not accounting for the million GOSL borrowed locally. Today our total eternal debt hovers around $ 70 billion and counting.

Source: Macrotrends

Finally  chickens have come home to roost. SL is engulfed in a massive debt trap that we can’t afford to pay. To be fair, Gota inherited this fiscal mess. To his great misfortune, Covid hit and our problems quadrupled. Companies closed, obs disappeared and tax revenue tanked. We continue to borrow to keep afloat.

To add to all this economic pain, Central bank was robbed to the tune of $ 268 million. A silly investment on Greek junk bonds cost the public $6.6 million. By the way public servant who masterminded this silly deal is now a member of parliament. The MIG deal in 2006 cost an extra $6 million over the purchase price. Then last year another $ 83 million lost to people due to the famous sugar scam of which almost all that money went to a private individual while the average Lankans paid almost the entire $ 83 million to him via their daily sugar purchases. It was a double whammy as on one hand coffers lost $ 83 million and on the other people paid extra $83 million to buy sugar. That was gigantic gut punch. Then again the import duty scam at BMW cost another $ 84 million to the SL public. The grand total of all these losses to the SL public mounts to $ 530 million. This staggering amount is only what we know. This loot amounts to 0.5% of our GDP. Worse, nobody has gone to jail on any of these.

The total loss to our coffers – Sri Lanka public – should be a whole lot worse. These are only that went public thanks to a few brave MP’s and the somewhat free media thanks Sirisena/ Ranil duo.

God only knows that cost of toxic coconut oil to our healthcare system when everyday Lankans come down with terminal cancer. Imagine the misery in those families watching their loved one wither away with cancer through no fault of their own. This coconut oil scam should have been going on for a long time. Who is responsible? Where is our justice system? Why are leaders silent ?

Now slowly but surely China is making serious inroads into Sri Lanka, pretending to be our friends and dishing out as much money as we ask. Soon there will be parts in SL that we need to get a Visa from China to enter, or go to jail. Port city surely might bring some investments and benefit. But at what cost ? US and India are not going to allow China to dominate this vital sea route around SL. They will get involved. Three super powers involved in tiny SL for supremacy will bring a Lebanon like situation in SL. There will be fighting every day by clandestine groups.

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