A ‘betting’ on borrowing, too?


By N. Sathiya Moorthy

The shoe now seems to be on the other foot, and it is former President Mahinda Rajapaksa, who is heard telling the nation that the successor-Government of three-plus-years is on a borrowing-spree. According to him, Government foreign commercial borrowings since January 2015, when the Sirisena-Ranil duo took over office, stood at $ 19.5 b, and Sri Lankan Rs 6 trillion.

As if he was responding to Rajapaksa’s charge, Prime Minister Ranil Wickremesinghe has said that the forex reserves were adequate and was expected to go up to $ 11 b. If anything, he claimed that the country was blessed to have them in power as the current Government has managed debt-servicing (flowing from the Rajapaksa era credit?) adequately.

Wickremesinghe has acknowledged that the economic recovery in the US has made dollar-costly for all developing nations and Sri Lanka was only one of them. As if to rub in the point effectively, Joint Opposition (JO) parliamentarian Udaya Gamanpilla of the Pivithuru Hela Uramaya (PHU) has put the nation’s additional debt-burden owing to rupee-depreciation at SL Rs. 863 b.

However, the immediate question is not about the US economy or the boom out there, or even about the debt-burden. Instead, it is about how all of it is going to affect the nation’s economy, especially costs and prices in an election year. Or, what answers the Government has for all of it and more, in the coming weeks and months.

The fall side of the rupee-depreciation is that imports, especially of the unavoidable oil and other petroleum products will shoot up, at times indeterminably. Even without the dollar-boom, petroleum prices were shooting up over the past several months. Now it could be worse, and cannot get better overnight.

The sad part is that this Government did inherit a debt-burden that it has managed well. So could well have any other Government in its place – if not better. The worst part is that the Government also began with a better oil-price regime world-wide, but did not seem to have done anything for the nation to benefit from. Like the predecessor, the indulged in profligacy and did not use up the advantage to provide for the rainy day – which is already upon the nation.

If nothing else, the nation expected better finance management from the present-day UNP rulers than any other – more so from PM Wickremesinghe. This is apart from the inevitability of high-end corruption of the ‘bonds scam’ kind, where again they have been caught with their pants down. Something is more than rotten in the State of Sri Lanka than earlier, and the nation is getting to see increasing proof of it, with each passing month thus far – and possibly each passing week and day, from now on.

Waiting and watching

Contrasting with the Rajapaksa diatribe now was UNP Opposition Leader Wickremesinghe, who was all along waiting and watching -- when the former’s regime was pushing the nation into what he has since been saying was a ‘debt-trap’.

Any party or leader in UNP/Ranil’s place hoping and wanting to replace the ‘ineffective’ Rajapaksa regime on an early day – and with that the ‘debt-trap’ too – would and should have acted with greater alacrity and responsibility.

A may have now come for some quick-thinking bookie (they all are, and that is why they are in the business) could open money-wager on which of the two regimes – Rajapaksa’s or Ranil’s – have pushed the nation into a worse debt-trap than the other. It may also be a quick way for someone to make quick money, given the way the real value of the money in the hands of the common man with fixed and limited earnings are falling through a bottomless pit the nation’s economy has become – over the past several years and decades, of course!

In the normal course, they were expected to alert the Government of the day and caution the nation. Instead, like everything wrong that the Rajapaksas were doing on the political front, they let it go, thinking as it would only add electoral brownie-points for them. It could not have, and did not do, either while the rest of the Rajapaksa mis-governance backfired on them very badly in the twin-polls of 2015. This one has waited for the Ranils of the world to take over power to fire on them, instead.

In context, Rajapaksa cannot blame himself or the rest if in case he were to return to power, directly or otherwise, in the months and years to come. He has now forewarned the nation. He has now forewarned himself. In between, he has also addressed the voters, as if the current credit-spree of the present government alone would be to blame for uncontrolled prices on all fronts, including petroleum product price-rise, too!

Debt-book diplomacy

Yet, none of it explains or justifies why the Ranil-centric Government too should commit the same fiscal harakiri of the Rajapaksa kind. After chiding the predecessor for pushing the nation into a debt-trap by borrowing excessively from China, for the Hambantota and Colombo Port City projects, among others, now the Wickremesinghe Government has opened the debt-book with a fresh Chinese Ex-Im Bank credit-line of $ 1-b for the Central Highways.

When it all started, critics called the Hambantota credit-line under the Rajapaksa regime as China’s ‘cheque-book diplomacy’. But after the equity-swap that the Sirisena-Ranil duo settled for that is no more the case. Analysts claim that Sri Lanka is one of the 16 nations where China has practised ‘debt-book diplomacy’ instead. This when there are other highways projects for which again the Rajapaksa regime had taken equally big Chinese loans.

If the Ranil-led UNP Opposition maintained radio silence on Rajapaksa’s original Hambantota deal, they flagged the Port City Project only as far as something that supposedly hurt the nation’s ‘sovereignty’. They did not necessarily question the very idea of massive credits and the inevitable debt-burden that came with it, unasked for and unavoidable at the same time. That too, they raised it only as a passing election issue ahead of the 2015 presidential polls.

By the time the parliamentary elections followed eight months down the line, they had stopped bothering about ‘sovereignty’ but had only environmental issues to work upon. Now, they are also the ones who have compromised the nation’s sovereignty through the Hambantota ‘equity-swap deal’, for starters that is!

On the lighter-side, the nation had to hand over ‘strategically-located, prime, Ocean-facing real-estate’ (as those in realty business would have advertised the Hambantota property, if asked). What then would they have to now say about all the additional Sri Lankan land and bridges that too may have to fall into China’s possession, if not absolute ownership, in the years and decades to come?

Who knows, you may soon have Chinese men and women running highway toll-booths across the country, where not just Sri Lankan rupee but also yuan and renminbi could well be accepted and also given back in ‘change’ and exchange. Who again knows, there may be a scramble to collect yuan and renminbi, and dump all the ‘Sri Lankan’ that people may have – and, have had!

(The writer is Director, Chennai Chapter of the Observer Research Foundation, the multi-disciplinary Indian public-policy think-tank, headquartered in New Delhi. email: sathiyam54@gmail.com)

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