Debt-ridden Sri Lanka snuggles up to China again at India’s expense

[INDIAPOSITIVE]

India is hoping to host Sri Lankan President Maithripala Sirisena this month for a multi-religious event at Ujjain which will be inaugurated by PM Narendra Modi. The visit by Sirisena, if it happens, will come at a time when India's strategic gains in the island nation over the past 15 months, or since the ouster of Sirisena's predecessor Mahinda Rajapaksa, seem to be fast petering out.

India was looking to sign an Economic and Technology Cooperation Agreement (ETCA) with Sri Lanka, which the two countries decided to negotiate after Lanka backed out of CEPA, but the proposal has run into resistance from the Rajapaksa-led Joint Opposition. China has managed to not just revive its flagship $1.4 billion Colombo Port City project, but it is now also engaged in expansion of major infrastructure projects it built in the past and which were seen as impracticable until recently.

These projects include expansion of the Hambantota port and the Mattala airport which were built by the Chinese under Rajapaksa and whose commercial viability was always suspect. China and Sri Lanka, in fact, are now also considering setting up an SEZ in what is also Rajapaksa's home district.

While Sri Lanka has assured India that it won't allow China any outright ownership of land as part of the Colombo Port project, its revival of Chinese projects, according to strategic affairs expert Brahma Chellaney, is likely to have a long-term geopolitical significance.

"Lanka, under Maithripala Sirisena's government, has reversed course and is returning into China's embrace, in part because of its precarious balance-of-payments situation and in part because Indian diplomacy still lacks teeth," says Chellaney.

Sri Lanka owes $8 billion as debt to China and it announced recently that it was looking to convert a portion of this debt into equity for infrastructure investment by Chinese companies.

READ ALSO:Short of options, Sri Lanka turns back to China's economic embrace


As India implores China to distance itself from terrorists operating out of Pakistan, Chellaney says Sirisena's government knows that India will impose no strategic costs for reviving the very Chinese projects that Sirisena had put on hold after coming to power. "It now appears that Rajapaksa's ouster only temporarily represented a setback for China's 'string of pearls' strategy in the Indian Ocean," he says.

In fact, after PM Ranil Wickremesinghe's visit to China last month during which he reiterated Lanka's endorsement of Beijing's Maritime Silk Road, Rajapaksa was quoted as saying that he stood vindicated by the Lankan government's recent actions.

It was Rajapaksa who drove Lanka into the arms of China as his election as president in 2005 coincided with China's growing role in the infrastructure sector. China's ``no-strings overseas aid and loans" policy extended through offers to Rajapaksa soon saw China replacing Japan as largest donor to Lanka. The Rajapaksa government accepted these loans at a very high rate of interest and this is mainly responsible for the debt Sri Lanka now owes to China.

China provided assistance worth $5.056 billion to Sri Lanka between 1971 and 2012. Around $4.7 billion of this amount, or 94 per cent, came after Rajapaksa came to power in 2005. China committed funding worth another $2.18 billion after 2012, mostly loans at high rate of interest

Now, while PM Ranil Wickremesinghe remains committed to signing ETCA this year, he is having to stave off serious resistance from the Rajapaksa-led Opposition which has stoked fears about the agreement leading to loss of jobs in the country in the services sector.

As a Lankan diplomat told TOI, there are many in Lanka who believe that CEPA, which the government abandoned after many rounds of negotiations, is now making a back door entry through ETCA. The Modi government clearly has its work cut out in its ties with India's most strategically located neighbour in the Indian Ocean.

http://timesofindia.indiatimes.com/...in-at-Indias-expense/articleshow/52056405.cms

 

[samv]

Sri Lanka's president and prime minister are pieces of sh*t who have taken down Sri Lanka. They need to be kicked out of office before they do any more damage. They are both Indian puppets.

 

[manlion]

The President and PM whore themselves to the wrong customers ,A penniless one. While ignoring the rich potential of another.

the customer isnt penniless but looking for a free ride at the expense of Tamils

 

[Godman]

Sri Lanka owes $8 billion as debt to China and it announced recently that it was looking to convert a portion of this debt into equity for infrastructure investment by Chinese companies.

This deal was rejected. However Chinese companies agreed to invest in Sri Lanka's upcoming privatization programme and take over some debt from certain SOEs looted by Rajapaksas.

