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Dr. Godahewa asks can individuals responsible for unprecedented economic crisis be architects of recovery

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MP Nalaka Godahewa addressing Matara seminar

Former State Minister Dr. Nalaka Godahewa, MP, says that the ruling party politicians were labouring under the misconception that the very individuals responsible for the unprecedented economic crisis could be the architects of the economi recovery process.

The Gampaha District MP said that unless that notion was challenged and publicly disapproved it could lead the country down a perilous path and by the time the political leaders realised this grave error, it would be too late for a course correction.

The MP said so addressing a recent seminar organised by the Freedom People’s Congress in Matara.

“It’s no secret that Sri Lanka finds itself in a dire financial situation today. We stand at the precipice of bankruptcy, a situation that has evolved over time due to an unmanageable debt burden that came to a head in early 2022. But in this moment of reflection, I pose a question: How many of us truly understand the root causes of this crisis, and who bears the primary responsibility for leading our nation into this perilous debt trap?

The prevailing sentiment among many is to point the finger at former President Gotabhaya Rajapaksa, asserting that he could have paid off a substantial $6.7 billion debt in 2020 when he held office. Furthermore, it is argued that subsequent administrations were saddled with annual payments exceeding $5 billion, leading to the eventual declaration of bankruptcy.

However, it’s crucial to clarify that these loans were not secured during President Gotabaya Rajapaksa’s tenure. So, the question lingers: who exactly initiated this borrowing spree?

Our nation gained independence in 1948, and as of 2015, a staggering 67 years had passed. During this time, the total debt had mushroomed to a staggering 7,400 billion rupees when converted from local and foreign denominations. It’s important to recognize that many of the significant infrastructure projects we see today, including ports, airports, highways, railways, the Mahaweli project, irrigation systems, power plants, universities, schools, and hospitals, were financed through loans secured over these six decades.

In a surprising twist, the period between 2015 and 2019 witnessed a 75% increase in the country’s total debt, with no commensurate large-scale development projects to show for it. By the time the “good governance” government was replaced in 2019, the debt had soared from 7,400 billion to a staggering 13,000 billion rupees, including foreign debt exceeding $40 billion, with $11.05 billion in short-term commercial debt or sovereign bonds looming ominously.

This debt crisis, ultimately, was inherited by Gotabaya Rajapaksa, and the resulting shortages in oil, gas, and electricity in early 2022 caused public outrage, leading to his removal from office. However, it’s important to note that he was not the architect of this economic quagmire.

We must pause to reflect on who managed our nation’s economy during the years 2015-2019, a period that witnessed a decline in economic growth from 5.5% in 2015 to a mere 2.1% by 2019. During this same time frame, the total debt swelled from $54 billion to $74 billion, all while our national resources failed to see a corresponding increase.

Consider the parallels with the present day. In the past year, our debt has skyrocketed, reaching $96 billion by June 2023. The key difference now is that we are not servicing this debt, sparing us the queues for oil and gas, but it has not been offset by an increase in foreign income.

In 2022, our economy contracted by a staggering 7.8%, and the first quarter of 2023 saw an even more alarming contraction of 11.5%. The government has yet to reveal the full extent of the second-quarter decline, but early indications suggest a crisis of greater magnitude.

So, let us ask ourselves: Is it rational to believe that the individual held responsible for this crisis can simultaneously be its savior? This question may linger, but time may be running out for us to find the answer.

In the days ahead, the true origins of this crisis will become increasingly clear, but by then, it might be too late to reverse the course we are on. It is imperative that we scrutinize our leaders and policies closely, and work collectively to chart a path toward financial stability and prosperity for our beloved Sri Lanka.”

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