Features
Deplorable Debt: Is Sri Lanka caught between IMF and IIF?
by Jayasri Priyalal
Jayasripriyalal59@gmail.com
The greatest challenges confronting the nation-states in the current era revolve around; deplorable debt, depleted natural resources, and degraded environment. Economic growth and future prosperity for all living beings are stalled due to the varying degrees of the 3D problems emerging out of ill-conceived policy divergences propelling the linear economic activities for centuries in many countries.
Sri Lanka hit its worst economic setback, since independence, in 2021, experiencing near bankruptcy short of a failed state. Still, the country is reeling from its socio-economic and political debacle without a clear visionary leadership putting the country on a recovery path. Showing resilience alone will not take us anywhere. Amongst many shortsighted policy debacles, including unmanaged debt without a semblance of fiscal discipline, remains unresolved. The unbridgeable mismatch between government revenue and expenditure is one such burning issue. Not a single political party, gearing for elections to secure political power, squarely addresses this challenge with viable options proposed.
Debt restructuring talks are dominating the media as the second IMF tranche of the Extended Fund Facility (EFF) with access to SDR 254 million (about US$337 million), subject to the IMF Executive Board’s review in due course.
Time, Information, and Power (TIP) are critical elements for persuasive Negotiations
The delegation from Sri Lanka for debt restructuring with the Official Creditor Committee (OCC) which consists of the majority of the private sector creditors, and sovereign bondholders, faces critical challenges. The author aims to highlight the various challenges and obstacles to unfold during the tough negotiations Sri Lanka faces in this essay. All Sri Lankans should endeavour to negotiate favourable terms in putting Sri Lanka’s debt on the path towards sustainable economic growth in a medium and long-term time frame.
As a nation, we should not burden those private creditors who hold our sovereign bonds, and it is our supreme responsibility to pay all our dues with reasonable compensation. Those who invested their money in Sri Lankan Sovereign Bonds are not at fault for the economic mismanagement of the corrupt politicians and their cronies. Sri Lanka, a sovereign nation, should take ownership to honour our commitments to settle all our creditors.
Unless Sri Lanka shows clear policy directions to revive and grow the stagnant economy, no one will be ready to put good money behind wasted bad money. Instilling trust and confidence in our ability to come up with viable and sustainable solutions to jump-start the growth of the economy is the way forward. This conditionality is paramount even to restructuring the existing debt instruments so that they can be traded in secondary markets to mobilize cash flows for stimulating the economic activities for growth.
In times of crisis, stakeholders are forced to sit and negotiate to find viable solutions, balancing the common and conflicting interests between the two sides. Hence, parties who sit down for negotiations are forced to deal with adversaries and not with friends or sympathizers ready to bargain to meet different expectations.
Time for Schock Doctrines
In an excessively financialized world cyclic financial crises are a common feature. Someone’s pain will always turn into another’s gain swiftly. The international financial system, consisting of private and public institutions, is well set to manage the crisis with the sole objective of privatization of gains and socializations of pains.
Many of their strategies anaesthetize weak policymakers looking for innovative and creative economic growth-led solutions to overcome the debt-burdened situations in the developing world. Capitalizing on this phenomenon, they force painful shock doctrines and austerities on the victims of financial crisis reversing all the socio-economic gains achieved thus far.
The classic example could be quoted from our own experience, currently, a quarter of Sri Lanka’s population is pushed below the poverty line. Moreover, the second IMF EFF assistance is a blessing in disguise for policymakers to hoodwink the public, especially on the eve of elections. Partners, with whom Sri Lankan Treasury and Ministry of Finance officials negotiate, are aware of the time-critical importance of this factor.
Media statements, following the various IMF official’s meetings, are loaded with praises but without any substance in handling the crisis for viable resolution. Instead, many are saddled in their comfort zone depending on further debt as the only recourse.
