My credit score is pretty good. I have neglected an occasional medical bill thinking that my health insurance would cover it. Other than that, I pay my bills on time. I do not borrow more than I need, either. I certainly do not squander my money and put my family at risk.
This is not the case with the rulers in Sri Lanka. Over the last several decades, they have borrowed large sums of money at high-interest rates on behalf of their family, the 21.6 million citizens. According to data from the World Bank, Sri Lanka’s external debt was approximately 47.7 billion USD in September 2022. The majority of this is owed to international lenders, such as the International Monetary Fund, the World Bank, and commercial banks. The country also has a significant amount of debt owed to China, which accounted for 19.4% of its total external debt in September 2022.
Where did this borrowed money go? The White Elephant projects such as the Mattala Airport that do not function or bring revenue are among the places where that money was spent. Built at a cost of $209 million, $190 of which came in the form of loans from China, Mattala is dubbed as the world’s emptiest airport. Rajapaksas are accused of embezzling money from this and many other large projects. Sri Lanka must repay China $23.6 million a year, according to Sri Lanka’s Transport and Civil Aviation Ministry. Sri Lankan Airlines, the country’s flagship carrier, was pressured into operating a hub at Hambantota by President Rajapaksa, who strategically positioned his brother-in-law as the airline’s chairman. All that failed, and Mahinda Rajapakse was removed in the 2015 presidential election. The fate of his brother Gotabhaya who became president in 2019 was worse.
In between, Ranil Wickremasinghe, a political opponent of Rajapakse, became the prime minister after the 2015 defeat of Rajapakse. He was not a ‘Mr. Clean’, either. He is accused of the Central Bank bond scandal in 2018. The Central Bank of Sri Lanka, under Governor Arjuna Mahendran, a friend of Ranil, advertised a bond of Rs 1 billion for 30 years. The governor decided to increase the value up to Rs.20 billion following the auction. As there was strong resistance from the Central Bank officials, it was narrowed down to Rs. 10 billion. It is estimated that the bond scandal caused Sri Lanka over 12 billion rupees. Ranil is now the president elected by the Rajapakse allies in the parliament, and not by the voters.
These two groups – Ranil & Rajapaksa – are forming an alliance to contest the upcoming local government elections in March of 2023. Other key corrupt politicians and/or family members and friends in this alliance are Namal Rajapaksa (son of Mahinda Rajapakse), Basil Rajapaksa (brother of Mahinda Rajapakse also known as Mr. 10%), Yoshitha Rajapaksa (another son of Mahinda), and several others. In May of 2022, another pollical front contesting the upcoming election called NPP presented a set of files containing what it called documentary proof of corruption involving the above members. NPP also said that one file contained documentary proof of how Opposition Leader Sajith Premadasa had misused three billion rupees from the Central Cultural Fund without proper approval.
Why such corrupted groups would be bad for the poor Sri Lankans? Because they are responsible for bankrupting the country. They took turns doing that since independence in 1948. Both groups including Sajith Premadasa’s father, the assassinated former president, R. Premadasa, are accused of having violated human rights. R. Premadasa’s government-backed death squads emptied villages of young men and littered Sri Lanka’s beaches with corpses, including those of reputed journalists and the lawyers who represented them. Ranil Wickremasinghe was also accused of allegations of disappearances, torture, and murder that took place between 1 January 1988 and 31 December 1990 in an unofficial government detention center at the Batalanda Housing Scheme.
While Sri Lankan children go to bed without milk, patients die without medicine, and health care and other workers leave the country, these privileged rulers enjoy luxurious lives oblivious to the pain of the poor. Sadly though, the corrupt leaders have the power, the money, the judges and the courts, the forces, and the corrupt priests to help fool the uninformed voters once more in the upcoming local election.
If I were a lender, I would not lend money to any corrupt groups such as the above. Unless all the corrupt politicians are gone and future borrowers can be held accountable instead of the poor citizens, international money lenders should think twice about putting innocent people in danger in the hands of the corrupt rulers. If the lenders can’t collect, unfortunately, they can’t break their knees or repossess what the corrupt have, as the loan sharks do but punish the poor. This is where a major system change is needed when lending to poor countries.