Who Really Killed Sri Lanka’s Economy?
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- Опубликовано: 16 июн 2024
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SOURCES:
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Timestamps:
0:00 - introduction
0:51 - suspects
1:38 - Russia
3:29 - Help Me Make Videos
4:20 - USA
7:53 - China
11:42 - Rajapaksa Family
14:46 - The Vote
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Made possible by research assistance from Peter Courtney (Stellenbosch University)
Narrated and produced by Dr. Joeri Schasfoort (VU Amsterdam)
Studio designed by Alex Moore Via www.dmsquaredagency.com
Hi!! As a Sri Lankan living in SL during the crisis and as a fan of your channel, thank you soo much for sharing content on the terrible situation we are in right now.
I agree with pretty much all of what you are saying in the video. But if I were to add something ,that I think was partly covered but not entirely, is how the successive governments of SL viewed the economy.
In my opinion, most Sri Lankan governments ( including but not limited to the Rajapakshe’s) have seen the economy as an instrument to get elected rather than a system to efficiently and effectively allocate resources among it’s citizens.
I think this is why SL’s government expenditure is ridiculously high and the reason why the state sector is soo massive. This not only allows the political class and their most loyal supporters in the state sector to do nefarious operations illegally , but it also allows them to rob the Sri Lankan people of opportunities and meritocracy.
Therefore like in most cases I think this economic crisis is a manifestation of the political mistakes we the Sri Lankan’s have made since independence. Sure corruption, war, and geopolitics were all part of this. But at the end of the day, I think ,the root cause of this catastrophe is definitely our lack of political sense.
Again.. thank you so much for covering this🔥🙌🏾 and thank you everyone who watched the video and shared their takes on the comments.
P.S.- I don’t really comment much on YT or anywhere. Feels nice to share once in a while. 😂
We Indians are with our brothers Sri Lanka.
"most Sri Lankan governments ( including but not limited to the Rajapakshe’s) have seen the economy as an instrument to get elected rather than a system to efficiently and effectively allocate resources among it’s citizens"
That happens in every country, democracy or dictatorship. The only reason that not all states go bankrupt is that you want to rule a rich country and not a bankrupt one.
@@YouTenaza Hi Máx!!! Yess i think you are right!!.. but unfortunately the level to which this happens in SL is almost unprecedented. Like for example, our politicians bring maximum or minimum price legislations to appease their voter demographics at the expense of the economy at large when elections draw closer. This is one of the reasons why the Ceylon Petroleum Corporation is in sooo much debt. This mismanagement of State owned enterprises have cost the country trillions of Rupees (thats not an exaggeration unfortunately.)Another thing they do is that they give government jobs to their supporters and overstaff government enterprises. Most of these workers actually become shadow workers who take government salaries but find other work somewhere else. This not only drives actual talent away but it also wastes tax payer money because the worker does ,quite literally, nothing. Also like it was highlighted in the video the vanity projects that were taken on by the Rajapakshes’ is also an extension of this problem.
Thank you for sharing, it's very informative to hear opinion from a local.
I think Sri Lanka needs to be put under British administration.
Interesting topic because i lived in Sri Lanka in the 1990s, when Hambantota was still a small fishing port, Mahinda Rajapaksa was only a cabinet minister and the Chinese hadn't arrived yet. Back then, the politicians were already pretty corrupt, but there were also a few competent government officials who managed to let common sense prevail and keep the country afloat.
I remember when a senior pilot in SIA was called back to lead Air Lanka, whose experiences in management was totally different from flying a plane.
The Sri Lanka had already bankrupt before the Chinese arrived but the Government need the money to service it existing western allies century loan. By inviting China to build the port with the China loan the Sri Lanka government can used it to pay the western century loan to buy sometime before it default. But it is too late to save Sri Lanka as time is running out.
It’s a shame that port was never given a chance to succeed. All the power struggles in politics and incitement of the public against Chinese investments doomed the whole project.
@@madsam0320 The US used this opportunity to start the interference/ meddling program in Sri Lanka, while they are sort out their problem. This is another US meddling from the New Atlas with plenty of informations supporting his view; ruclips.net/video/Ysy6qrXi0m0/видео.html
@@ielee1765 China targets small countries with
corrupt elite. They put last nail in coiffin.
There are always multiple factors involved in the collapse of a country's economy, but war and pandemics apart, incompetence and corruption are at the heart of it.
Add GREED !!
Agree..
Sri Lanka has a 41% debt to the various US banking firms. It has 15% to EU banking firms and 10% to China. Japan also holds 13%. ADB also holds 5% I think? IMF & World Bank also holds like 7% total.
@daniel halachev the problem is the interest rate, the repayment period, what happened if the loan is defaulted and other terms of contract(like using china contractor, material, manpower etc etc and whether the services was overcharged)... we do not know the exact terms of contract..but for reference malaysia ECRL railway project initially cost a 15 billion... was slashed to 10 billion (when new malaysia government was installed)... however i do agree it is mainly the problem of sri lanka politician
@daniel halachev because many nations leaning towards Chinese banks, that's trillions of dollars worth of customers west is losing. So this is an opportunity to do so calling it is "debt trap diplomacy"
@@kamalyandluri4298 when you call it debt trap you're implying that all of these nations have no clue what they are doing.
Also China has restructured Sri Lankas debt multiple times. You need to do more research before calling it a debt trap.
@@watertreaderwong4142 So, you do not know?!
@@Myway0107 know what?
Sri Lanka and Lebanon are what happen when a developing country artificially appreciates it's currency for an extended period of time and allows itself to become excessively import dependent.
The Rajapaksa family is solely responsible for the economic disaster in Sri Lanka. Terrible economic decisions, wrong capital investments with huge fiscal debts and deep corruption drove the economy aground. I don’t blame China, the US or Russia for this. I totally blame the country’s leadership and that’s the presidency.
Being a Sri Lankan who has closely followed the anomaly since 2001, the four culprits you have highlighted are spot on. I am impressed at the research you have put to make this video. None of the other channels or media has delved into the situation as you have.
If the culprits are to be listed down, it is as follows;
1. Lack of return of investment in majority of the projects/developments since 2005
2. Definite mismanagement of the economy since 2005 as you have rightly mentioned, it was a family business. Many of the Central Bank governors were appointed politically or due to acquaintance
3. Lack of vision and transparency in the government. All development was done with the mind of self benefiting through commissions and contracts
4. Covid19 pandemic. The country performed fairly well compared to many countries but due to significant lock downs, the productivity level decreased and tourism/exports/logistics decreased
5. Oil crisis. both due to Russia and US. While Russia's invasion was one reason, US sanctions on Iran and Venezuela hampered the price control of global oil. Adding to this was the Saudi-US ego conflict which led to OPEC increasing oil prices
6. Slashing of taxes in 2020, this was done to increase performance of the private sector but the timing was gravely miscalculated. This was a decision by the Rajapaksha regime to satisfy much of the corporate sector which lobbied towards his election win. Already taxes like VAT was under performing when this tax reduction was introduced, significantly hampering gov income avenues
7. The central bank governor under PM Mahinda Rajapaksha took a decision to control the US Dollar rate against Sri Lankan rupee where for the longest period the 1USD was 201 LKR. During this time, the black market was exchanging at 260LKR. Foreign remittance fell significantly due to global unemployment rates and also due to illegal money transfer mechanisms known as 'Hawala' which hampered USD being transferred to Sri Lankan banks as remittance.
