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Borrowing from Peter to Pay Paul: Sri Lanka’s Latest Strategy is Celebrated on the Streets

Borrowing from Peter to Pay Paul: Sri Lanka’s Latest Strategy is Celebrated on the Streets

Sri Lanka must pay their outstanding and new loans to various lenders for decades to come and must play by the rules of those who come forward to help the country’. I wrote those words in one of my previous pieces published in the Visible magazine. On March 20, 2023, The International Monetary Fund (IMF) Board approved a 48-month arrangement under the Extended Fund Facility (EFF) of about US$3 billion to support Sri Lanka’s economic policies and reforms. As the country’s president announced it on TV, the supporters of the government set firecrackers off on the streets and ate traditional milk rice to celebrate. Sri Lanka joined the on August 29, 1950. Since June 1965, Sri Lanka has taken 16 loans from the IMF. This is the 17th time Sri Lanka borrowed money from the IMF.  It will be interesting to find out where this money went and what was done with the borrowed money.

The behavior of the government supporters who were cheering a loan intrigued me. I was born in Sri Lanka in the mid-fifties. Just a few years after the independence from the British. I have seen successive governments failing since then until I left Sri Lanka in the late Eighties for the USA. But I kept my eye on my native land trying to understand how and why a set of corrupt leaders continue to win mandate after mandate in successive elections and could take turns in running the economy and the poor to the ground while the same victims were cheering them on. Why do people cheer or support corrupt leaders?  I could not help concurrently notice how the Trump base in America is getting ready to protest if Trump is indicted for alleged hush money payments to a porn star violating election campaign laws. Federal prosecutors say the payments amounted to illegal, unreported assistance to Trump’s 2016 presidential campaign.

What exactly happened in Sri Lanka is this. According to the IMF report, ‘Sri Lanka has been hit hard by a catastrophic economic and humanitarian crisis. The economy is facing significant challenges stemming from pre-existing vulnerabilities and policy missteps in the lead-up to the crisis, further aggravated by a series of external shocks’. What are these pre-existing vulnerabilities? What policy missteps? They don’t say. Surprised? But I have explained them previously. ‘The Rajapaksa brothers (two former presidents) and their family members and friends looted over $52 billion during the last 16 years through various scams. Rajapaksa family fell for China’s pocket diplomacy and pocketed large commissions from the high-interest loans. The corrupt government started printing money making things worse. After the President Gotabaya Rajapaksa fled the country on July 13, 2022, the parliament, not the voters, chose Ranil Wickremasinghe, a relative of the Rajapaksa family but an opposition member, as the new President. Ranil has failed six times as prime minister and only got around 30,000 votes in the last election but came to the parliament through the backdoor. He, who is linked to the central bank bond scandal, was chosen by the other corrupt rulers in the parliament to protect them’. 

Add the Chinese feces ship scandal, the sugar scam, the garlic scandal where a wholesale government store sold garlic to a seller at a lower cost and bought it back from the same seller at a higher price losing millions, and a variety of similar scandals deepened the economic crisis. As of 2022, the external public and private debt Sri Lanka owed was $58.7 billion (78% of the GDP). Sri Lanka’s Sovereign Arrears to Foreign Creditors at the end of 2022 was $2,752 million. China and India were owed $382 million. So, when Sri Lanka borrowed from Peter (IMF or America) to pay Paul (China, India, and Paris club and others), uninformed and/or corrupt voters celebrate that on the streets. They do not seem to understand that the people in power who took the loan are the same ones who stole, took missteps, and made them suffer and the country go bankrupt. Until these people are reformed, Sri Lanka will always be a third-world country going from the frying pan to the fire. God bless them! Because the fake yellow robes in Sri Lanka that are supposed to bring blessings have failed to do so.

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