Sri Lanka’s outgoing Bank of Ceylon Bank of Ceylon chairman has stated that rates of default on state loans were almost zero in the North-East, a stark contrast to the rest of the country.

Gamini Wickramasinghe was quoted as saying,

"We are happy to say NPAs (non-performing assets) since the war, in the North and the East taken as an average is about one percent... Sometimes in some branches in the North NPAs are zero percent. You can't find this kind of thing around the country."

"They have some kind of belief that what they borrow they pay. Even the East was 1.1 percent last year. I do not know the exact number this year."

Meanwhile, rates of default across the rest of the country reached rates of 37% in 2011, from state owned agencies such as the Sri Lanka Mortgage and Investment Bank (SMIB).

For a brief analysis, see our earlier post:

Bank lending and ethnicity (27 January 2011)

As one scholar of Sri Lanka, Deborah Winslow, put it (see p31 of her 2004 book).,

“never, in independent Sri Lanka, has economic policy been isolatable from issues of ethnicity, because how the government has chosen to define and to resolve economic difficulties has consistently been informed by ethnic politics, just as ethnic politics has been informed by economic choices.”

Ironically, Wickramasinghe’s comments came as he also stated,

"A lot of people expect to get loans from a state bank and think it is easy if they have state patronage…  I had served the government for 8 and a half years but I had never done any politics."

Also see our earlier posts:

Terror in Jaffna II: blocking international efforts (13 January 2011)

The state is the main obstacle to developing Tamil areas (27 December 2010)