8. Banning fertilizers, though this was much discussed on media, this in fact is not a core reason for the economic collapse. This was done along with banning importation of vehicles, and other luxury items to control the FOREX. The country was able to provide itself through homegrown agriculture methods and depending on stocked fertilizers. The prices of food shot up due to transportation cost increasing.
9. US dollar interest rate hike resulted in the devaluation of the Sri Lankan Rupee as well which is explained in the video.
10. Delay in requesting IMF bailout till the economy crashed. The ego of the Rajapaksha regime failed to restructure the debt and its gov spending and failed to secure a bailout an year and half before this disaster.
11. There are many other reasons but the above are the main reasons for the Economy in Sri Lanka to collapse (in order of severity)
Not only Rajapaksa. Every government that has existed must be held accountable.why don't you mentioned about government service.
You nailed it bro
It's all in the details isn't it 👍
Remainings shold be Countless inspite of any one Ruling. ( Including the finest Oppositions. - why ?
BECAUSE of following the
- WESTERN CONSTITUTIONAL POLITICS. *
EVERYTHING IS SIMPLE IF YOU KNOW MORAL GOVERNANCE.
CHEERS *
Well genocide and human rights violations are not reasons for you….bastards.
Who Really Killed Sri Lanka’s Economy? Sri Lankan's themselves. It is the same with other countries that went bankrupt. The people themselves are the reason their country fell. That is, the majority of people are stupid enough to believe somebody who promised stability when that somebody's mindset is based on only money and power. The power of the majority means that, to be understood, people in every country have supreme power. The majority can do anything, either good or bad, for their country.
Dont talk about something you dont know in public. Only Sri Lankans know whats happening there. Government still dont want to solve this problem. Instead, the new president (another colony of rajapaksas) killing and beating ppl who protest against the government. New president is choosed by Sri Lankan parliament. Not ppl. So thieves choosed another thief to be safe under. This is a huge plan you guys dont even know whats going under in Sri Lanka. They protecting rajapaksas.
@@HP-hu8rw Did you ponder the body of the comments? No country will move forward without its people, because the people in every country have supreme power. The Sri Lankan parliament installed a new president. Does this mean they are the majority and have power? No, they don't.You and the people of Sri Lanka are the majority. If the majority of Sri Lankans allow another thief to run their country again, then the cycle of stupidity will go round and round in your country. There are 300,000+ military active personnel in your country, and the adult population in your country is approximately 14.41 million minus the military active personnel. Now do the math and ask yourself, do they have power over us?
Right-on you nailed it. To be a more direct the Singhalese majority ruined the country.
They are a democracy so they chose their own government.
One Brother : President
One Brother: Prime Minister
Another 2 Brother: Minister
What could go bad 🤣🤣
It's Rajapaksa family who had destroyed Sri Lanka's economy!
And he is holidaying in Singapore
It was the Sri Lankan government that wanted to build the port. Also, the feasibility study was done by a Canadian company. The Chinese construction company is the one selected to carry out the work and also investments.
Sri Lanka's debt to China is only 10%. The majority of the money is bonds owned by western finicial institutions.
He got an agenda here, a debt percentage less than japan somehow or rather had an outsized effect on sri lanka economy. I bet he didnt even check the forex outflows balances to see whether his allegedly “hidden debt” is consistent or not. This channel is being more like economics explained by the month.
Yea, im dissapointed too 😔
I mean, he said that China has a reputation of not writing off or restructuring bad debts unlike western financial institution. suspicious statement because the complete opposite is true, weird because i liked this channel but i think he's mainly an economist and isn't interested in politics.
@@omarhafez7775 "because the complete opposite is true" Funny because it isnt. China has land grabbed from in debt nations multiple times already and they are just getting started with hostile, aggressive investing/ debt policies.
@@IsomerSoma ok, can you give instances of this because i can give you dozens of examples going back to the formation of the IMF and world bank, the structural changes that they imposed on third world countries, the loans given to countries that were known to be unpayable, western trans-national corporations expanded campaign of land grabs in africa and latin america, not to mention the REAL F**KING aggression by western nation spearhead by usa against poor countries whether its by direct invasion or backing military coups which to my knowledge is unmatched by anything the Chinese has done
Only 10% of Sri lanka's external debt is from china while the rest are from Japan and western institutions. So I do believe the western debt is a huge factor because they're backed by austerity measures as we have seen in Greece which I've studied the Greek debt crisis quite extensively
The bigger issue with western debt is that it's private bondholders. Which is bad, cos that tends to be more short term debts and is harder to restructure cos you have thousands of creditors to deal with and they don't have images to uphold cos no one names them
Oh but austerity measures weren't a problem. They will be, once the IMF bails them out. But Sri Lanka was spending profligately and had terrible public finances despite that western debt, cos it was mostly to private debtors who don't dictate policy. They just charge high interest rates and buy mostly short term bonds aka all they care about is making their money.
Exactly this clown 🤡 thinks everyone is dumb and he’s trying to spread lies about China ! He didn’t realize there are ppl that know the truth ! 90% of the debt is owed to the US , Europe, Japan and India !
False logic. Only ccp occupies territory in lieu of loan repayments
@@JG-qy6fe but they didn't, if you look at the deal, the port still belongs to Sri Lanka, still pays tax to Sri Lanka govt and stil operatesl under Sri Lankan regulation. Only port management is under a Chinese company. So let's pretend you're right, by your logic Sri lanka's entire economy collapsed because they gave up a port they never had to begin with..... your logic is trash
Sri Lanka was also heavily reliant on Russian and Ukrainian tourism. This has been heavily effected by the war.
It’s heavily reliant on all tourism. This isn’t like with Turkey.
@@PutXi_Whipped At the start of the year, 15.9% of international tourism arrivals were from Russia according to the Sri Lanka Tourism Development Authority... it's even higher than Indian arrivals and a higher Russian demographic percentage of tourists than Turkey had.
What about Indians? Why don't Indians visit them?
@@cashewnuttel9054 Indians have other options to visit such as their own tropical islands of Andaman & Nicobar (middle class) or country of Maldives (for rich people)
@@cashewnuttel9054 India is the second largest tourist group.
Instead of saying "4 suspects", I'd say "4 contributors" since all of the four reasons caused the downfall of Sri Lanka's economy; the biggest one being its government itself.
All government takes some level of loans to fund themselves, but Sri Lanka's government didn't utilize the loans to help economic growth. They also abolished fertilizers for "organic crops" without planning which halted almost all food production and had to rely on foreign imports. If they didn't do such things, it would still have a bad economy but at least not this catastrophic, despite the ongoing world Shenanigans.
