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Sri Lanka to secure on March 20, 2013, a sign-off on a long-awaited $2.9 billion four-year bailout from the International Monetary Fund (IMF) after the crisis-hit country secured new financing support from China. The IMF confirmed that Sri Lanka had received assurances from all its major bilateral creditors, a key step to deploy financing and an important moment for the country engulfed in its worst economic crisis since independence from Britain in 1948.People across Sri Lanka are hoping that 2023 would see the end of the worst effects of a crushing economic crisis recede, after the government reached a deal with the International Monetary Fund for an emergency loan. Instead, they are struggling with the impact of income tax rises, energy price hikes, and spending cuts that the government says must be imposed to satisfy IMF creditors.
President Rajapaksa resigned after fleeing to Singapore. Before stepping down he made Prime Minister Ranil Wickremesinghe acting President. Mr. Wickremesinghe declared a state of emergency across the country and imposed a curfew in the western province while he tried to stabilize the situation. It is reported that widespread corruption, China’s failed projects and employment of families in key positions, were causes of the violent protests that led to the President Rajapaksa’s departure. Heavy 3 Sri Lanka, with Fs, Families, Families and Favourites.
The country does not have enough fuel for essential services like buses, trains and medical vehicles, and officials say it does not have enough foreign currency to import more. This lack of fuel has caused petrol and diesel prices to rise dramatically. Sri Lanka suffered its worst economic conditions since Independence due to overborrowing for huge projects including Hambantota International Port (China), Wind Power Project (India), and others. This is a grave situation for citizens, facing starvation, malnutrition, and reduced wages. At macro level the IMFs 4-year economic program for Sri Lanka and to unlock the $ 2.9 billion loan, is welcomed, but when will the citizens receive the improvements?
Protests restarted in Colombo as the IMF package over 4 years will not solve all the problems, as the crises started with the same items and the cycle is continuing. Trade unions’ members in the thousands are protesting the increased taxes and price increases imposed by the Government to satisfy the IMF creditors. The government will need to be more responsive to citizens to avoid further demonstrations. Sri Lanka’s election commission announced April 25, 2023, as the new date for local elections and it is expected that the Government will lose major support due to citizens’ anger. The Democratic Socialist Republic of Sri Lanka’s population is 21,413,249, Registered voters 15,044,490, with 74% voter turnout at last 2015 general elections.
Sri Lanka’s Chinese-built port city stirs white elephant fears.
As far as many residents of Sri Lanka’s capital are concerned, the last thing their island nation needs during its worst-ever economic crisis is another beach – the island nation’s 1,340km coastline is blessed with some of the most beautiful beaches in the world. Yet, Port City Colombo (PCC), a vast new Chinese-built reclaimed commercial zone in Colombo, recently unveiled an artificial beach facing the Laccadive Sea. “The artificial beach is just greenwashing to attract international investors – sustainability is a convenient buzzword,” Priyangi Jayasinghe, a researcher at Colombo’s Munasinghe Institute for Development, told Al Jazeera.
Bilateral creditors including China, India, Japan, and Paris club member countries have expressed their willingness to restructure their debt amounting to $10.814billion. Accordingly, financing assurances from bilateral creditors are required only for their debt as a pre-requisite to the IMFs 4-year economic program for Sri Lanka and to unlock the $ 2.9 billion loan, a senior Finance Ministry official, familiar with the procedure, told the Business Times.
Although the total government external debt amounts to $35.052 billion as at end September 2022 only bilateral debt is considered for the debt restructuring process to release the IMF Extended Fund Facility, he explained. Multilateral debt of $9.499 billion and commercial debt of $14.74 billion amounting to $24.239 billion will be dealt separately following different debt treatment procedures. Sri Lanka’s debt forgiveness will be extremely difficult, as most of the debts were for developmental projects. Foreign Debt, Asian Development Bank 13%; China 10%, Japan 10%, World Bank 9%, Other 9%, India 2%, and Market Borrowings 47%
Why Sri Lanka defaulted on its foreign debt – DW – 04/14/2022
Pakistan is following Sri Lanka’s footsteps in China’s debt trap. China, which is Pakistan’s single-largest creditor — owning 30 per cent of its total external debt — is set to grant a $700 million loan through its China Development Bank. But experts say further borrowing from Beijing could cause trouble ahead.
The IMF is also aware of the widespread cancellation of several of Zambia’s infrastructure projects by primarily Chinese lenders, halting 20 undistributed loan balances for much-needed infrastructure projects in Zambia, adding up to just under the same value as the IMF’s loan.
International Monetary Fund (IMF) is working on debt restructuring with Suriname, Zambia, Chad, Gabon, Cameroon, Chad, Ghana, Republic of Congo, and Equatorial New Guinea.
