MR defends loans obtained during previous Govt.

Former President Mahinda Rajapaksa has defended the decision taken when he was in power to borrow money.

Rajapaksa said his Government borrowed money to build infrastructure projects, but these were long-term concessional loans at 2% or less in interest.

Furthermore he said such borrowings were spread out over many years and that his Government never borrowed for consumption like the present Government which is why he said there were no fiscal fiascos like sweeping revisions of budget proposals and constant revision of tax rates when his Government was in power.

After coming into power, the present Government obtained $ 400 million under a currency swap arrangement with India in March 2015. They obtained another $ 650 million through a sovereign bond issue in May 2015. Another $ 1,100 million was obtained from India in July under a currency swap agreement. A further $ 1,500 million was obtained through a sovereign bond issue in October. 

Between March 2015 and March 2016, the Government issued short and medium term Sri Lanka development bonds on 12 different occasions borrowing over $ 2,711 million. Thus in the 15 months they have been in power, the present Government has obtained $ 6,361 million in foreign loans.

Rajapaksa said this was enough to meet the entire foreign loan components of the Mattala Airport ($ 190 million) the Hambantota Port ($ 426 million), Norochcholai Coal Power plant ($ 1,340 million), the Colombo-Matara Highway ($ 630 million), and the Colombo-Katunayake Highway ($ 248 million) all put together, and there would still be enough money to build not one, but two Port Cities ($ 1,400 million each) one 500 megawatt Sampur Coal power plant ($ 500 million) and yet another Mattala Airport with the final leftovers.

“This Government enjoyed foreign exchange savings of around $ 2,500 million in 2015 due to the precipitous drop in oil prices after they came into power. But they could not build up foreign exchange reserves or even make the Petroleum Corporation and the Electricity Board profitable. All these colossal borrowings including the massive savings from petroleum imports have been spent on consumption. It is because of the almost comic fiscal irresponsibility shown by the Government that Sri Lanka’s credit rating was downgraded by Fitch and Standard and Poor’s recently,” he added.

Rajapaksa said the Prime Minister’s allegation that there were undisclosed loans and liabilities of the former Government which were only now coming to light was a complete falsehood.

He said the present Government would have to be held accountable for the hardships the people would have to face. (Colombo Gazette)