Couldn't agree more, agriculture change needs always a comprehensive program with substitute instead of a ban... It's so moronic 🤦♀️
You do not need fertiliser to grow organic crops you just need no dig and compost. Anyone can do it
@@Anosha116 it must be done by stages and not in a sudden switch like every decision.
id say top contributor would be China since they unleashed covid to the world and play innocently dumb.
regarding the 'fertilizer' issue, exprez did right...to stop dead use of toxic substances to grow our food...any dad that realised a mistake (toxics) would change it Immediately - gut reaction
Gota was not corrupt...he is Clean
-my conviction
we lost more than a good president there,
Sri Lanka 41% debt:
13% - Asian Development Bank (a western own and run bank)
10% - China
10% - Japan
9% - World bank
2% - India
47% - Market borrowings (bonds) - most of which is held by BlackRock
9% - Others
Wumao?
Problem is not quantum but, quality. Interest rate charged. Due diligence before giving loans weren't carried competently by China. They invested in Rajapaksa's territory to sway him. Those projects failed and turned to NPA.
@@sublimefermion2205 hmmm 🤔
@@sublimefermion2205 都是中国的错，所以破产都是银行的错？
@@sublimefermion2205 why not japan?oh yes ,china is more powerful than japan .lol
What about a 5th option, the people themselves?
They voted in these corrupt politicians, why are they blameless?
A democracy ensures you get the government you deserve, not the government you need.
The problem with that theory is that most voters are ignorant of what policies are really required to uplift their lives and most politicians who are successful in politics, are closet narcissists, who are money and power hungry. This results in the most conniving politicians, suckering the ignorant masses into getting their votes. Especially in countries where education is not of a high standard and/or availability or where their news media are paid puppets to the highest bidder.
Agreed. They deserve every bit of shit they are getting. Elect a clown, enjoy the circus!
I‘ve been there many times & its harsh to say they deserve it.
But the levels of naivity & backwards thinking I saw was sure paved the way for their troubles.
@@LboroWick hey I have been fascinated by this same question can you please elaborate? I keep wondering why the people kept voting for basically overtly corrupt strong men with little to no respect for institutions?
It seems you have some idea what went inside their heads to give the Rajapakshas such overwhelming support.
@@aquatick1848 I‘m no psychologist but to me it looked scarily like a battered wife going back to the violent husband expecting things to be better. The country suffered a 30 year very bloody war and the Rajapaksas took credit for it. AFAIK the alternatives to Rajapaksas were no different to them in terms of corruption and incompetence.
It’s as if the kids there have any shame or self-reflection capability erased of them en masse at a young age. The ones that end up in politics or government institutions corrupt it every step of the way and the rest just accept it as normal just to get by. Take a good walk outside of the resorts and you see that life is very cheap if you are local.
Great video as per usual! One small criticism: it is pretty hard to distinguish the orange border of the thumbnail from the red yt bar that appears if you have already watched a video. I wanted to watch some older videos since I have only recently discovered your channel but I can't really tell the ones that I already watched apart. Might be a me-issue cuz I am watching on a mobile device
100% agree with this. Pretty sure this isn't the only channel guilty of this either.
100% agree. plz fix
Second this.
Ez fix: get rid of the orange border on the bottom
Yessss i Always think that.
The pandemic also crippled their tourism industry as well. I would say it's the sum of all the points you've laid out as well as the pandemic.
That would still fall into the fault of China as China didn't ban international flights out of the country until much later
@@rejvaik00 : The original outbreak of the virus started in Fairfax, Virginia of USA in June 2019. The US government covered it up and didn't notify WHO. Yes, the virus was designed and patented by the US government in 2000 before the outbreak of SARS in China in 2003.
terrorism attack destroyed tourism first.
@@elliekwong3180 dunning kruger would be proud of that 🤦
My vote is the ruling class of Sri Lanka. It's been the same story for way too long. From my experience the people from Sri Lanka are welcoming, hard working and compliant people. It is through the lack of functioning democratic institutions these people never get a chance at power.
I know this one guy who lives in Norway now, he was a ships captain for 12 years. He managed to flee with is family because of the civil war. Because of the timely nature in which he had to flee he didn't have any documentation. He had pictures of him as the captain all sorts but nothing official. He works in a bowling alley last time i saw him. Non democratic and coercive institutions are washing human potential on a collosal scale. This is why I think the regime is to blame.
Yea unfortunately China’s bad loaning practices will sometimes allow governments to be a little more corrupt and add fuel to the fire, but problems like this can be solved by having a free and open society (democracy, free speech, free press, free protests)
The USA’s role in this is kinda weird, seems more like capitalism caused people to pull out of the country(?) (or just invest less), which seems kinda reasonable when world or locally economies are having a downturn.
Russia/USA/China/globalization are parts of it, but mismanagement/non preparation for market downturns and corruption would be the biggest factor
"It is through the lack of functioning democratic institutions" - Sri Lanka is a well established democracy, and her leaders were repeatedly voted into power fair and square by clear margins. It's a multi-party representative democracy where the president can be removed from office at any time by a majority vote in parliament. Rajapaksa won just shy of a two thirds majority in the last election. The people of Sri Lanka voted for these leaders, repeatedly. Why? Cos they're war heroes. They brought the civil war to an end, after decades. We may end up seeing the same thing play out in Ukraine some years down the line now, given Zelensky's popularity at this point. As they say, you either die a hero or...
It turns out that having a civil war, based on racial myths made up by a bunch of EuroAnatolian mestizos throwing stones at you from their glass house, is bad for economics.
@@ArawnOfAnnwn One can only look at Lebanon and see the consequences of a corrupt ruling class on a country.
it wasn't russia's invasion that caused higher prices, it was the eu and us sanctions.
china just holds about 10% of sri lanka's debt, why would the debt be china's fault?
Ah yes. Let’s completely ignore the incompetent Rajapakshas and blame it completely on the West.
That sanctions were because Russia invaded.
@@akaneinvidia5874 the rajapakshas are not in china or russia...
@@redeyexxx1841 the us and europe didn't have to enter economic warfare with russia, that was their choice. one that is destroying europe's economy)
sri lanka is paying some of the consequences...
@@randomdude2832 They had to because Russia is invading Ukraine.
Went to Srilanka back in 2018, and passed through Hambantota. We were so surprised to see such a massive port, massive road infrastructure without any traffic. I don't even remember seeing another car on the wide open, multi-lane highways - at 4 PM! Clearly it was built without any practical use in mind - but was rather built for the sake of building something.
It's a nice port for the Chinese navy, I guess they were prepared for the bankruptcy so now they own it as much as the government. But now it also has an interest in helping fix it, so it's not all bad.
@@chubbymoth5810 Exactly, the Chinese schemes are not bad in itself. In this case it played a role in increasing the mismanagement by the corrupt nepotistic ruling dynasty, but then again that dynasty would have simply trashed the country in a different way if China wasn't there. Hypothetically, if the country didn't collapse, in the long term the Chinese project is still good: China paid for it, so it's not like Sri Lanka was robbed. The only thing they lost was the land, and eventually after 99 years (or until re-negotiation if Sri Lanka gets stronger sooner), they will get back the land with developed infrastructure on it. If the country doesn't collapse, what usually happens is that people gradually move to where the infrastructure is good. So sure, maybe it's empty and useless-looking for the first few years, but it won't be long. People adapt; they're not stationary idiots. It will eventually become economic development regardless.