Pruning expenditure on social security and welfare, imposing unbearable income tax on the middle class – working poor – curtailing their purchasing power, reversing all progressive labour laws and regulations that mainstream inclusive growth and fairer distribution of wealth created in the economy, especially hampering the investment growth in the EPF, workers savings with arbitrary interest rate cuts, are some of the policy options concealed within the shock doctrine recommendations.
Aside from the above privatization of profitable State-Owned Enterprises was mismanaged by appointing cronies by the various governments, including appointing ‘yes’ men to serve the political interest, including in the banks, allowing the henchmen to rob the banks from inside. Commercially viable enterprises are loaded with debt, restraining them from coming out with any turnaround strategies.
And many national wealth is now offered on a platter for privatization as a remedial measure to the current crisis. These are part and parcel of the shock doctrine proposed to serve the interest of those foreign investors to grab the national wealth. A classic case, outsourcing the on-arrival visa issuance to tourists, at the BIA, to a private company hiking the visa fees at a disproportionate increase impacting the resilient tourism industry. On top of that, the private company charges US$ 18.50 as their fees on each tourist applying visa.
However, many economists, and advisors are keen to measure productivity gains, even at times of crisis, on factor inputs such as Labour, Land and Entrepreneurship, except Capital. At times of Financial Crises, private-public partnerships strongly advocate Quantitative Easing options as a remedy to maintain market stability by subsidizing the Capital Markets with zero and negative interest rates.
Those civic-conscious officials, consisting of the Sri Lankan delegation who sit for negotiations with the OCC, should bear in mind, for the sake of sustainability of the debt and stimulation of future growth in the economy, should not pass on the advantage of time factor to the opponents across the table. They need to put the country’s interest first, not to serve the interest of the bankrupt political propaganda, merely to deceive the electorate on the eve of elections.
Sadly, there isn’t any form of social dialogue between the policymakers, officials, private sector chambers, and academia to propose policy recommendations, at least, to identify and cut the avoidable expenditure in the parallel administration structures in the island state. A culture of meaningful stakeholder consultations before policy formulation is a must in the desired new system that Sri Lanka is aspiring for.
Information Asymmetry and the Role of the Institute of International Finance (IIF)
The second critical element that is vital in negotiations is information. In any negotiation process to achieve desirable goals all parties need to act in good faith and be fully informed of the facts and circumstances.
The Institute of International Finance (IIF) is a powerful organization that represents the interests of private creditors and financial institutions. IIF members include a wide range of financial firms operating globally in the sovereign debt markets, with common and divergent interests. The mission and basic lobbying position of the IIF are enshrined in its by-laws, namely, to be the most influential financial lobby organization at the international level that promotes voluntary market-based approaches to financial or debt crisis prevention and management.
According to Netherlands Amsterdam-based Stichting Onderzoek Multinationale Ondernemingen (SOMO), Centre for Research on Multinational Corporations) October 2021, report highlights serious imbalances in relationships between the IIF and private creditors, on the one hand, and the other hand public international and national financial decision-makers, parliamentarians, citizens, and other affected stakeholders. Furthermore, reports contend, that the IIF’s strategy leads to even higher indebtedness to private creditors and promotes a profitable sustainability-linked financial industry, which the IIF actively supports in the interest of its members. https://www.somo.nl/the-iif-debt-relief/
The Sri Lankan delegation needs to be aware of the advantages enjoyed by the counterparties with whom they negotiate. As per findings of the SOMO research, IIF membership covers the largest international financial conglomerates with common and diverse interests regarding sovereign debt of middle-to-lower income countries: from private and public Chinese banks and Wall Street investment banks to credit rating agencies, asset managers and hedge funds. Official authorities, like the IMF and World Bank, and even the central banks of some middle- and low-income countries, are IIF members.
On the one hand, this diversity of members involved in the international debt market can enable members more easily to exchange views and coordinate. On the other hand, members’ very diverse interests may block positions and solutions that are proposed in the IIF’s lobbying activities.
