Economic crisis deepens with futher borrowing: AIPM
June 5, 2012
The proposal to borrow a further US $ 500 million in addition to the US $ 2.6 billion standby agreement would put Sri Lanka’s economy into further crisis; the JVP led Anti Imperialist People’s Movement (AIPM) charged yesterday.

The AIPM said in a statement that the country was already facing a crisis after the devolution of the rupee following IMF advice as the price of imported goods had gone up in price as a result. The movement said devaluation of the rupee was one of the conditions laid out by the IMF in exchange for the US $ 2.6billion which was offered. The other conditions were reducing the budget deficit to five per cent of the GDP, opening the capital account. The AIPM said the devaluation of the rupee had resulted in a huge balance of payment crisis with the Import Expenditure soaring up to Rs. 20 billion against the export revenue of Rs. 10 billion earned during the year 2011.

In addition the AIPM charged that the debt services in 2011 had also increased up to Rs. 513 billion in 2011. The AIPM also charged that the programmes such as ‘Api Wawamu Rata Hadamu’ and ‘Divi Neguma’ which aimed at increasing local production had failed, plunging the crisis to even more difficulty. “Government had no choice but to go for more foreign borrowing as there is no other way to stabilize the economy; but more borrowings spells more trouble for the economy,” it said.

Source: Daily Mirror - Sri Lanka