We dont need to snuggle up to anyone to end our debt crisis, this debt is the thing that is runining Sino-Lanka relationsip. All of backward nonsense by the Rajapaksas which cannot even be called policies are being undone. IMF EEF has been approved and tax reforms ,public sector reforms are underway according to the conditions for bailout by IMF.

http://www.cnbc.com/2016/04/30/sri-...lout-to-avert-balance-of-payments-crisis.html

The government will seek to raise the tax-to-gross domestic product (GDP) ratio, which was 10.8 percent in 2014, to near 15 percent by 2020 through a new Inland Revenue Act, reform of the VAT and the customs code, Schneider said............

Sri Lanka was already well on the way to implementing reforms, including raising value added tax (VAT) by 4 percent, announcing a restructuring plan for its loss-making state-run airline, and eliminating tax holidays granted by a state-run investment body.

Then comes the finding a new partner SriLankan Airline
SriLankan Airlines where the Rajapaksas kicked out the then reputed CEO Peter Hill for not kicking out business class who already paid for their seats and not reserving them to his Rajapaksa family and gang. Then appointed his own brother-in-law who treated Air hostesses like prostitutes
http://www.sundaytimes.lk/160501/business-times/rfps-to-be-issued-for-srilankan-airlines-191393.html

The things needed for ending the debt crisis are already being done. cozying up for China or India wouldnt end our internal problems

 

[+4vsgorillas-Apebane]

I remember posting about the negative impact of Sirisina when he was first elected. Chinese had never been wary of Sri Lanka prior to him getting elected.

 

[Jlaw]

I remember posting about the negative impact of Sirisina when he was first elected. Chinese had never been wary of Sri Lanka prior to him getting elected.

Chinese can be blinded by $$$.

 

[HeinzG]

This deal was rejected. However Chinese companies agreed to invest in Sri Lanka's upcoming privatization programme and take over some debt from certain SOEs looted by Rajapaksas.

We dont need to snuggle up to anyone to end our debt crisis, this debt is the thing that is runining Sino-Lanka relationsip. All of backward nonsense by the Rajapaksas which cannot even be called policies are being undone. IMF EEF has been approved and tax reforms ,public sector reforms are underway according to the conditions for bailout by IMF.

http://www.cnbc.com/2016/04/30/sri-...lout-to-avert-balance-of-payments-crisis.html

The government will seek to raise the tax-to-gross domestic product (GDP) ratio, which was 10.8 percent in 2014, to near 15 percent by 2020 through a new Inland Revenue Act, reform of the VAT and the customs code, Schneider said............

Sri Lanka was already well on the way to implementing reforms, including raising value added tax (VAT) by 4 percent, announcing a restructuring plan for its loss-making state-run airline, and eliminating tax holidays granted by a state-run investment body.

Then comes the finding a new partner SriLankan Airline
SriLankan Airlines where the Rajapaksas kicked out the then reputed CEO Peter Hill for not kicking out business class who already paid for their seats and not reserving them to his Rajapaksa family and gang. Then appointed his own brother-in-law who treated Air hostesses like prostitutes
http://www.sundaytimes.lk/160501/business-times/rfps-to-be-issued-for-srilankan-airlines-191393.html

The things needed for ending the debt crisis are already being done. cozying up for China or India wouldnt end our internal problems

Why do state needs to privatize it's SOEs. There are number of examples where it has shown SOE can achieve profits or at least avoid loss without any privatization. Privatization means letting cronies of the ruling class purchase valuable and strategic assets that should belong to the government.

Selling SOE is a worst crime comparing with corruption.

MR had to turn to China because of the debt crisis. His predecessors has taken enough debt to ruin our country. Moreover Chinese loans are better than what IMF.

IMF uses the debt as a political tool and put conditions in order to keep countries like Sri Lanka underdeveloped. It's there strategy. IMF don't pass loans on infrastructure rather they pass loans on agriculture (which is infested by multinational pesticide manufactures) and bailouts. These things won't contribute a dime for the development of countries like ours. The proposed tax reforms and public sector reforms only worsen the current crisis of Sri Lanka by weaken the economy with higher inflation and higher unemployment rates. The saddened factors is that our so called "economic theologians" blindly accepts the IMF conditions knowing fully what will be the consequences.

What use is a national carrier when they cannot host the President of the country. It was right thing to kick Emirates out of the partnership. It only benefited the Emirates only.