Lazard the French Asset Management company Sri Lanka consults for the debt restructuring and the law firm Clifford Chance both could be members of IIF, if so the conflict of interest between the parties will become a stumbling block in reaching a favourable solution to the benefit of Sri Lanka as highlighted in the SOMO report. This fact must receive the best attention of the Sri Lankan delegation to the negotiation, bearing in mind that no one subordinate could work for two masters’
honestly – the adage often quoted as a warning to be cautiously optimistic in similar circumstances.
Information is Power – Markets are good When you are on the Right Side
The third element that is crucial in handling negotiation effectively rallies around the power that the parties to the negotiation garner. Readers would understand better by the foregoing how the balance of power tilts between the parties to negotiations.
IIF is committed to protecting the interests of its members by lobbying for voluntary market-based approaches to financial or debt crisis prevention and management. Towards achieving these goals IIF functions with a few committees such as IIF Committee on Sovereign Risk Management (CSRM), G20 Debt Service Suspension Initiative (DSSI), IIF Debt Transparency Working Group (DTWG), IIF Emerging Markets Advisory Council (EMAC). They are very well equipped with data on capital market flows and debt situations in countries and markets across the region. IIF is committed to serving the interests of its members to spot investment opportunities and secure the assets with returns.
Following the recent rounds of negotiations with the Sri Lanka delegation with OCC, media reports revealed that in principle understanding was reached with a set of frameworks for further negotiations. Furthermore, there appear to be some discussions to extend the maturities with varying haircuts and interest rates reclassifying the Sovereign Bonds linked to either Macro or Governance parameters. We are forced to agree weighing the pros and cons to make the bonds marketable in the secondary markets to overcome the short-term constraints knowing how the Creditors team up to serve their interest.
Breaking the Vicious Debt Cycles – Focus on Growth instead of Distribution Sri Lanka is battling with the current crisis because of irresponsible borrowing and investment in wasteful projects. The Supreme Court has given a ruling pointing out the responsible policymakers and concerned government officials who contributed to the mismanagement of the economy. But it is good to remember stupidity is not a crime in the eyes of law, hence marginalized and vulnerable population sacrifice future prosperity for sins of the corrupt and greedy.
To offer a viable counter-proposal to the OCC at the next round of negotiations, the Sri Lankan delegation must be prepared with viable policy options that stimulate economic growth in the long-term enabling us to repay the debts and move away from the debt traps. To make that happen Sri Lankan policymakers will have to move away from popular distribution-led policy directives offered to deceive the electorate to growth-led directives for bottom up transformation.
A May Day promise by the President to increase the daily wage of Workers in Plantations to Rs. 1700 is one such gimmick. This writer fully supports the upliftment of the quality of life of the plantation workers. But that must come as a non-wage benefit as a form of social security measure, without destabilizing the plantation industry. There is enough money saved by the plantation workers in their EPF/ETF to be invested in such projects getting a reasonable return to sustain the viability of the fund. Such projects will serve the growth and distribution needs of the country.
Sri Lanka has been depending too much on the advice from the neo-liberal pundits aiming at realizing fake prosperities widening inequality in wealth, income, health, and education. We need to count on organic growth-focused economic policies and directives instead of synthetic short-term policies grappling with deplorable debt.
Facts, issues highlighted in the essay; assumptions made and actions proposed are to stimulate discussion and debate amongst the like-minded. Critics’ comments are welcome to encourage meaningful social dialogues among various stakeholders and policymakers to think of creative and innovative growth led options to overcome the eternal debt crisis.
by Dr Gotabhya Ranasinghe
Senior Consultant Cardiologist
National Hospital Sri Lanka
When we sought a meeting with Hon Dr. Ramesh Pathirana, Minister of Health, he graciously cleared his busy schedule to accommodate us. Renowned for his attentive listening and deep understanding, Minister Pathirana is dedicated to advancing the health sector. His openness and transparency exemplify the qualities of an exemplary politician and minister.