It was the Sri Lankan government that wanted to build the port. Also, the feasibility study was done by a Canadian company. The Chinese construction company is the one selected to carry out the work and also investments.
@@chubbymoth5810 do some research before showing off your ignorance and bias. First of all China was just selected to finance and build the port. The decision to build the port was Sri Lanka's. And China's debt to Sri Lanka is less than 10% of it's total debt . Most of Sri Lanka's debt is owed to IMF world bank Japan and private lenders.
Hahaha. Blame the Chinese while half its debts are western and American own.
From Sri Lanka - surprisingly your research on Sri Lanka is to the point.. and it is rajapaksha family who is responsible for
But he was not entirely accurate about Reasons 2&3. Chinese loans only amount to 20% of our external debt and US interest rates didn't drop our currency exchange rates, but the money printing and the CB floating the rupee in March.
@@OPM6906 - China owns 10%.
@@laqueenawilliams4762 It’s 15 percent (most likely) A little more transparency would help the entire situation
You should hear about how much money the rajapaksha’s had in their bank accounts from nations like China who is more than open to doing corrupt deals. I feel bad and hopefully your nation can recover. As a citizen in a more western less corrupt nation, I find that term limits and caps on power help reduce corruption a lot.
@@OPM6906 the rupee should have been floated long time ago. If only we did it earlier we would have only seen a gradual rise, but instead the rupee was held by the government artificially. Chinese loans may have been little as a percentage. But those were short term, high interest loans and half of them were stolen by the Rajapakshas.
I must say, your explanations have become much clearer! It's much easier to grasp when you explain it in simple terms and then expand into detail from there, along with the many graphics and stock footage... Idk why but the stock footage really helps me concentrate XD
It was a culmination of acts by various actors over time that broke Sri Lanka, and most of the interdependencies between the actors are obvious, but many other are hidden. The lack of checks and balances in the political and economic system, populism, plain old human folly, and a tolerance for casual corruption all made it much more likely to happen over time.
So in the end, the only real people responsible are they themselves
I mean the Rajapaksa's obvi, but it's clearly a multifaceted issue.
Solidarity with the people of Sri Lanka.
I think the Sri Lankan people are also responsible. First, they elected incompetent leaders, who spent huge fortune on some investments. Then they let opposition leaders incite them against those projects and ruin any chance of making them profitable. Also scared away tourists and investors with their frenzy infightings and agitations.
as a sri lankan i approve of the first points but the last point was not in our control.
I think you nailed it. The SL majority are short sighted and ethnically charged voting majority. They don’t understand much about macro economics etc. The government subsidizes much of the imported food to pacify and buy votes. In the United States a Black man was elected as president. In SL they will only elect a minority the day pigs fly. It’s vast majority is tribal and easily tricked by charlatan politicians that play the ethnic card. I don’t mean to be critical but it’s the sad truth
As a Sri Lankan I fully agree with everything you said. We the Sri Lankan people are ultimately responsible for the downfall of Sri Lanka, not anyone else.
@@mayarkonline I retract my statement and now I have lost all hope in my country
@@mayarkonline Sri Lanka can and will recover, just need to stand together and leave sectarian fighting out.
Can we just agree that government mismanagement, corruption and overreach is to blame? This is an extreme example of what’s happening all over the world.
China has 10% of Sri Lanka's debt and the economic problems were there lo g before 24 January this year.
It's a accumulation of all 4. But the main people are the Rajapakshas borrowings and the mismanagement when running the country. Srilanka would go into a recession but it would have come out of it if it weren't for low taxes, heavy borrowing and heavy corruption
do some research before showing off your ignorance and bias. First of all China was just selected to finance and build the port. The decision to build the port was Sri Lanka's. And China's debt to Sri Lanka is less than 10% of it's total debt . Most of Sri Lanka's debt is owed to IMF world bank Japan and private lenders. So I don't think China is responsible for any of this.
@Balaram Chakrabarty lol proof I believe the loans made by world bank IMF and the Chinese are to the same government run by the same people so do you believe that those people receiving the loans from world bank IMF become honest but and then they become corrupt when they get the loans from the Chinese
@Balaram Chakrabarty lol proof
@Balaram Chakrabarty typical indian, very butthurt about china growing influence in south asia. if you come to me and asking me to lend you money, and then you corrupt it by yourself, is that my fault or your own fault, genius? it is clearly yours. same like sri lanka, it is corrupt politician's fault, not china. keep butthurt son.
@@walterwayne3081 your right china is thr 3rd biggest lender, but you need to know the problem here as mentioned in this video china provided loans to srilanka in project they knew won't make much revenue to the country where usa and india refused to give when mahinda wanted money to make the hambantota port. China also make sure only chinese companiess work on the project meaning no job opportunities for local construction workers for these projects and well as the srilankans don't have much control of how the project should be made. I have been to srilanka many times from 2013 to 2019 so I have seen first hand. Imf and Japan provided loans for projects that can make money with lower interest rate, whereas china provided loans to projects that might flop and most politicians know will flop but their greed of getting cut of the loans for their personal use make them go with the and make the tax payers deal with the loan. China interest rates are higher than the west or Japan so for project that don't make money and they need to pay back at a higher interest shows how dreadful Chinese loans are. If you want some articles to confirm my proof just ask. However it's mostly srilankan politicians fault especially the Rajapakshas who approved them cause they made around 10million dollars from taking 1 to 5 percent of the loans given for their personal use
It's mainly the internal issues, e.g. if someone loses their job, then home loan and interest rate increase are just making things worse but not the main cause.
- the corruption
- lowered tax
- ban chemical fertilizers to boost their ESG score to qualify for more loans from IMF
- tourism decline
Combine with increasing commodity prices, USD strength, and rate rise. It's just the perfect storm.
All of the above, but mostly staggering miss-management. Keep in mind that Sri Lanka has a stable multi-party representative democracy. The president can be removed from office at any time by a majority vote in parliament, and likewise, the president can dissolve parliament at any time. Rajapaksa won just shy of a two thirds majority in the last election. The people of Sri Lanka voted for these leaders, repeatedly.
Well they're war heroes. It was the Rajapaksas who (brutally) brought the civil war with the LTTE to an end, after decades. We may end up seeing this same thing play out in Ukraine next some years from now, given how popular Zelensky is at this point. As they say, you either die a hero or...
people elect them because they believe, its rulers responsibility to keep their good will on work.
@@sandarudamsara6175 Well safe to say they aren't doing that so well
Democracy guarantees the people to be lead by the leaders they deserved most.
Isn't this gotabaya's first term? Sadly, it's hard to predict how a ruler would act before giving him power
My Sympathies are with Sri Lankan people who are the real victims. Combined effect of many factors led to this situation, this taught everyone a great economic lesson.
Now what are your suggestions to come out of this situation?
Good work with the video. We definitely need more critical thinking on issues like this.
Excellent synthesis! I hope my engagement gives your channel a needed boost in the algorithm, more people need to be watching you!