 

[ShankaraBharanam]

The things needed for ending the debt crisis are already being done. cozying up for China or India wouldnt end our internal problems

But taking loans at lower interests would certainly help your cause. e.g. Japan has offered India a Loan of 15 Billion $ for an interest of 0.1 % with a duration of 50 years payback and which needs to be paid back only after 15 years.

That is what friends do, anything else is called Loan sharking.

 

[Godman]

Why do state needs to privatize it's SOEs. There are number of examples where it has shown SOE can achieve profits or at least avoid loss without any privatization. Privatization means letting cronies of the ruling class purchase valuable and strategic assets that should belong to the government.

Selling SOE is a worst crime comparing with corruption.

MR had to turn to China because of the debt crisis. His predecessors has taken enough debt to ruin our country. Moreover Chinese loans are better than what IMF.

IMF uses the debt as a political tool and put conditions in order to keep countries like Sri Lanka underdeveloped. It's there strategy. IMF don't pass loans on infrastructure rather they pass loans on agriculture (which is infested by multinational pesticide manufactures) and bailouts. These things won't contribute a dime for the development of countries like ours. The proposed tax reforms and public sector reforms only worsen the current crisis of Sri Lanka by weaken the economy with higher inflation and higher unemployment rates. The saddened factors is that our so called "economic theologians" blindly accepts the IMF conditions knowing fully what will be the consequences.

What use is a national carrier when they cannot host the President of the country. It was right thing to kick Emirates out of the partnership. It only benefited the Emirates only.

What an idiot! I dont even need to explain about this idiocy
Privatization is a crime? WTH Is that nonsense? DONT EVEN MENTION THAT CRAP IN FRONT OF ME!!!Probably in North Korea not in Sri Lanka.(even North Korea is embracing it now).
No wonder how backwards Sri Lanka is with Pathetic idiots like you, Parasiticic uneducated trash that only knows to run under the banner of "Patriotism" to hide their nudity
thats why the SLFP back then decided to streamline it and make it more transparent instead of stopping it.

IMF was never created for development, your general knowledge sucks I saw the purpose for IMF's creation once in a General Knowledge book for Kids.

As a joint venture UL made profit while now its losses are several times the accumilated profit under Emirates management that managed it as a company.

Companies are menat to be run as companies. Uneducated idots like yourself may not know it so get EDUCATED NOW! Vietnam is struggling to privatize their SOEs while idiots like you are blabbering "ruling class" nonsense just because your Slave masters wont be able to loot them if they are privatized and start helping the economy in Sri Lanka. Such Bacward nonsense should remain in backward countries like your "Rajapaksa Kingdom"

Economists have been explaing the importance of privatization for ALONG TIME. Even Mark Mobius praised the decsion to restart the privatization programme.

If you want jobs handed down to you and want your "Dear Leaders to Loot the SOEs I recomend you GO TO NORTH KOREA instead burdening our Motherland

 

[HeinzG]

What an idiot! I dont even need to explain about this idiocy
Privatization is a crime? WTH Is that nonsense? DONT EVEN MENTION THAT CRAP IN FRONT OF ME!!!Probably in North Korea not in Sri Lanka.(even North Korea is embracing it now).
No wonder how backwards Sri Lanka is with Pathetic idiots like you, Parasiticic uneducated trash that only knows to run under the banner of "Patriotism" to hide their nudity
thats why the SLFP back then decided to streamline it and make it more transparent instead of stopping it.

IMF was never created for development, your general knowledge sucks I saw the purpose for IMF's creation once in a General Knowledge book for Kids.

As a joint venture UL made profit while now its losses are several times the accumilated profit under Emirates management that managed it as a company.

Companies are menat to be run as companies. Uneducated idots like yourself may not know it so get EDUCATED NOW! Vietnam is struggling to privatize their SOEs while idiots like you are blabbering "ruling class" nonsense just because your Slave masters wont be able to loot them if they are privatized and start helping the economy in Sri Lanka. Such Bacward nonsense should remain in backward countries like your "Rajapaksa Kingdom"

Economists have been explaing the importance of privatization for ALONG TIME. Even Mark Mobius praised the decsion to restart the privatization programme.

If you want jobs handed down to you and want your "Dear Leaders to Loot the SOEs I recomend you GO TO NORTH KOREA instead burdening our Motherland

Explain how privatization would help the SOE and ultimately Sri Lanka prosper?

