04 December 2017

SriLanka and Its Economy

As you know, Sri Lanka gained independence in 1948. That was 69 years ago.

Since independence except for two years;1954 and 1955,  Sri Lanka has always had a budget deficit. These deficits were mostly bridged through local and foreign borrowings.

When Mr Mahinda Rajapaksa became the 5th executive president of the country in 2005,  the total national debt stood at Rs  2,222 billion. But when he left the presidency after 9 years the national debt had grown to  Rs 7,391.

Rs 5,169 billion had been added to the national debt within those 9 years.  That is an average of Rs 575 Bn per year.

Where did that money go ?  To understand this let us look at the accomplishments of the government during this period.

The 30 year long internal conflict ended in 2009 with the complete elimination of LTTE

A large number of development projects were completed while many others were already in progress.

Colombo city was rated the fasted growing city in Asia at a survey conducted by Master Card

Colombo Stock market was rated the most sustainable stock market in Asia by  Capital Finance International of UK.

The Sri Lankan Economy had grown 4 times from  USD 20 Bn to USD 80 Bn

The unemployment had reduced from 8.3% to 4.3%

Poverty had reduced from 15% to 8%

The total National Debt as a percentage of Economy had reduced from 102.3% to 70.3%

The inflation had reduced from 9 % to 3.3%

The household electricity availability had increased from 73% to 98%
Availability of clean drinking water had increased from 72% to 90%

Budget deficit had narrowed from 7.5% to 5.7%

The economy was growing at an average of 7% for three consecutive years.

But then the government changed in January 2015. A new set of rulers assumed duties.

Almost 3 years later where do we stand now?

The National debt had been rising at an alarming rate.

By June 2017 the National Debt stood at 10,163 Billion.

That is a 37.5% increase in 2 ½ years.

Debts amounting to Rs 2,772 billion has been added in just 2 ½ years.

It is like increasing the national debt by Rs 3 billion every day

The previous government had borrowed Rs 5,169 billion over 9 years

The current government has borrowed 54% of that in just 2 ½ years.

Today the per capita debt burden of a citizen stands at  Rs 462,000

Rs 126,000 of this per capita debt has been added by the current government over  2 ½ years.

Previous administrations borrowed money and built national assets for the future generations

Harbours, Airports, Roads, Highways, Irrigation projects, Power plants,

What has this government done with all the money that they borrowed?

Think for your self…… where have we gone wrong?  How are we going to rectify the situation?

By Nalaka Godahewa