About Hambatonta, I remember that at first the Chinese wanted to build it in return for the right to managing it. China also planned to build industrial parks near it. But then the Sri Lanka opposition politicians, with the encouragement of India and the US, attacked the project, claiming that the government is selling out to China because the Chinese will run the port when it is finished. So the project stalled, later the Rajapaksa government lost the election, and the opposition came to power. At first they wanted to take over the unfinished project. But they had no capability to build it for themselves, and no other foreign investors were willing to take over. Meanwhile, the cost started to overrun because of the stalling. So the new government had no choice but to turn to Chinese again. This time, the Sri Lankan government had no other choice but to sell it to the Chinese investors for the right to run the port for 99 years because the debts had ballooning due to the postponement. Even worse, the industrial parks that would have contributed to the port business, also got stalled. Sri Lankans only have themselves to blame for.
One small correction...India and us stalling it was limited to informing the then govt that the project is not viable when they were approached..34 ships landing here is proof of it. Chinese investment is for strategic purpose eyeing india. Rajapksa chose such opaque projects not for economic viability but for for political mileage in his native. In return he backstabbed india by allowing the Chinese encircle india. No country would want to part off its land to another. Sri Lanka did that. And still the blame is on india.
@@ravindilip . It's none of India's business. Nor the Americans. So why are the Indians telling the Sri Lankans what is viable or not? Should the Chinese go tell the Indians they can't afford a high speed rail, which is probably true, but don't say it.
Blame every 1 but SL for their faults. Yup sounds exactly like a SL.
@@yellowbird1170 hahaaa so now you can enjoy your chinese port in your dinner well chinese have kicked your asses in this difficult its the indians who r feeding you thankless ppl you chinese stooge can defend as much as u want but reality is before everyone
@@yellowbird1170 Did you even read Di rav's comment? The Sri Lankan govt asked India to invest in Hambantota, so of course the Indians will do a viability check. Heck, they even requested India to buy the Hambantota airport when the port had already failed.
Who’s fault is it? It’s Sri Lanka’s people. They voted for the wrong rulers. There were so many red flags before but they ignored it as the Rajapaksas appealed to the Singhalese nationalists. They were pandered with political rhetoric by Rajapaksas giving big promises such as low tax and organic agriculture, flashy white elephant projects funded with foreign debt, dole outs, etc. Now, no one even wants to rule them. They have kicked out the Rajapaksas but the country is nowhere close to finding any workable solution for the crisis. The lack of foreign reserve, current account deficit, trade deficit and crippling debt exceeding GDP means it would take at least 2 generations to put the country back on track. The country looks more like it’s on track to be paralyzed economy like Lebanon or in worst case, eventually like Venezuela.
It's heart breaking.
I'm a Sri Lankan , In 2019 there were two main presidential candidates , Gota and Sajith . Gota is the younger brother of Mahinda and Sajith is the son of Premadasa ,so both are family politicians. Also when Premadasa died in a bomb people celebrated it , that shows what kind of reputation he had . Mahinda's reputation was not good either but it was better than Premadasa .Sajith was a part of the ruling party at that time and the government high officials and politicians received intel about terrorist attacks but they did nothing , this was the main reason people thought they need Rajapaksas back ,We didn't vote for a good president that year instead we voted for the least worst president . So simply there were not much choice anyway
It is inappropriate to say the fault comes from the people at any time, actually it is Sir Lanka's constitutional system that elected corrupt government administration even though it was in the democratic way.
Sri Lanka needs to learn Singapore/China style democracy, not WEST style democracy, so long if there is a firmly strong political party that selflessly and truly serve the people, the country will have a brilliant future.
@@simonfoster1881 singapore is free market with interventionism (iceland somewhat the same) the almost oposite of china who from the us comunist, something theorized by marx, a german guy. Your idea of deviding east and west is laughable.
@@puraLusa I don't think WEST style democracy is not good, but obviously it is not fitting into some developing countries including Sri Lanka. I hope Sri Lanka find a way to go through all the difficulties, my idea is that the country like Sri Lanka can go the path that Singapore/China once take to develop the country and prosper its people, and it is normal someone disagree with my opinion, respect you, but what about your suggestion other than complaint if it can help Sri Lankan?
I'm on Team "All Of The Above." Complex systems like economies or ecosystems tend to be quasi-stable, very self-correcting. But they are vulnerable to being hit by multiple stresses at once. It challenges their ability to adapt and evolve their way out of trouble.
Same here. Though I might add all of the above + more as there are probably other factors not mentioned in the video that have contributed to the current crisis. And out of the four mentioned, while there are some that may have contributed more than others, none of them feel like the particular main reason
@@H7B2ify Tourism hit after 2019 Easter Bombings, Tourism and Remittances hit after Pandemic.
Amazing content bro!!!
I am Sri Lankan. We have free education, free healthcare and our most of university students do not study at all. And when they graduate, expect a gov job. Gov use 85% of their income to pay wages. We have so much subsidies and due to that huge budget deficit which, continuously growing. And most unfortunately as well as corrupt Rajapakshas there is another socialist based political party called JVP which promotes a lot of socialist, freebie ideas. They organize unions strikes in almost every private or public organizations and cripple those, I am so sad about my country. It was a great place
If more Srilankans thought like you there would be no issues. You see absolutely correct
Well jvp didn't rule the nation did they? Your favorite politician did. 😂😂😂😂
@@thtkp5 unions made by jvp are a real pain in the a$$
Mr. Kasun , what do you mean by " most of our university students don't study" means? I don't know whether you have step into a university or not, but as an undergraduate I am totally disagree with you. Don't be narrow minded and get the world a bad picture anyway. You should be ashamed of yourself
@@k.k.pasanpankajith6091 Keep your emotions out. If you are a university student then you better know than me. Since you know better than me, I do not want to explain. Btw since you ask, Yes I have stepped in to a university. Actually I am teaching in a university.
China 🇨🇳 portion of Debt is only 10°
ADB have the biggest portion and the West Merket Lender
Yeah. That narrative is mainly about what unofficial lending might be combined with what the money was used for.
I can hardly wait for the virtual politik video discussing what an economic success Sri Lanka is...
Sri Lanka has huge debts, limited revenue streams, low Forex reserves. So Sri lankan govt failed to predict the perfect storm which was coming their way and when it finally came, it wiped out everything.
Thanks for sharing 👍🏻
Also the Chinese debt trap is false. China is owed only 10% of the total owed to lenders. The H port was leased to China to pay IMF and other private lenders.
I am just tasked to write a report on this crisis and your video came out just on time! Thank you so much!
10% of Sri Lanka debt is from China , 10% from Japan and over 45% from Western countries .
Check Sri Lanka Gov't website and they listed the debt % from each countries .
Debt from China had been converted into Port , Bridges & Roads . Where were the Western 45% debt now ?
Please check clearly before writing your report .
Corruption always ends like this. When the money of a country gets funnelled in the hands of few, the wheels of economy stop. The best way to keep a healthy economy is to have the money shared among the population as equally as possible, so all the people can benefit from being part of such country, and to create opportunities for advancement based in merits.
If the money is accumulated, it gets to the point where the people having it have no way to spend enough, effectively reducing the economy cycle with it. When a person save X amount each cycle, not much from the basic living standard costs, is not a real problem and in fact healthy for the banking that can loan to create more market and job opportunities, but when a person hold X millions amount each cycle, it basically prevents millions of people from saving and from getting loans from banks, that are forced to reduce interest to not collapse under the pressure of the interest of the big holders, and to reduce loans to have liquidity for those few individuals.