 

[samv]

This deal was rejected. However Chinese companies agreed to invest in Sri Lanka's upcoming privatization programme and take over some debt from certain SOEs looted by Rajapaksas.

We dont need to snuggle up to anyone to end our debt crisis, this debt is the thing that is runining Sino-Lanka relationsip. All of backward nonsense by the Rajapaksas which cannot even be called policies are being undone. IMF EEF has been approved and tax reforms ,public sector reforms are underway according to the conditions for bailout by IMF.

http://www.cnbc.com/2016/04/30/sri-...lout-to-avert-balance-of-payments-crisis.html

The government will seek to raise the tax-to-gross domestic product (GDP) ratio, which was 10.8 percent in 2014, to near 15 percent by 2020 through a new Inland Revenue Act, reform of the VAT and the customs code, Schneider said............

Sri Lanka was already well on the way to implementing reforms, including raising value added tax (VAT) by 4 percent, announcing a restructuring plan for its loss-making state-run airline, and eliminating tax holidays granted by a state-run investment body.

Then comes the finding a new partner SriLankan Airline
SriLankan Airlines where the Rajapaksas kicked out the then reputed CEO Peter Hill for not kicking out business class who already paid for their seats and not reserving them to his Rajapaksa family and gang. Then appointed his own brother-in-law who treated Air hostesses like prostitutes
http://www.sundaytimes.lk/160501/business-times/rfps-to-be-issued-for-srilankan-airlines-191393.html

The things needed for ending the debt crisis are already being done. cozying up for China or India wouldnt end our internal problems

Your president and prime minister are disgusting, degenerate politicans who are an embarassment to Sri Lanka. They have literally destroyed Sri Lanka in the little time they have been in power and yet boot lickers like you are desperately trying to polish their sh*t. Pathetic. The whole country is moving back in time. They need to be kicked out.

 

[Godman]

But taking loans at lower interests would certainly help your cause. e.g. Japan has offered India a Loan of 15 Billion $ for an interest of 0.1 % with a duration of 50 years payback and which needs to be paid back only after 15 years.

That is what friends do, anything else is called Loan sharking.

While I agree Japan has one if the lowest interest rates and the ADB which is mostly run by Japan also gives loans at a decent interest rate. But we should remember those loans are strict on feasibility.
For example the Mattala airport which was built using Chinese loans was never recomended. Even Ranil and CBK (Seperately ) planned a second international airport but the report in 2004 advices against it and expanding the current BIA instead. So no 2nd International airport was built.when Rajapaksa was planning on the Airport in Mattala the govt agency SESMA protested and repeated the same thing, an emergency airstrip issue was solved by developing the Palavi airstrip in Puttalam. However the decision was overridden. China is the only country that is willing to give loans for anything and with wrong leaders this could be disastrous.

As expected Japan is giving twice the money that China gave for Mattala for less than 1% interest rate for BIA Expansion. Which was recommended by everyone

The other issue is the Fiscal challenge. SL lacks tax revenue needed to manage a welfare economy, repay debt and develop the country at the same time. The IMF EEF was taken for the purpose of buying time until reforms are done. The IMF conditionality will also push the govt to take proper fiscal reforms.
IMFs policy is to give loans to countries racing economic issues at the condition of reforming the economy so it does not happen again and to make sure the loans are repaid to IMF.
Rajapaksa also took a IMF bailout However Rajapaksa managed to get away from politically unpopular but very much needed reforms becuase the economic situation became favourable for developing nations and the loans became easy to repay for the moment. As IMF only wants to get back the loans they did not care about reform for long term fiscal consolidation.
However a massive economic crisis is coming the future for SL as population ages. If we don't do something now then a massive disaster will happen.

 

[Godman]

Explain how privatization would help the SOE and ultimately Sri Lanka prosper?