Dr. Palitha Mahipala, the current Health Secretary, demonstrates both commendable enthusiasm and unwavering support. This combination of attributes makes him a highly compatible colleague for the esteemed Minister of Health.
Our discussion centered on a project that has been in the works for the past 30 years, one that no other minister had managed to advance.
Minister Pathirana, however, recognized the project’s significance and its potential to revolutionize care for heart patients.
The project involves the construction of a state-of-the-art facility at the premises of the National Hospital Colombo. The project’s location within the premises of the National Hospital underscores its importance and relevance to the healthcare infrastructure of the nation.
This facility will include a cardiology building and a tertiary care center, equipped with the latest technology to handle and treat all types of heart-related conditions and surgeries.
Securing funding was a major milestone for this initiative. Minister Pathirana successfully obtained approval for a $40 billion loan from the Asian Development Bank. With the funding in place, the foundation stone is scheduled to be laid in September this year, and construction will begin in January 2025.
This project guarantees a consistent and uninterrupted supply of stents and related medications for heart patients. As a result, patients will have timely access to essential medical supplies during their treatment and recovery. By securing these critical resources, the project aims to enhance patient outcomes, minimize treatment delays, and maintain the highest standards of cardiac care.
Upon its fruition, this monumental building will serve as a beacon of hope and healing, symbolizing the unwavering dedication to improving patient outcomes and fostering a healthier society.We anticipate a future marked by significant progress and positive outcomes in Sri Lanka’s cardiovascular treatment landscape within the foreseeable timeframe.
by Fr. Emmanuel Fernando, OMI
Jesuit Fr. Aloysius Pieris (affectionately called Fr. Aloy) celebrated his 90th birthday on April 9, 2024 and I, as the editor of our Oblate Journal, THE MISSIONARY OBLATE had gone to press by that time. Immediately I decided to publish an article, appreciating the untiring selfless services he continues to offer for inter-Faith dialogue, the renewal of the Catholic Church, his concern for the poor and the suffering Sri Lankan masses and to me, the present writer.
It was in 1988, when I was appointed Director of the Oblate Scholastics at Ampitiya by the then Oblate Provincial Fr. Anselm Silva, that I came to know Fr. Aloy more closely. Knowing well his expertise in matters spiritual, theological, Indological and pastoral, and with the collaborative spirit of my companion-formators, our Oblate Scholastics were sent to Tulana, the Research and Encounter Centre, Kelaniya, of which he is the Founder-Director, for ‘exposure-programmes’ on matters spiritual, biblical, theological and pastoral. Some of these dimensions according to my view and that of my companion-formators, were not available at the National Seminary, Ampitiya.
Ever since that time, our Oblate formators/ accompaniers at the Oblate Scholasticate, Ampitiya , have continued to send our Oblate Scholastics to Tulana Centre for deepening their insights and convictions regarding matters needed to serve the people in today’s context. Fr. Aloy also had tried very enthusiastically with the Oblate team headed by Frs. Oswald Firth and Clement Waidyasekara to begin a Theologate, directed by the Religious Congregations in Sri Lanka, for the contextual formation/ accompaniment of their members. It should very well be a desired goal of the Leaders / Provincials of the Religious Congregations.
Besides being a formator/accompanier at the Oblate Scholasticate, I was entrusted also with the task of editing and publishing our Oblate journal, ‘The Missionary Oblate’. To maintain the quality of the journal I continue to depend on Fr. Aloy for his thought-provoking and stimulating articles on Biblical Spirituality, Biblical Theology and Ecclesiology. I am very grateful to him for his generous assistance. Of late, his writings on renewal of the Church, initiated by Pope St. John XX111 and continued by Pope Francis through the Synodal path, published in our Oblate journal, enable our readers to focus their attention also on the needed renewal in the Catholic Church in Sri Lanka. Fr. Aloy appreciated very much the Synodal path adopted by the Jesuit Pope Francis for the renewal of the Church, rooted very much on prayerful discernment. In my Religious and presbyteral life, Fr.Aloy continues to be my spiritual animator / guide and ongoing formator / acccompanier.
