Rajapaksa Says Sirisena And Ranil Borrowed US $ 7.4 Billion In Foreign Loans

April 28, 2016 

Amidst claims by Prime Minister Ranil Wickremesinghe that his government was saddled with a Rs. 10 trillion debt mostly left by the previous administration, former President Mahinda Rajapaksa today said that since January 2015, incumbent President Maithripala Sirisena and Wickremesinghe have borrowed a staggering US $ 7,436 million in foreign loans alone.

In a statement issued today, Rajapaksa said that of the borrowings, the government has to pay back US $ 3.2 billion before end of this year. “This is apart from the hundreds of billions of Rupees the government has been borrowing in the domestic market by issuing treasury bills and bonds. Now the government is trying to collect taxes from the people to repay these debts,” he said.

Rajapaksa also called upon the people to rise up against the government for imposing additional burdens by way of increasing the Value Added Tax from 11% to 15%.

“Though the government has been saying that they have had to borrow heavily to pay off the debts taken by my government, that is not true. In 1977, Mrs. Bandaranaike left behind a debt to GDP ratio of 68.6%. When the UNP was voted out in 1994, this had increased to 95.1%. When President Kumaratunga lost to the UNP in 2001, the debt to GDP ratio was 103.3%. It was still 102.3% when the UNP was voted out in 2004. When I assumed office in 2005, it had declined to 90.6%. By the time I left office in January 2015,the debt to GDP ratio was 75.5% – the lowest since 1979. Even if the debt of all public enterprises is added to the government debt, the debt to GDP ratio will still be much lower than it was more than a quarter of a century ago,” he said.

He accused the Yahapalanaya government of increasing taxes to find money for their political survival. “This is another cynical trick on the part of a government that won power through, and is sustained by deception. This is why the people should rise up as one against the impending tax increases,” he said.

While emphasizing that no state can exist without taxes, he noted that taxes have to be justifiable and reasonable. “The international prices of virtually everything that we import declined after this government came into power in January last year,” he said.

According to the former President, the current government should sell petrol at less than Rs. 80 and diesel less than Rs. 50 per litre, based on the current world market prices.

“Though international sugar prices have declined since 2014, the government has not passed the benefit onto the consumer. The import levy on sugar was reduced to Rs. 18 with much fanfare in January 2015. Bu tin September 2015, it was increased to Rs. 30. The international price of milk powder has declined by as much as 60% since I was in office. The yahapalana budget for 2016 fixed the price of a 400 gram packet of milk powder at Rs. 295 which means that the retail value of a tonne of milk powder in Sri Lanka is Rs. 737,500 when the world market price is something like Rs. 290,000. Leaving aside a small amount for shipping and packing, the difference is what the government takes as taxes and importers get as profits,” he said.

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