Suriname with recent riots, the exchange rate has slipped more than double from 15 Suriname dollars to US$1.00 to 35 Suriname dollars to US$1.00 while government has cut subsidies. The International Monetary Fund approved a three-year, $688 million program for Suriname, with some $55 million enabled for immediate disbursing. Suriname with 3 Fs, Families, Friends, and Favourities.
Key LESSON for Guyana
Former Auditor General Anand Goolsarran has issued a caution to the government over its accumulation of debt. In his accountability column in Stabroek News, Goolsarran cited two recent loans from China which were announced by the Ministry of Finance. In equivalent United States dollars, he noted that the country’s external debt was US$1.375 billion, compared with US$1.303 billion at the end of 2020.
He pointed out that the Exim Bank of China accounted for six loans totaling US$240.451 million, representing 17.5 percent of the external loan portfolio. He adverted to the signing of the two loan agreements with the China in the sums of US$192 million and US$172 million for the East Coast Demerara Road expansion project and the construction of the New Demerara Harbour Bridge, respectively.
Former Auditor General Anand Goolsarran noted that “The Sri Lanka experience has important lessons for Guyana since the incurrence of excessive debt, both internally and externally, can adversely affect the economy. While Guyana’s medium-term economic prospects appear very favorable due to anticipated oil revenues, the authorities should nevertheless exercise restraint in Government spending, given the volatility of oil prices.
With street smarts, wisdom and commonsense, it will be much better for Guyana to use its National Resource Fund (NRF) OIL monies, in place of borrowings at a very high rate of interest. Huge borrowings and total debt will be with greater risks and consequently a higher rate of interest for loans. It is incumbent on the PPPC Government with its one seat majority in Parliament, to involve the ½ of the population representatives in the Opposition parties, NGOs, Faith Groups, Community Groups and Diaspora Groups for Dialogue, Discussions, and Decisions towards a better quality of life for all and consultations on the developmental projects for the 10 Regions and Diaspora.
NEW Identity Electronic Cards for USD $34 Million and NEW Identity Electronic Cards for USD $34 Million, Industry back-channel quote for USD $17 Million
Awfully Expensive. What about Competitive Bids? The reliable back channel in the industry said the contract should be around USD $17 Million NOT $34 Million. Go-betweens? Excess Profits. 3 Fs Friends, Favorites and Families? Why the silence from the Public Procurement Commission?
The French company Thales provided the technology software and chips (for card) and printed blank polycarbonate cards for the UAE, and through a UAE company (so called local content). Guyana should have requested bids/quotes from General Dynamics, Thales or IDEMIA. (IDEMIA is a multinational technology company headquartered in Courbevoie, France. It provides identity-related security services and sells facial recognition and other biometric identification products and software to private companies and governments.)
My back channel in the industry QUOTE is for USD $12- $17 million for 1 million polycarbonate chip cards with Kinnegram guilloche and micro-text print hologram; 10-15 locations to enroll and generate cards;1 large central location in Georgetown to enroll and generate cards (say 10 clerk stations); Digital signature pads x 30.10-15 IXLA or Matica brand single station laser printers and chip encoders; 1-2 large units IXLA or matica brand central station bulk laser / chip encoder printers; 30 document scanners; 30 cameras; PC and monitors x 30; Card testing units x 30; Servers and software; Database software (oracle IBM Microsoft etc.); Card readers x 500; System software to (biometric) generate ICAO (International Civil Aviation Organization) feature ID cards; setup and training; monthly fees for software maintenance and annual fees for 3rd party software licenses; partner General Dynamics Information Technology; The quote is for new cards with ICAO (International Civil Aviation Organisation ) features; and Thales and IDEMIA are 2 alternate contractors.
Former Auditor General Anand Goolsarran says ID card deal violates procurement law – a US$34m deal for a national electronic ID card among the Guyana Government, the UAE and a German company runs afoul of the country’s Procurement Act. There was a hurried, virtual signing of the deal on Friday and no one in the government has explained why the Procurement Act was not complied with. The violation of the Procurement Act would be a matter for the Public Procurement Commission to examine.
“The Guyana Human Rights Association (GHRA) says the signing of an agreement to operationalise e-governance in Guyana, without the framework legislation covering Data Protection being in place, is reckless in the extreme. The body said that given the haste, absence of public consultation and threats to the integrity of personal information, not to mention the seeming illegality of sole sourcing the project, it is calling for the project to be paused.”
Maintaining that there were procurement breaches in its handpicking of the contractor for the US$34 million e-ID contract, former Minister of Public Communications Catherine Hughes is urging the government to relook at the project, hold public consultations and have an open tender process. I endorse the former auditor general Mr. Goolsarran who says the procurement laws have not been followed.
One would start off with [calling for] Expressions of Interests (EOI), then a public tendering process that would involve NPTAB. I think the biggest insult really is that there has been no public discussion, no public information strategy to explain to people and citizens how this would work, and to alleviate their concerns and answer questions,” Hughes, an opposition MP, told the Stabroek News in an interview.