Why Does China Finance Sri Lanka ...

Devil's Advocate ...

In short, Colombo is borrowing from China, but in fact actually pumping money into the Chinese Economy and not the Sri Lanka Economy.

However, many try to justify and portray that these massive Chinese loans are to rescue the Rajapakse administration from international economic pressure over Human Rights abuses.

While China’s loans are an immediate de-facto handout for Chinese companies (Which Sri Lanka is obliged through conditionality’s to hire and purchase from), which means, future Colombo government will be left with debts, at interest rates higher than other developmental lenders agree.

Already the biggest lender to Sri Lanka, China has now pledged more than $3bn (£1.9bn) for infrastructure development, maintenance and other projects, the BCC Sinhala service reports.

Much of the debt is offered by China’s fully government-owned Export-Import Bank.

And here is the catch …
Key Conditions:
“Chinese loans by Exim Bank are mainly offered to strictly buy Chinese Products and Services.”
“Contracting Firms, Sub-Contractors and Labourers are Chinese nationals.”
“There are also reports that 30% of the labourers are Chinese Convicts.”
“All Raw Materials is imported from China.”
“Sri Lanka gets no concessions or Favours on interest rates either.”
Mr Asantha Sirimanne of Lanka Business Online, reports to BBC Sinhala Service.

The World Bank and the Japanese government loans rates are far better.
Any country embarking on massive infrastructure relies on soft (long duration, low interest) loans from the World Bank – which exists to provide such assistance, or from Bilateral State Donors.

However, much development Aid, especially from the World Bank and Asian Development Bank, come from as grants, which necessarily does not have to be paid back by Governments.

Prior to Chinese lending of funds, 75% of Sri Lanka’s AID was from Japan, World Bank and Asian Development Bank.

China is no Forgiving friend to Sri Lanka, when it comes to funds.
Here’s what the Sunday Times Editor had to say: “Negotiations continue with China for several unpaid bills for Arms purchased during the protracted, insurgency.
Hence, China is offering to bail out European economies, it just won’t simply write off these loans to Sri Lanka as Bad Debt.

(What comes to mind is a stand up comedian “Russell Peters”, Indians and Chinese can never do business together … Chinese won't give a bargain, and Indians won't do without.)

Sunday Times also reported that Sri Lanka is applying and taking Soft Loans too from the IMF and Commercial Loans from Foreign Banks at even higher interest rates.

Whilst Sri Lanka is banking on the fate of Hambatota port, which is at present being constructed by Chinese contractors, Labourers and Financiers, in becoming a trans-shipment hub to generate income, this is no means a given.

Rajapakse administration envisions 10,000 ships coming to port at Hambantota each year.
At present all combined ports in Sri Lanka cannot handle 5,000 ships a year.

Sri Lanka’s existing container port, in Colombo, has already seen a serious growth in competition from fast and improving of one of many Indian ports such as Cochin and also Alalah port in Oman.

India in the meanwhile has been developing a number of ports, which is already proving to be a favourite for Chinese owned companies and reportedly also bidding.

Point made here is, if the Hambantota Port fails to generate sufficient revenue, repayment of Loan with its conditions is going to prove a serious disaster.

Sri Lanka is still amongst world’s heaviest borrowers.
In proportion to what it earns, Sri Lanka borrows more than almost any other state, according to the ratings Agency Moody’s.

Sri Lanka’s total debt in 2009 was 545 per cent larger than the total government revenue.
Moody’s LBO reports.

Only Lebanon rated B1, Jamaica and Pakistan rated B3 had worse credit metrics, amongst countries rated by Moody’s.

In 2010, the government’s own figures showed between January and April 2010, while the total revenue was Rs234, 345 million, total government expenditure was Rs410, 864 million. A overspend of Rs167, 520 million, over two thirds (69%) of its total Income.

In September ahead of the billion US dollar Bond issue, Moody’s rated Sri Lanka at a below investment grade of B1 with a ‘stable’ outlook.

Moody’s says its future assessment of Sri Lanka’s debt rating would be depend on whether Colombo demonstrated a commitment to Fiscal disciple and took action to cut the budget deficit.

Fitch and S&P rates Sri Lanka with B+ four notches below the lowest BBB- investment grade level.

The World Bank, Asian Development Bank, Japan Bank and IMT suggested and supported the idea that Rajapakse administration, should ask for assistance and guidance of Pr Manmohan Singh (The most respected Financier of our time) of India to view and oversee the finance of Sri Lanka, but was declined by the Rajapakse administration. This has raised serious concerns in the region.

Any State needs to generate cash to function day today, but at present Sri Lanka heavily relies on borrowing to meet its needs to survive.

Meanwhile Sri Lanka has set up a ‘Sovereign Rating Committee’ which is charged with devising a strategy of taking the country’s rating to an investment grade of BBB-, or higher over the next four years, The Sunday Times reports.

Exactly what the President of Uganda Dada Idi Amin did during his reign during the seventies, which resulted in bringing the country down on its knees.

Aninda Mitra, senior analyst and vice President of Moody’s Investors Services told Lanka Business Online that the rating agency was waiting to assess whether the 2011 budget will indicate a ‘Policy Intention to Improve Fiscal Fundamental.’

At present most African already troubled countries are subject to same finance policies by China.

I sense trouble ahead ... !!!

Let me have your views ...
Paza Sauti ...
Awaaz Utao ...

Sri Lanka's Displace People ...

Devil's Advocate ...

By 2002, over 80% of Sri Lanka’s displaced people were Tamils.

This is an extract from Amnesty International report from 2006 into the plight of the internally displaced.

According to a census of all IDP’s in Sri Lanka conducted by the Ministry of Rehabilitation, Resettlement and Refugees in 2002.
The displaced population was:
80% Tamil.
13.7% Muslim.
4.56 Sinhalese.
0.88% Other.
(There has been no comprehensive survey of IDP’s since 2002.)

Many of the IDP’s have suffered multiple displacements during the course of the conflict.

What are these Politicians of the world up to?

Mass Exodus and Ethnic cleansing will not work.

When Humans ever learn from History’s past?
Half the Issues are caused by Religion and Power Hungry Politician.

Punjab paid the price. Due to the Partition by the British, all hell was let loose. What has Pakistan or Punjab achieved. The others may have.

In 1984, again the Sikhs were singled out!!!

In 2009, Ethnic cleansing in Kenya!!!

Rwanda, Dafore, all religion based, by the Rich and the Politicians!!!

Do they have a conscious?

Why? Why? Why? It’s a Sin to forgo with this action against Mankind?

Let me have your views ...
Paza Sauti ...
Awaaz Utao ...

Obama: India cannot ignore abusive States ...

Devils Advocate ...

Barack Obama ~ India cannot ignore Abusive states.
24th Nov 2010 - Guardian

US President Barack Obama criticised India for shying away from condemning Rights abuses in repressive states, saying those states with Global aspirations should not remain silent and Ignore “Gross Violations” in other countries.

Is America enticing India to get aggressive with neighbouring countries?

Go to War?

Or is trying to de-stabilise the emerging region?

Or is genuinely concerned?

Remember it is NOT Barack Obama, I am questioning, but the US Policies. It’s the Policies that drive the Presidents.

Let me have your views...

Paza Sauti !!!
Make your Opinion Count !!!
Awaaz Utao !!!