SL economy on right track — Ravi K
Finance Minister Ravi Karunanayake
Sri Lanka’s economy has been ‘discharged from the Intensive Care Unit (ICU)’ since the regime change two years ago, an emotionally-charged Finance Minister Ravi Karunanayake told reporters on Thursday.
The minister said this, in a heated response to a statement by Central Bank (CB) Governor Indrajit Coomaraswamy who had said that the local economy is not in the ICU, but in the hospital.
Dr. Coomaraswamy told reporters earlier in the week that the economy is expected to have grown by between 4.5 per cent and 5 per cent during last year supported by stronger third and fourth quarter performances, but the economy is not in good shape. “We are not in the ICU. But we are clearly in hospital as it is under International Monetary Fund (IMF) assistance,” he said. The Finance Minister while noting that Dr. Coomaraswamy may have been ‘misquoted’ rejected this assertion saying that during the time of the Rajapaksa’s, the economy was so distressed that it was in the ICU. “He (Dr. Coomaraswamy) was in the government then,” an upset Mr. Karunanayake said raising his tone.
He said that the economy is on the right track and also rejected opposition claims that the government is attuning to the whims of the ‘white outfits’ (meaning the IMF). “We don’t need white folks telling us how to maneuver this economy, but if its good, then we’ll even follow what South Korea asks us to.”
Country will ‘win’
The heated media conference at the Finance Ministry to ‘clear the hot air’ on the Hambantota Port which was expected to be leased for 99 years to a firm in which China Merchant Port Holdings will own 80 per cent, saw two ministers reiterating that the country will ‘win’ with this deal.
Mr. Karunanayake strongly argued that 3,000 families were displaced by the former Rajapaksa regime to make way for the port, airport and cricket stadium in Hambantota but the new proposal doesn’t displace a single family. Dishing out data, he said that the last regime borrowed US$1.3 billion or Rs. 183 billion to build the Hambantota Port with no revenue plans. “Interest rates of loans ranged between 2 per cent and 7.5 per cent with the operational loss of the Hambantota Port at more than a staggering Rs. 9 billion per year since 2014 whereas revenue has been Rs. 2 billion per annum.” A data sheet sent to the media following the conference showed that the last government obtained a preferential buyer’s credit loan of $600 million for 13 years, $147 million for 12 years and $157 million for 12 years from the Exim Bank of China.
The negotiations will see that high interest loans will be settled first, Mr. Karunanayake said. “Some loans were taken at low rates and were as low as 2 per cent,” he said.
It was said that the cabinet accepted the swapping of the Hambantota Port debt to equity but denied that the Government was supposed to sign the agreement on January 7. “We didn’t say that we will sign the agreement on the 7th,” International Trade Minister Malik Samarawickrama said after the media grilled him. Minister Samarawickrama said that three more agreements have to be negotiated and finalised before the handover which include the shareholders agreement for the China Merchant Port Holdings Ltd and SLPA joint venture, the 99-year lease agreement and the main concessional agreement. He said this last agreement was crucial. “Both parties are trying to negotiate the best deal
possible and it will take a week or two.”
According to a framework agreement Sri Lanka will set up a company to which the port will be given on a 99-year lease. Under the proposal, China Merchant Port Holdings Ltd is to acquire 80 per cent of Hambantota equity, valued at US$ 1.08 billion and to settle payments in installments and Sri Lanka Ports Authority, the balance 20 per cent, of the firm. According to Mr. Samarawickrama, the agreement will be sealed within the next 10 to 14 days.
This agreement was being negotiated in another room at the Ministry and the two ministers hurried out for those negotiations amidst calls by journalists to answer more questions.
Minister of Special Assignments Sarath Amunugama, who the media was informed would be the third minister attending Thursday’s briefing, was however absent.