The new year marks the imminent requirement on Gotabaya’s government to pay back 875 billion Sri Lanka rupees of foreign debt due October 2020.
Colombo remains heavily burdened with foreign debt, with the Chinese, in particular, having invested billions in major infrastructure projects ranging from power stations to ports. And as Sri Lanka’s economic crisis worsened, the island was forced to hand over control of Hambantota Port in a debt-for-equity swap with Beijing in 2017.
UNP MP Dr Harsha De Silva described the government’s aim to attempt “ to repay this debt with our foreign reserves. But if they do this, it is wrong. The government will find it hard to raise debt, due to negative ratings”.
Furthermore, Economist Fernando has highlighted that the alternative action of Gotabaya obtaining more debt to repay the current debt will only prolong this issue and not find an effective resolution.
Whilst on the campaign trail, Rajapaksa promised to halve value-added tax (VAT) and abolish other taxes to induce growth within the Sri Lankan economy. Finance ministry officials stated the cuts could lead to a loss of more than 600 billion rupees ($3.31bn) in tax revenues, which would add fuel to the fire of the debt troubles that Sri Lanka faces.
Read more from News First here
We need your support
Sri Lanka is one of the most dangerous places in the world to be a journalist. Tamil journalists are particularly at threat, with at least 41 media workers known to have been killed by the Sri Lankan state or its paramilitaries during and after the armed conflict.
Despite the risks, our team on the ground remain committed to providing detailed and accurate reporting of developments in the Tamil homeland, across the island and around the world, as well as providing expert analysis and insight from the Tamil point of view
We need your support in keeping our journalism going. Support our work today.
For more ways to donate visit https://donate.tamilguardian.com.
