Tue, 24 Jun 2003

A bouquet for Sri Lanka's Ranil

The Island, Asia News Network, Colombo, Sri Lanka

The 4.5 billion dollars aid pledge at the Tokyo Conference, attended by 51 nations and 21 international organizations, has run into various criticisms by economists and politicians of opposition political parties. Such adverse criticisms for colossal development projects and vast amounts of foreign assistance are true to Sri Lankan tradition.

Contemporary history has it that when restoration of the ancient monuments such as the Ruwanveliseya and construction of the New Anuradhapura town complex was attempted, our Marxists of yore were firmly convinced these exercises were a thorough wastage of public funds that could have been better utilized for more mundane projects such as the building of toilets for the poor. They did not see any economic return at that time, the inexhaustible tourist potential that would last into countless future generations.

So was it when the Gal Oya scheme was inaugurated. The opposition, which comprised mainly Marxists, saw it as another White Elephant. Perhaps an economist should compute the cost benefit/ratio of the Gal Oya project in terms of agricultural production for a near half century.

The Accelerated Mahaveli Project was and still is subject to much criticism. Some economists should quantify the power and agricultural production that has resulted from this scheme so far and compare it with the astronomical cost of thermal power production which consumers now pay for.

Prime Minister Ranil Wickremasinghe, in his address to the nation yesterday, presented a very strong case why funds of the magnitude pledged at the Tokyo Conference was absolutely essential. He pointed out that Sri Lanka has borrowed Rs 47,100 million as soft loans and interest payments on this amount to Rs 570million. In addition Rs 26,400 million had been borrowed at rates between 20 percent and 3.5 percent and the interest payments amounting to this was Rs 780 million.

But the greater problem by far was domestic borrowings amounting to Rs 88,400 million for which the interest payments this year alone amounted to Rs 11,650 million. Interest payments for foreign debt amounted to Rs 1350 million while the domestic debt interest payment per year was Rs 11,650 million. Ninety five percent of the interest paid was on domestic commercial borrowings.

Wickremasinghe pointed out that this year's revenue could only meet debt repayment and there were no funds left for development work including reconstruction and rehabilitation in the north and east. The international community, he said, that realized Sri Lanka's plight and come in to assist Sri Lanka.

This staggering national debt has been accrued over the years due to corruption, financial profligacy and the defense expenditure. Thus, whatever criticisms can be made of the UNF government's policies, it has to be conceded that if any movement ahead was to be made, such a vast colossal financial infusion was absolutely needed. There appeared to be no way out and critics cannot show an alternate strategy. In this respect, what is called for are bouquets and not brickbats for the premier.

How he disburses these funds and handles the economy is another matter and there are no encouraging signs because the same economic advisers to successive governments responsible for accruing this astronomical debt continue to be his guiding lights.

But Wickremasinghe's labors are only half done. The LTTE on which he placed great hopes are still growling and refusing to continue negotiations. Quite obviously the LTTE wants to grab the whole north-east boodle of the donors for themselves but this, their political pundit Balasingham, will say is extremely juvenile behavior. Western donor nations and Japan cannot give such funds the way former Indian Prime Minister Rajiv Gandhi did under the table to Prabakaran. What have been pledged are accountable public funds of these countries. Besides there is the Tokyo Declaration which calls upon both parties-government and the LTTE -- to abide by a human rights declaration. For the LTTE outfit, run and held together by terror, such a call is tantamount to a call for hara-kiri.

The LTTE it appears has fallen into a peace trap. But so has the government that staked its political future in coming to a deal with the LTTE. And so is President Kumaratunga and the PA as seen from their oscillations from pro-peace process to anti- peace process. Right now all three parties are caught in a three way peace trap.

However, prime Minister Wickremasinghe deserves bouquets for his strategy of working out of the financial mire we have been sinking in.