Govt. handling of State finances worst since Independence: MR

Wednesday, 2 October 2019 00:00 -     - {{hitsCtrl.values.hits}}

 Opposition Leader Mahinda Rajapaksa



  • Charges debt crisis created by Govt. has reached “critical stage” 
  • Claims debt has increased by 71% since 2015, exacerbated by rupee depreciation 
  • Says Govt. commercial borrowings high and proceeds used for “political endeavours”
  • MR argues his borrowings were for profitable ventures 
  • Accuses Govt. of not building something of lasting value from $ 26 b borrowed since 2015    

Opposition Leader Mahinda Rajapaksa yesterday severely criticised the Government as the worst administration to have mishandled State finances in the 71 years since Independence and insisted this was due to borrowings for “political endeavours” and contended that his projects were profitable investments. 

“The ‘Yahapalana’ Government has not built anything of lasting value or anything that would generate an income from the staggering $ 26 billion that they took in the form of foreign currency commercial loans since January 2015. The reason why my Government did not have to take foreign currency loans for consumption while the Yahapalana Government has had to do so is because the latter threw Government money into political endeavours to win elections and to retain power.” 

“The money spent by the Yahapalana Government to keep themselves in power will finally have to be paid by the people of this country. Economic crises have occurred under previous governments as well. However, this is the first time that an economic crisis has come about due to the mismanagement of state funds. Never in the 71 years since Independence have we had a government that has been as irresponsible as this in the handling of government finances,” Rajapaksa said in a statement.

Rajapaksa in the statement argued that during his Government the number of loans taken at commercial interest rates was lower compared to that of the current Government and they were used for infrastructure projects. In his view the borrowings of this Government were largely for consumption related purposes and not for capital investments. Debt has been exacerbated due to the rupee depreciation, which has increased pressure on State finances, he added.

“The debt crisis created in this country by the Yahapalana Government has now reached a critical stage. The total Government debt which was Rs. 7.39 trillion at the time this Government came into power in January 2015 had skyrocketed to Rs. 12.64 trillion by the end of July 2019 – an increase of 71%. The high proportion of foreign currency commercial loans in the debt taken by the Yahapalana Government increases the risk to the country. The international ratings agency Moody’s issued a warning recently with regard to this matter. From January 2015 to date, this Government has taken a staggering $ 26 billion in foreign currency commercial loans through Sri Lanka development bonds, sovereign bonds, syndicated loans, currency swaps and the like.” 

In the statement Rajapaksa denied the criticisms levelled at him by the Government, arguing that his highway projects, Norochcholai Coal Power Plant and the administrative building for the Sri Lanka Ports Authority (SLPA) were all making profits. In contrast he questioned what the current administration has achieved despite the significant borrowings they had also accessed since coming to power in 2015.

“Whenever the Yahapalana camp refers to the debt taken on by my Government, they refer only to various project loans that we took to build infrastructure. It should be noted that during the past five years, the Yahapalana camp has never referred to any debt taken by my Government which was not related to a project. The reason for this is that it was very sparingly that my Government took commercial loans through Sri Lankan development bonds, sovereign bonds, currency swaps or syndicated loans. The project loans taken during my time were long-term loans taken at concessionary rates of interest. Furthermore, the amounts that we took as project loans are very small in comparison to the Yahapalana consumption borrowings.”