Fr. Aloysius Pieris, BA Hons (Lond), LPh (SHC, India), STL (PFT, Naples), PhD (SLU/VC), ThD (Tilburg), D.Ltt (KU), has been one of the eminent Asian theologians well recognized internationally and one who has lectured and held visiting chairs in many universities both in the West and in the East. Many members of Religious Congregations from Asian countries have benefited from his lectures and guidance in the East Asian Pastoral Institute (EAPI) in Manila, Philippines. He had been a Theologian consulted by the Federation of Asian Bishops’ Conferences for many years. During his professorship at the Gregorian University in Rome, he was called to be a member of a special group of advisers on other religions consulted by Pope Paul VI.
Fr. Aloy is the author of more than 30 books and well over 500 Research Papers. Some of his books and articles have been translated and published in several countries. Among those books, one can find the following: 1) The Genesis of an Asian Theology of Liberation (An Autobiographical Excursus on the Art of Theologising in Asia, 2) An Asian Theology of Liberation, 3) Providential Timeliness of Vatican 11 (a long-overdue halt to a scandalous millennium, 4) Give Vatican 11 a chance, 5) Leadership in the Church, 6) Relishing our faith in working for justice (Themes for study and discussion), 7) A Message meant mainly, not exclusively for Jesuits (Background information necessary for helping Francis renew the Church), 8) Lent in Lanka (Reflections and Resolutions, 9) Love meets wisdom (A Christian Experience of Buddhism, 10) Fire and Water 11) God’s Reign for God’s poor, 12) Our Unhiddden Agenda (How we Jesuits work, pray and form our men). He is also the Editor of two journals, Vagdevi, Journal of Religious Reflection and Dialogue, New Series.
Fr. Aloy has a BA in Pali and Sanskrit from the University of London and a Ph.D in Buddhist Philosophy from the University of Sri Lankan, Vidyodaya Campus. On Nov. 23, 2019, he was awarded the prestigious honorary Doctorate of Literature (D.Litt) by the Chancellor of the University of Kelaniya, the Most Venerable Welamitiyawe Dharmakirthi Sri Kusala Dhamma Thera.
Fr. Aloy continues to be a promoter of Gospel values and virtues. Justice as a constitutive dimension of love and social concern for the downtrodden masses are very much noted in his life and work. He had very much appreciated the commitment of the late Fr. Joseph (Joe) Fernando, the National Director of the Social and Economic Centre (SEDEC) for the poor.
In Sri Lanka, a few religious Congregations – the Good Shepherd Sisters, the Christian Brothers, the Marist Brothers and the Oblates – have invited him to animate their members especially during their Provincial Congresses, Chapters and International Conferences. The mainline Christian Churches also have sought his advice and followed his seminars. I, for one, regret very much, that the Sri Lankan authorities of the Catholic Church –today’s Hierarchy—- have not sought Fr.
Aloy’s expertise for the renewal of the Catholic Church in Sri Lanka and thus have not benefited from the immense store of wisdom and insight that he can offer to our local Church while the Sri Lankan bishops who governed the Catholic church in the immediate aftermath of the Second Vatican Council (Edmund Fernando OMI, Anthony de Saram, Leo Nanayakkara OSB, Frank Marcus Fernando, Paul Perera,) visited him and consulted him on many matters. Among the Tamil Bishops, Bishop Rayappu Joseph was keeping close contact with him and Bishop J. Deogupillai hosted him and his team visiting him after the horrible Black July massacre of Tamils.
