May 20, Colombo: Sri Lanka's Finance Minister Mangala Samaraweera said after Independence in 1948, the highest amount of foreign debt has to be paid in 2018 and 63 percent of that debt was to pay off the loans obtained by the previous government for wasteful projects and reelection campaign of the former president.
According to the Finance Minister the total foreign debt to be paid this year is US$ 2,845 million and of which US$ 1,789 million has to be paid for foreign debts which were borrowed before the year 2015. Only an installment of US$ 1,056 to be paid for the foreign loans borrowed after 2015.
Accordingly, 63% debt installments to be paid this year are repayments of debts that had been borrowed during former president Mahinda Rajapaksa's tenure as finance minister. It was at the level of 75% in 2017.
Minister Samaraweera in a statement presented the figures responding to a charge by the former president Rajapaksa that the government has to make the highest recorded debt repayment of US$ 4.2 billion in 2019 in the history due to the debt crisis created by the Yahapalana government.
"This crisis will further worsen next year," Minister Samaraweera warned as US$ 4,285 million have to be paid in 2019 and of which US$ 3,315 million or 77% of the repayment are for the debt obtained during the tenure of the Rajapaksa regime.
Another US$ 3,768 million will have to be paid as loan installments and the interest in 2020 and of which 77% or US$ 2,905 million is the debts that were borrowed before 2015. Only US$ 863 million have to be paid for the debt that was borrowed after 2015.
In 2021, 83% of the foreign debt installments will have to be paid to repay the debt taken before 2015. "In addition, even in 2030, 73% of the repayments will go to pay the debt that were obtained during Rajapaksa regime for the waste, fraud and corruption committed by the oligarchies of the Rajapaksas," the Finance Minister noted.
The loan installment to be paid in 2019 includes a US$ 1,000 million which was obtained on January 6th, 2014 at 6% interest to be paid within five years and, a US$ 500 million obtained on April 7th, 2014 at 5.1% interest to be paid within five years. As these two loans that amounts to US$ 1,500 million that have been obtained at commercial rates will be matured in 2019 and the entire loan should be repaid in bulk with full interest at one stretch.
"The Mahinda Rajapaksa regime obtained these loans in a hurry in 2014, not for the development work but for the election where they lured unsuspected voters thereby distributing cheap items such as 'Sil Redi'," the Minister charged.
According to Minister Samaraweera, the unity government has obtained foreign debts of US$ 12 billion during the last three years and, US$ 6 billion out of which was from International donor Agencies and under bilateral agreements at concessionary interest rates. They have been spent for various projects.
"These loans were taken neither under commercial basis nor for consumer purposes as Mr. Mahinda Rajapaksa attempts to interpret," he said.
The Minister said 48% out of the total foreign debt obtained after 2015 have been used to repay the debts that were borrowed by the Rajapaksa regime.
"Although this government was destined to shoulder such a heavy debt burden in 2015, it has been able to take steps to implement development activities at a fast pace than that of the Rajapaksa regime thereby assuring more direct benefits to the people," he added.
The Minister pointed out that the unity government has gradually increased the allocations for education, health and housing.
The unity government has raised allocations for Education from Rs. 190 billion in 2014 under previous government to Rs. 257 billion in 2017, for Health from Rs. 138 billion in 2014 to Rs. 197 billion in 2017 and for Housing from Rs. 173 billion to Rs. 274 billion in 2017.
Although 1.8% of the GDP was spent for education in 2014, it was gradually increased up to 1.9% in 2017. It will further be increased up to 6% in the next few years, the Minister said. The allocation for health will be increased up to 3.5% of GDP in the next few years. The allocations for public welfare have been increased to 265 billion rupees in 2017 from 165 billion rupees in 2014. It is an increase from 1.6% to 2% of GDP.
"The economy during the previous government, handled by their cronies and henchmen didn't have any proper system in place to implement the economic development in a manner that would bring direct benefits to the people," Minister Samaraweera said.
The Finance Minister explained that former president and his family have been attempting to regain power by throwing the people into a destructive path and urged the people to defeat such attempts and rally around the Unity Government's agenda to build a strong economy and a rich country by the year 2025.