Economy itself is very sensitive to huge inequalities, and is only a matter of time before the country gets crashed under those. It's normal to have big companies and even good, but very inefficient to have companies large enough that their numbers hide huge payments, that are for the most part never going back to the economic cycle.
In other words, if you create richs and poors, the rich will have no market to sell and/or enough things to buy, and the poor will have nothing to cover their basic living expenses, resulting in a collapsed economy that has no real market but only holders, which in turn create even more inequality. If the fruits of the economic boom of Sri-Lanka would have been shared via the development of the country, there would have been very less chances for this to happen, but instead the government ruled for the few and the family. It was a mistake of catastrophic proportions for the citizens, and funnily enough even for the huge holders, that held money that now worth nearly nothing and are captives of the economy they crashed.
All factors contributed in some degree to this collapse, but was corruption the one that landed the final blow.
Summarized the topic so well !
subscribed
Have to say that China is only bringing goodwill to Sri Lanka by building civil projects. However China never interven with local political system and does not impose rules for other countries to reform or change regime. In this way, you can not say China is part of the blame at all.
That’s because white boy want to blame China for everything.
@DEVANAND BISHNOi - helping build roads and ports are useless? Dumb
@DEVANAND BISHNOi - way better than what the white countries does to my nation and rest of Africa.
your number regarding Chinese loan is incorrect. Japan and Chinese each holds 10% of its debt, Asian Development Bank is 10%, but this bank is majorly controlled by Japan, so Japan holds 20%of the debt, IMF has another 12%, other international financial institutes hold 43% of the debt. China’s loan has 10% contribution, that it is.
Sri Lanka's foreign debt summary (April 2021): 47% market, 13% Asian Development Bank (chaired by Japan, 15%+ Japan, 15%+ USA, 6% China, 6% India, ~6% Australia, ~6% Indonesia, ~6% Canada, 5% South Korea), 10% China, 10% Japan, 9% World Bank, Other 9%, India 2%.
The Chinese debt has a much higher interest rate and lower maturity term than the Japanese debt.
@@BurningMad 2-3% over LIBOR is very typical World Bank loan rate (go search for the typical World Bank loan rate for other countries) and that was the range those Chinese loans were at. Keep in mind that Sri Lanka chose not to have the World Bank terms back in 2021, because the terms from the Chinese were more favorable (as the Chinese didn't require Sri Lanka to restructure their existing loans like how IMF asked them to). In fact, China was being pressured to help forcing Sri Lanka to restructure their debt (search for Yellen's comment).
Which Japan debt are you quoting? Did you mean to do an apple to apple comparison and refer to those later non-project syndicated loans that were around 2.5% over LIBOR when countries were not stepping in to provide competitive loans and when the island was nearly bankrupt? Or loans of the earlier days? Can you quantify what you meant by "much higher" so that we know the actual difference you are thinking of? Frankly, I am not sure how a 2-3% over LIBOR could be "much higher" in any sense. So I supposed you might be just expressing your bias via a propaganda you got it from somewhere.
@@BurningMad bot??or just spreading propaganda
@@oinamronenzaaa4923 you're the bot. Stop being a clown.
Thanks for the video !
Corruption alone can killed the economy of nation
Sri Lanka has been experiencing twin deficits for long time due to economic structure issues. In 2019, Rajapaksa Regime made a huge mistake by cutting out TAX and then came covid. Sri Lanka has huge foriegn debt payments service , this can not be served without the assistance of International markets. With the Covid19 , tourisam income reduced and with the tax cut , Country rating downgraded and we were unable to go to international markets. Without access to foriegn currency funds, SL had to manage the import through reserves and export income, which was not sufficient. This scenario was clearly visible in 2020 as covid19 came, but Rajapaksa regime didnt go to IMF to restructure the loans and promised us homegrown economic solutions.. Meantime, they destroyed the economy through money printing and accomadative central bank policies leading to currency devaluation. Due to the said policies(low interest rate regime), stock market bloated and other assest prices bloated , prices went up slowly and demand went up hitting the import bills. Seeing the devaluation of the currency , government tried to artificially hold currency value , which eventuality dried out the reserves and meantime supply shocks in the world made it worse. Specially when our currency is not reserve currency , printing money freely is a patway to the grave. We are country with long history and educated people, it sad to how people in the country suffering due to mismanagement of the Politicians along with creating corrupted politcal culture. However , if we can restructure our debts and do economic reform correctly , we can bounce back within 5 years.
I hope so.In order to get out of this problem, all the people have to go together and understand the truth and stop the agitations now.
Please do a video on the recent rise of the USD vs the pound, euro, yen, Indian rupee, Thai bhat and other currencies from US allies from this recent war in Ukraine.
It’s not just the ruble that is appreciating.
Russia's war with Ukraine would mostly have affected wheat, barley and fertilizers, if it were not for the West's sanctions. I would look closer to home for the reasons behind the high inflation and low foreign reserves. Sri Lanka just does not produce enough to garner sufficient foreign exchange in order to purchase items they do not manufacture or mine. Nor are they an off shore tax haven similar to Singapore which prospers from low taxes and a desirable life style. China may have loaned Sri Lanka money to build infrastructure, or Sri Lanka may have borrowed money in dollars, which would cause financial distress when the dollar rose.
Sri Lanka's debts are made up of 10% Chinese, 50% western financial companies, 30% western countries and allies. The Chinese 'debt trap' is a myth. Same story in Africa, where Chinese debt makes up around 10% as well, versus 35% western owed loans. On average, western loans are twice as expensive as Chinese debt, which is why many countries prefer dealing with the Chinese.
As he mentioned and many others, China does not publish their foreign loans so we may never know the true numbers.
@@tsipatos6532 china never publish their foreign loan. But sri lanka do, and thee loan sri lanka to china only 10% from their entire debt. That fact the western drstroy srilanka and blame it to china... Shame on you
@@tsipatos6532 You are gullible to be caught looking for number that were made to look hidden.
@@danielng9798 China's Belt and Road = We build your road, then belt the f@#%k out of your economy.
Do not try to play down this phenomena of Chinese Debt Traps. I could list many useless projects funded by Chinese state loans with underhand dealings in Sri Lanka. Western loans, including Japanese grants are quite transparent and were not offered for exorbitantly priced projects that failed feasibility studies repeatedly. That 10% is the myth, and it put a lot of strain on Sri Lanka's economy without any productivity and later sucking funds out of Sri Lanka.
I always get a little confused when I hear something along the lines of, "The government ran out foreign currency reserves and so the country could not import fuel." How does the private sector fit into this? My best guess is that in a country like Sri Lanka the government is the only entity that is willing to exchange (in large enough quantities) local currency held by the private sector for foreign currency, foreign currency that the private sector can then use to buy imports.
Can someone shed some light on this?
Also the government sells those foreign reserves in exchange for local currency to increase the supply of USD in the local market relative to their local currency and thus keep the price of USD stable, which benefits importers in the private sector (the price of oil doesn't increase so much in local currency terms). Once the government runs out of reserves, they can't keep the artificial value of the currency and it just depreciates, making oil much more epensive.