Sri Lanka-Singapore Free Trade Agreement
By Gomi Senadhira
senadhiragomi@gmail.com
“You might tell fairy tales, but the progress of a country cannot be achieved through such narratives. A country cannot be developed by making false promises. The country moved backward because of the electoral promises made by political parties throughout time. We have witnessed that the ultimate result of this is the country becoming bankrupt. Unfortunately, many segments of the population have not come to realize this yet.” – President Ranil Wickremesinghe, 2024 Budget speech
Any Sri Lankan would agree with the above words of President Wickremesinghe on the false promises our politicians and officials make and the fairy tales they narrate which bankrupted this country. So, to understand this, let’s look at one such fairy tale with lots of false promises; Ranil Wickremesinghe’s greatest achievement in the area of international trade and investment promotion during the Yahapalana period, Sri Lanka-Singapore Free Trade Agreement (SLSFTA).
It is appropriate and timely to do it now as Finance Minister Wickremesinghe has just presented to parliament a bill on the National Policy on Economic Transformation which includes the establishment of an Office for International Trade and the Sri Lanka Institute of Economics and International Trade.
Was SLSFTA a “Cleverly negotiated Free Trade Agreement” as stated by the (former) Minister of Development Strategies and International Trade Malik Samarawickrama during the Parliamentary Debate on the SLSFTA in July 2018, or a colossal blunder covered up with lies, false promises, and fairy tales? After SLSFTA was signed there were a number of fairy tales published on this agreement by the Ministry of Development Strategies and International, Institute of Policy Studies, and others.
However, for this article, I would like to limit my comments to the speech by Minister Samarawickrama during the Parliamentary Debate, and the two most important areas in the agreement which were covered up with lies, fairy tales, and false promises, namely: revenue loss for Sri Lanka and Investment from Singapore. On the other important area, “Waste products dumping” I do not want to comment here as I have written extensively on the issue.
1. The revenue loss
During the Parliamentary Debate in July 2018, Minister Samarawickrama stated “…. let me reiterate that this FTA with Singapore has been very cleverly negotiated by us…. The liberalisation programme under this FTA has been carefully designed to have the least impact on domestic industry and revenue collection. We have included all revenue sensitive items in the negative list of items which will not be subject to removal of tariff. Therefore, 97.8% revenue from Customs duty is protected. Our tariff liberalisation will take place over a period of 12-15 years! In fact, the revenue earned through tariffs on goods imported from Singapore last year was Rs. 35 billion.
The revenue loss for over the next 15 years due to the FTA is only Rs. 733 million– which when annualised, on average, is just Rs. 51 million. That is just 0.14% per year! So anyone who claims the Singapore FTA causes revenue loss to the Government cannot do basic arithmetic! Mr. Speaker, in conclusion, I call on my fellow members of this House – don’t mislead the public with baseless criticism that is not grounded in facts. Don’t look at petty politics and use these issues for your own political survival.”
I was surprised to read the minister’s speech because an article published in January 2018 in “The Straits Times“, based on information released by the Singaporean Negotiators stated, “…. With the FTA, tariff savings for Singapore exports are estimated to hit $10 million annually“.
As the annual tariff savings (that is the revenue loss for Sri Lanka) calculated by the Singaporean Negotiators, Singaporean $ 10 million (Sri Lankan rupees 1,200 million in 2018) was way above the rupees’ 733 million revenue loss for 15 years estimated by the Sri Lankan negotiators, it was clear to any observer that one of the parties to the agreement had not done the basic arithmetic!
Six years later, according to a report published by “The Morning” newspaper, speaking at the Committee on Public Finance (COPF) on 7th May 2024, Mr Samarawickrama’s chief trade negotiator K.J. Weerasinghehad had admitted “…. that forecasted revenue loss for the Government of Sri Lanka through the Singapore FTA is Rs. 450 million in 2023 and Rs. 1.3 billion in 2024.”