Any informed person knows how Privatization of those useless companies help to create a vibrant economy and promote private sector competetition. As Mark Mobeus said the CSE lacks diversity and that is a major issue. Most CSE Blue chips are diversified conglomerates and that is a pretty big issue and the proposal to list several SOEs in the CSE received a lot of praise by economists (Not by ignorant idiots like you who say Privatization is a "crime" for some dumb reason like 1+1=1)
Private sector is meant to be more efficient and productive and thus is seen as major vehicle for Economic growth. Even in nations such as Russia where privatization came with corruption they are considered way less corrupt than Public sector.
Sri Lanka had a special agency that made sure privatization is organized and transparent but it was removed by Rajapaksa regime. Even before the agency was created and privatization was less transparent our economy boomed alongside economic liberalisation and quality of living skyrocketed. Private sector jobs came for everyone as UNP brought export oriented policies. Apparel industry was the biggest industry that created jobs for the poor in large numbers.
Private sector benefits the poor as much as it benefits the rich.
SL SOEs also have an unfair advantage over private sector in competetition and it creates monopolies that needs to be broken. A former SEMA head even explained it but I couldnt find the article. Further SOEs are used as job banks by politicians and many SOEs have more staff than it needs. Rajapaksa is also just a customer and has no right to order dozens of paying customers to be removed. Then CEO Peter Hill worked according to standards.
There is no need for the govt to fully divest. The amount of shares sold can be decided on its strategic value for govt. The govt is planning on keeping over 60% of UL under the new PPP. However they have not decided on Mihin Lanka which lacks much strategic value and they could completely sell it. Most countries have already decided to privatize airlines and SL should join the trend again.
Sri Lankas early economic liberalisation gave us a major boost however Rajapaksa administration brought back Import substitution oriented policy which failed before and was replaced by JR's export oriented industrialisation was a big success. The current govt also planning on undoing MRs that policy as well.
Both Pakistan and India has started privatization programmes already and we are falling behind because shameless idiots like you who come running naked ranting utter nonsense like 'Privatization is a crime'(Which is humiliatinglying dumb) after ruining and looting the SOEs. I have no time to fully explain here but I hope you would gain the ability of learning

 

[Gibbs]

Any informed person knows how Privatization of those useless companies help to create a vibrant economy and promote private sector competetition. As Mark Mobeus said the CSE lacks diversity and that is a major issue. Most CSE Blue chips are diversified conglomerates and that is a pretty big issue and the proposal to list several SOEs in the CSE received a lot of praise by economists (Not by ignorant idiots like you who say Privatization is a "crime" for some dumb reason like 1+1=1)
Private sector is meant to be more efficient and productive and thus is seen as major vehicle for Economic growth. Even in nations such as Russia where privatization came with corruption they are considered way less corrupt than Public sector.
Sri Lanka had a special agency that made sure privatization is organized and transparent but it was removed by Rajapaksa regime. Even before the agency was created and privatization was less transparent our economy boomed alongside economic liberalisation and quality of living skyrocketed. Private sector jobs came for everyone as UNP brought export oriented policies. Apparel industry was the biggest industry that created jobs for the poor in large numbers.
Private sector benefits the poor as much as it benefits the rich.
SL SOEs also have an unfair advantage over private sector in competetition and it creates monopolies that needs to be broken. A former SEMA head even explained it but I couldnt find the article. Further SOEs are used as job banks by politicians and many SOEs have more staff than it needs. Rajapaksa is also just a customer and has no right to order dozens of paying customers to be removed. Then CEO Peter Hill worked according to standards.
There is no need for the govt to fully divest. The amount of shares sold can be decided on its strategic value for govt. The govt is planning on keeping over 60% of UL under the new PPP. However they have not decided on Mihin Lanka which lacks much strategic value and they could completely sell it. Most countries have already decided to privatize airlines and SL should join the trend again.
Sri Lankas early economic liberalisation gave us a major boost however Rajapaksa administration brought back Import substitution oriented policy which failed before and was replaced by JR's export oriented industrialisation was a big success. The current govt also planning on undoing MRs that policy as well.
Both Pakistan and India has started privatization programmes already and we are falling behind because shameless idiots like you who come running naked ranting utter nonsense like 'Privatization is a crime'(Which is humiliatinglying dumb) after ruining and looting the SOEs. I have no time to fully explain here but I hope you would gain the ability of learning

Why bother mate ? ..All what that dim witted idiotic slave will get out of your post is that's somehow it's all contrary to what his god king MR has done.. Stats,figures and economics doesn't matter to them.. Hero worship does

 

[samv]

Things are really looking up for Sri Lanka under yahapalanaya. Investments are pouring in and Ranil Wickremesinghe's 'Volkswagen factory' has started producing its first automobilies. Ohoma yang!