Transparency to protect relations

Sino-Sri Lanka relations hit headlines yet again after the Chinese Ambassador was widely quoted by media for commenting on interest rates criticisms and alleging corruption on Chinese loans that were enthusiastically borrowed by the previous Government under former President Mahinda Rajapaksa. 

Chinese Ambassador Yi Xiangliang’s remarks at an event last week where he called on the Sri Lankan Government and public to show “gratitude” for the largesse of China struck a nerve and provoked a rebuke from Finance Minister Ravi Karunanayke. 

The Chinese Ambassador’s main contention was founded on the charge that some loans from Beijing had been given at high interest rates. Yi insisted that the loans, especially from China Exim Bank, were given at a low 2% interest, which was a preferential limit that was even criticised by private businesses in China that had to borrow at higher rates for investment. He appealed to the Government to understand this and refrain from making statements that showed Chinese loans in a poor light and questioned why, if interest rates were too high, the Government continued to borrow from the same source.  

Representatives of the United National Party (UNP) when they were in the main Opposition launched repeated volleys against the multitude of loans taken from China, rightly warning that it would increase the indebtedness of Sri Lanka. Deputy Foreign Minister Dr. Harsha de Silva in particular highlighted the commercial rates of loans that were earmarked for the second phase of the Hambantota Port, pointing out that such high interest rates would worsen a venture that was already massively loss making. They pointed out that selected loans were being taken at commercial fixed interest rates that could be detrimental to Sri Lanka. 

This state of affairs was largely allowed to flourish because the previous Government actively discouraged open and transparent policy making with projects hatched and funds secured behind closed doors. There was little public engagement at any level and sometimes the public heard about projects only when the agreements were being signed. This led to heightened concerns of quality, standards and the cherry picking of economically unsound projects that will haunt Sri Lanka’s balance sheets for years to come. 

Unfortunately reports are emerging that massive infrastructure projects are being parceled out to international companies without open tenders by this Government as well.  Already widely-read articles have reported that the first phase of the Central Expressway has been given to a Chinese State-run company without any tenders. Following these reports the Government has called for a tender for another section but has allegedly given instructions to the Japanese Embassy to pre-select companies, severely undermining the open tender process that was promised by this Government. Reports also allege the Government has converted a low interest loan from the Japanese Government to one with higher interest without any public explanations. 

When governments fail to look after their own interests, there is little point in criticising another country after the fact. Once agreements are signed governments have to honour them, as has been demonstrated over the past two years, so this Government now has to live up to its pledges and ensure that it gets the best possible deal for Sri Lanka or risk leaving itself open to similar criticism further down the road. It would behove them to remember that what goes around comes around.