They used the foreign currency to peg the rupee at a level much higher price compared to USD so the importer can buy the fuel. The government doesn't usually buy it directly.
I can think of 3 key reasons (there could be others I'm missing):
1) Companies dealing in exports bring in a lot of foreign currencies, which have to be exchanged for rupees in the countries for expenses like land, rent, worker wages.
2) Plus don't forget that, till the 2019 Easter day bombings, we had a very vibrant tourist economy. The exchange of their currencies is quite large (I think 10% of GDP).
3) Expatriate worker remittances. We have many domestic workers (especially in the Middle East) that send money back home to their families (so foreign currencies exchanged to Rupees) So there's a significant amount of foreign exchange there too. It's significant enough that when key economic data in the country is considered foreign exchange remittances are also looked at.
That's because in Sri Lanka only the government has the sole right to import fuel. The private sector does not import fuel. India Oil Company is the only private company operating in Sri Lanka, only by running some fuel stations. The rest are owned by the state oil corporation. Kind of like a government monopoly in fuel when it comes to Sri Lanka.
@@thulithaabayawardana9146 Agree and I'm not disputing it.
Was addressing how the private sector contributed to FX reserves. And if I were to tie it to the oil purchases from the state owned entities, all that FX revenue generated from those 3 points (and others I missed) would be used for imports (including the oil from the state owned corporations).
Great vid aye there are few missing key points. 2015-2020 under Ranil wickramasinghe government was the worst borrowing peroid along with worst scam of central bank bonds. Most foreigners are unaware of the Wickramasinghe's role of allowing Rajapakshas to run their dirty schemes. Wickramasinghe made Sri Lanka's opposition party very weak. Wickramasinghe and Rajapakshas are responsible for this collapse a like. I think you should do more research on 2015-2019 period. The melody goes like this in Sri Lanka. One family comes to power and they get their schemes done and then other party comes to power by selling the idea of catching the previous scama while they do the same all along and the cycle repeats.
This channel is amazing. I’ll be joining your discord
Thank you. Good discussion 👌 👍
I vote for all 4. Things are rarely simple and usually have multiple root causes. I have no idea what was the last straw that broke the camels back.
If you need a research assistant Joeri I would very much be interested, I study economics and business economics at Erasmus University. Right now I am a second year’s bachelor student and teaching assistant.
Thanks for you interest Luuk. I cannot guarantee anything. Mainly because I first need more funds. But, feel free to send me an e-mail at info@moneymacro.rocks
@@MoneyMacro Here are the breakdowns of Sri Lanka's foreign debts: 1) China=10% 2) Market Borrowings ( US Bankers) =47% 3) Asian Developing Bank ( Japan and US own majority)=13% 4) Japan=10% 5) World Bank=9% 6) India=2% 7) Other (IMF)=9%. The Western countries + India + Other (IMF) are holding 90% of Sri Lanka's Debt and I think it is the Western debt trap.
@@MoneyMacro China ‘not to blame’ for African debt crisis, it’s the West: study
High-interest loans from private Western lenders account for most of the burden on countries in Africa, Britain’s Debt Justice charity finds
Campaigners are calling on the G7 to stop using Chinese loans as ‘distraction’ while letting their own banks, asset managers and oil traders off the hook
@Big John And that chinese company are the ones who are going to make profits for years to come. Unless the SL government has the balls to say no, ofc. But until there comes a fairly intelligent government, china will milk everything becuz basically the port acts as a puppet. In a few years again for maintenance and stuff they are going to come back. Already the hambantota harbor and the colombo port city are practically under them. Meaning, they have established their years worth of profit. And that is how they debt trap you. And you cant really say anything cuz they already control it and when it comes to debt, they are not usually willing to restructure it. The talks that happened recently is proof for it. So, how othr nations try to fck up poor nations is not straight forward as it seems. What matters is not the amount they give as loans. But how much assets that it has seized control over and how mcuh damage they do to a country. generally, vesting their power on.
No one is responsible for srilankan economic crisis except the currupted politicians
Correction: @10:25 Sri Lanka was forced to lease Hambantota Port to pay Western held Debt.
“The usual account of subsequent events has been that, given Sri Lanka’s inability to repay China’s EXIM Bank, Colombo was forced into a ‘debt-equity swap’, ceding ownership of Hambantota Port to China in exchange for debt relief. Both parts of this story are simply untrue. Ownership was not transferred, and no debt was forgiven. A Chinese SOE paid Sri Lanka to lease the port, providing Colombo with liquidity so that it could repay Western creditors; the debt to China remained in place. Claims that China ‘seized’ the port to extend its naval reach are likewise false.” - chathamhouse
nice video. One criticism. maybe you should do more research into the Hamanthota Port debacle. You state that the the project was deemed not feasible. Might i suggest you check out the feasibility study for the port conducted in 2003 by SNC-Lavalin, a Canadian construction and engineering firm and by Danish engineering firm Ramboll conducted in 2006 which conclude that the project was feasible, with recommendations on how to proceed and expand. No one would throw hundreds of millions of dollars onto a project without doing any feasibility studies. Its very wrong to state something like that without evidence, and i think you should have done more research on it. And it is absolutely wrong to say that China grabbed the port because Sri Lanka could not pay back Chinese loans. $4.5 billion in debt service was payed by Sri Lanka in 2017 and only 5 percent of this was because of Hambantota. payments on international sovereign bonds, which comprised nearly 40 percent of the Sri Lanka's external debt the government decided to raise dollars by leasing out the Hambantota Port to an experienced company which was China Merchants and used the $1.12 billion cash infusion to bolster its foreign reserves, not to pay off China Eximbank (which financed the Hamanthota project). The lease of the the port was not to pay off Chinese loans but to pay out ISB holders, which were mainly western financial institutions. There have been no cases of China forcibly sizing states assets as collateral. And Chinse debt in Sri Lanka is approximately only 10% of the total. Another few incorrect statements you have made is that China do not forgive debt. this is incorrect. I will not go into extreme detail here. but just to point out that between 2000 and 2019, China has cancelled at least US$3.4 billion of debt in Africa and in the same period has restructured or refinanced approximately US$ 15 billion of debt in Africa. Just wanted to point this out cuz this is something i am aware of. over all the video was good.
And that's why hes looking for a research guy, so why don't you take up the job
@@doffy.69 I could have..but honestly....got.too much shit going on with me...😬😬
Actually China only hold about 10% of Sri Lanka's foreign debt whereas the IMF and Western Countries hold 80%+ of Sri Lanka's debt.
Thanks for great video
Thanks man, it's a great sight of relief to hear economic news, without the doom and groom of most channels, also i wanted to ask if you could analyze the economy of my country rwanda and check if it's legit and what's it's future thanks
Everything you say here is exactly true. Sadly mainstream media will never tell what you are telling here. 🙏
As many have mentioned in the comments China's official lending to Sri Lanka's accounts for roughly 10.1%. I linked to this in the source list. It could be used as an argument in defence of this suspect. Still, the case against China was mostly about debt quality, not about it being the biggest quantity.
