Cabraal tells Sajith not to confuse loans with grants

By Saman Indrajith

State Minister of Money and Capital Market and State Enterprise Reforms Ajith Nivard Cabraal yesterday urged Opposition Leader Sajith Premadasa to understand that there was a difference between loans and grants.

 Minister Cabraal told Opposition Leader Premadasa: “Make no mistake. Grants and loans are two different things. There are some who think that when a loan is a favour to us in the same way as a grant. It is not so.”

 “Opposition Leader asks whether we would reject Asian Development Bank grants to upgrade the Kelani Valley railway. First, he should learn that the ADB does not give grants, it gives loans. Even if we reject the ADB loan, we have decided to continue with the project because the country needs it. These are our country’s projects; we do them for the sake of the country. They will be completed whether we receive loans or not. This is our responsibility as a government we complete these projects.”

Minister Cabraal said so responding to a series of questions raised by Opposition Leader Premadasa who said that the government had stopped the Light Rail Transit (LRT) project funded by Japan International Cooperation Agency (JICA) and that would be inimical to Lanka-Japan relations.

Minister Cabraal said that the LRT project was to be carried out with a loan from JICA to be settled in 52 years with a 12-year grace period under 0.1% interest. “The Opposition leader should understand that the stipulated period of 52 years is too risky for this country since we would not know the rate of the Japanese Yen in 52 years. A Japanese Yen was two cents then. Now it is Rs. 1.80. Making calculations on the basis of 0.1 percent interest rate does not give the complete picture.

“The Opposition Leader accuses the government of arbitrarily suspending the LRT project. Where was he when his government stopped the Port City project resulting in paying additional 125 million US dollars and adding several more acres to the project due to their ill-conceived action. They suspended a project by SriLankan airlines and had to pay USD 110 million as compensation.”

Minister Cabraal said that the Cabinet had decided on Sept 28. to obtain an ADB loan for the Kelani Valley project because accumulation of foreign loans would not be favourable to the national economy. “At the time they assumed office the amount of loans was 72 percent of the GDP and by the time they left office it had been increased up to 87 percent of the GDP. Foreign loans increased during their time. It is not healthy to the economy to add up more foreign loans. So, we had to suspend some projects they commenced under foreign loans to manage the economy.

“In managing an economy you should understand priorities. The LRT project was planned on a loan of USD 2,300 million. The Kelani Valley project was to be carried out with a loan of USD 1,400 million. If we had gone ahead with those projects, the country would have suffered a loss. Those two projects are centered on the Colombo city. That means their benefit is not directly felt by the low and middle income receiving population in other provinces.”