If these numbers are correct, as tariff liberalisation under the SLSFTA has just started, we will pass Rs 2 billion very soon. Then, the question is how Sri Lanka’s trade negotiators made such a colossal blunder. Didn’t they do their basic arithmetic? If they didn’t know how to do basic arithmetic they should have at least done their basic readings. For example, the headline of the article published in The Straits Times in January 2018 was “Singapore, Sri Lanka sign FTA, annual savings of $10m expected”.
Anyway, as Sri Lanka’s chief negotiator reiterated at the COPF meeting that “…. since 99% of the tariffs in Singapore have zero rates of duty, Sri Lanka has agreed on 80% tariff liberalisation over a period of 15 years while expecting Singapore investments to address the imbalance in trade,” let’s turn towards investment.
Investment from Singapore
In July 2018, speaking during the Parliamentary Debate on the FTA this is what Minister Malik Samarawickrama stated on investment from Singapore, “Already, thanks to this FTA, in just the past two-and-a-half months since the agreement came into effect we have received a proposal from Singapore for investment amounting to $ 14.8 billion in an oil refinery for export of petroleum products. In addition, we have proposals for a steel manufacturing plant for exports ($ 1 billion investment), flour milling plant ($ 50 million), sugar refinery ($ 200 million). This adds up to more than $ 16.05 billion in the pipeline on these projects alone.
And all of these projects will create thousands of more jobs for our people. In principle approval has already been granted by the BOI and the investors are awaiting the release of land the environmental approvals to commence the project.
I request the Opposition and those with vested interests to change their narrow-minded thinking and join us to develop our country. We must always look at what is best for the whole community, not just the few who may oppose. We owe it to our people to courageously take decisions that will change their lives for the better.”
According to the media report I quoted earlier, speaking at the Committee on Public Finance (COPF) Chief Negotiator Weerasinghe has admitted that Sri Lanka was not happy with overall Singapore investments that have come in the past few years in return for the trade liberalisation under the Singapore-Sri Lanka Free Trade Agreement. He has added that between 2021 and 2023 the total investment from Singapore had been around $162 million!
What happened to those projects worth $16 billion negotiated, thanks to the SLSFTA, in just the two-and-a-half months after the agreement came into effect and approved by the BOI? I do not know about the steel manufacturing plant for exports ($ 1 billion investment), flour milling plant ($ 50 million) and sugar refinery ($ 200 million).
However, story of the multibillion-dollar investment in the Petroleum Refinery unfolded in a manner that would qualify it as the best fairy tale with false promises presented by our politicians and the officials, prior to 2019 elections.
Though many Sri Lankans got to know, through the media which repeatedly highlighted a plethora of issues surrounding the project and the questionable credentials of the Singaporean investor, the construction work on the Mirrijiwela Oil Refinery along with the cement factory began on the24th of March 2019 with a bang and Minister Ranil Wickremesinghe and his ministers along with the foreign and local dignitaries laid the foundation stones.
That was few months before the 2019 Presidential elections. Inaugurating the construction work Prime Minister Ranil Wickremesinghe said the projects will create thousands of job opportunities in the area and surrounding districts.
The oil refinery, which was to be built over 200 acres of land, with the capacity to refine 200,000 barrels of crude oil per day, was to generate US$7 billion of exports and create 1,500 direct and 3,000 indirect jobs. The construction of the refinery was to be completed in 44 months. Four years later, in August 2023 the Cabinet of Ministers approved the proposal presented by President Ranil Wickremesinghe to cancel the agreement with the investors of the refinery as the project has not been implemented! Can they explain to the country how much money was wasted to produce that fairy tale?
It is obvious that the President, ministers, and officials had made huge blunders and had deliberately misled the public and the parliament on the revenue loss and potential investment from SLSFTA with fairy tales and false promises.
As the president himself said, a country cannot be developed by making false promises or with fairy tales and these false promises and fairy tales had bankrupted the country. “Unfortunately, many segments of the population have not come to realize this yet”.
(The writer, a specialist and an activist on trade and development issues . )
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