Former Governor Ranjith Keerthi Tennakoon has said that Sri Lanka has to pay debt amount which is higher than the country’s GDP, but the government is continuously print money which lead to high inflation.
He says that if money could be print, rice-coconut-egg cannot be print and only rice-coconut-eggs can be eaten for hungry, not money. He has stated this by issuing a statement regarding the debt crisis in Sri Lanka. The announcement states that in the past 16 months, from January 2020 to April 2021, the Government of Sri Lanka has allocated Rs. 3.2 trillion as debt. Accordingly, the total debt in Sri Lanka today has exceeded 16 trillion and it is rising at a speed of a rocket.
According to the Central Bank of Sri Lanka, at the end of 2019, Sri Lanka’s domestic and foreign (total) debt stood at Rs. 13,031.5 billion and by April 2021 it was Rs. 16,287.8 billion, an increment within 16 month is Rs. 3256.3 billion. He also points out that it is 3.2 trillion, which means that one person owns Rs. 148,000 amount as debt.
The statement he issued further states;
Today our country is facing the biggest economic crisis in history. 87-89 Even when both the North and the South were on fire, during the Chandrika Kumaratunga regime, even a probationary government had to be formed (2001) when the country’s debt exceeded GDP. 1988 and 2003 (two loans) were made available to Sri Lanka by the International Monetary Fund. It provided the opportunity to continue importing essential commodities including fertilizers, gas, fuel and medicines. That is why the country was not bankrupt.
There is an easier way to understand the debt crisis the country is facing in a very short period of time. Today the government debit amount is Rs. 16,287.8 billion. (Rs. 16,287,800 million) Suppose the population of the country is 22 million. Accordingly, the per capita loan amount is more than Rs.740, 000. Out of this Rs. 148,000 or 20% of the debt is in the past 16 months from January 2020 onwards.
Official debt amount in Sri Lanka
The official ‘debt level’ in Sri Lanka is the sum of Treasury bonds, Treasury bills, loans and foreign debt. The total domestic debt is Rs. 9,709.5 billion. (Includes 1,759.1 billion Treasury bills, 6,011.9 billion bonds, 24.1 billion rupees loans and more) Foreign direct loan amount is Rs. 6,578.3 billion. Total Public Debt Amount is Rs. 16,287.8 billion.
The opposition is proposing a move toward to the International Monetary Fund as a solution to the debt crisis. The government has made it clear that this is not the case. The highest government revenue in the history of Ceylon was received in 2018 (Rs. 1950 billion) and 2019 (Rs. 1900 billion). In 2020It it fell down to (Rs. 1373 billion) due to the erroneous economic policy of giving the unlimited tax exemptions to rich and the Covid crisis.
This year government expects revenue of Rs 2019 billion. It is clear that it will not be received. It will not sufficient to pay the salaries and pensions of public workers. For that Rs. 2100 million is required. The country’s income is not even enough to pay the loan instalments and interest. If the government continually fail to increase the country’s revenue and reduce spending, further escalation of the economic crisis will be inevitable.
-Shani-