Why was Japan not mentioned tho? It's time we mention countries other than Russia, USA, or China that's ruining the world
Hi Joeri, or Dr. Schasfoort, should Finland have their own currency instead of using Euro?
Could you make a video about the Norwegian Krone and its economy as well?
Because you made a video about Denmark's Economy and its Krone.
Thank you very much!
Interesting yet I think you should do more of a study on the attack on 2019 as mentioned by you as to who the master minds are .... cheers 🥂 good luck
No clear vision and national policies, lack of accountability and of course rampant corruption by all elected governments led to this 😓
True. This is a better reason than what he mentioned about in the beginning. Polymatter did a way better video on this topic with much better research
but aren't they a democracy?
Thanks!
Thanks for the support!!
If you aren't already aware the animation of the world map has the United states labeled instead as the United "Stated".
Great Video! I am from Sri Lanka. Accuracy is commendable
Like in Lebanon and other so called developing countries, we tend to blame everyone but us…. The buck stops with the government. Removing corruption is the only solution to solve the problem.
Just commenting to boost this channels engagement. This channel is consistently some of the highest quality economics content on RUclips, and deserves to be found by more people.
Thanks!!
That’s a good point, but I think your point would be better if it had another comment under it.
@@madskittls well said.
@@MoneyMacro Here are the breakdowns of Sri Lanka's foreign debts: 1) China=10% 2) Market Borrowings ( US Bankers) =47% 3) Asian Developing Bank ( Japan and US own majority)=13% 4) Japan=10% 5) World Bank=9% 6) India=2% 7) Other (IMF)=9%. The Western countries + India + Other (IMF) are holding 90% of Sri Lanka's Debt and I think it is the Western debt trap.
@@MoneyMacro China ‘not to blame’ for African debt crisis, it’s the West: study
High-interest loans from private Western lenders account for most of the burden on countries in Africa, Britain’s Debt Justice charity finds
Campaigners are calling on the G7 to stop using Chinese loans as ‘distraction’ while letting their own banks, asset managers and oil traders off the hook
Good analysis.
Thanks!
Your absolutely spot on!!
I'm a big fan of your show!
I'm a big fan of your shaw!
Ethiopia undertook a major national reforestation programme for the last 4 year, with the ambitious target of planting four billion trees.
The highlight was a single day in July, on which people across the country turned out to help with planting 350 million tree seedlings. The question is why no news agency is speaking about it? 😉
Well you know development projects dont sell well on media unlike conflicts and other horrors.btw they planted 19billion seedlings.and they are not planning to stop any time soon
Twitter poll is now closed: twitter.com/JoeriSchasfoort/status/1549421533327679489?t=hqeRA0G5AkfJE1NlKqjRPg&s=19
**Results: 82.2% Rajapaska, 8.8% China, 6% USA, & 3% Russia.**
I personally think the government is also mostly to blame. While developing countries are very much affected by big global events (shocks) such as those caused by US interest rate hikes and Russia's invasion (and the sanctions response), there are many countries that show these can be dealt with. Also, as alluded to in the video, the scale of Chinese lending in Sri-Lanka is not overwhelming (10.1% of official debt).
I wish all the best to the people of Sri Lanka and hope that the crisis can be overcome.
Why no 'All of the above'? It seem both far more likely and probable that it was a combination of some or all of these factors instead of the fault of a single bad actor.
@@DBLt4p I agree, that's the more realistic answer.
But tbf, the government seems to be the most directly responsible here, even if the other factors might've had some influence too.
Great. You and EE should team up and do the economy of Antarctica. Would be a good collab.
As a Sri Lankan I voted for the Rajapakses hands down as the cause for this mess
@@DBLt4p I think that's why makes the emphasis on "primarily" or "mainly".
Referring to something as a ‘cause’, inherits a mechanistic view, constricting thought to a structure akin to syllogism, if A then B, if B then C, thereby if A then C. This gives an acknowledged discipline to arguments, similar to such as adoption of ‘the scientific method’, adopted to encourage communication with a broadly accepted formality. But ‘cause’ is a mental model that at best hints on what will be observed, and far from an absolute relation.
I request you to make a video about the Economics of Immigration( Both Legal and Illegal) and how it affects the economy.
The collapse of Sri Lanka's economy is giving us just a little, tiny, small glimpse of an economic wildfire that is about to engulf the entire Western world's SWIFT based economies, economies that have leaned very heavily on the world's reserve currency, the USA dollar. With the USA, under the present administration, printing USA dollars non stop as they have been doing lately, has created an inflationary domino effect that will eventually collapse the USA economy also.
They are bringing about a new world order.
Lived in Sri Lanka from 2010 to 2014, and it was the exact moment all that is happening now was being built. Having being there exactly studying its economy and government, I could personally gather the data that told me this would happen around 3 or 4 years in the future (From now), if not for the Covid pandemic. That was the one thing that shortened the "hug pull" from the illusion the government created all those years before I moved there.
If not for that, not China, not Russia, not the US would really get Sri Lanka as bad as it is now.
Hi Estevan, it's really interesting how you predicted this would happen before it happened. I would love to see the data which helped you forecast this crisis. I'm learning economics at the moment, it would be really great if you could explain your thought process.
You seem very unbiased A+
I am sympathetic to the plight Sri Lankans are currently facing. But it is difficult for a company to emerge from a financial crisis when its first thought is to find the external perpetrators. Only by finding the internal cause and improving him will this company have hope. The same is true for a country.
Sri Lanka might be in the cross hairs of the power struggle between the West, It’s Neigbour, India and China, given it’s strategic position, proximity, to a major international shipping route… A weak and corrupt administration, whose main expertise is state capture, nepotism and Kleptocracy is a beautiful bride for ugly suitors.
If the absconding politicians don’t have skeletons in their cupboard and loved their country and had a clear vision beyond personal enrichment, why did they flee, leaving the country to its faith, instead of resigning and staying put in Sri Lanka? To my mind they just saw the country as a place to be milked as much as possible…
Ultimately the responsibility falls to the government. Whatever influences comes from outside the country, the government is the decision maker and it could reject or accept them for the good of the citizens. Saying that those people were chosen under a democratic election is not saying much, for as we know people are usually not voting for the best but for the least bad candidate.
To me, the fact that the actual president is, let say not the best or most honest, is not a surprise. A summary look at most leaders in the major countries is sufficient to realize that honesty is not the first quality that makes a president!
Awesome videos! As a South African knowing you’re affiliated with UCT, an we expect any videos on the South African economy?
I sadly am no longer affiliated with UCT and left the country. I do really want to return at some point and then make a video about SA.
great research..
It was the rajapakshas and the high interest loans that were taken during their rule from early 2000's.
also, rajapakshas printed almost double the amount of rupees so they can give it to the ones closest to them in two years.
Sri Lanka millitary is 320k, UK is 150k and Germany is 175k soldiers....
Every 100 people there is a soldier in SL...
Even after 13 years of ending the war it kept on increasing....
But no one talks about the SL millitary spending that has a huge impact on the current economic crisis....
Good point, thanks. but the reason is probably in the last war and the fear of its repetition? The civil war leads to economic losses, it turns out that these losses were postponed. And covid stimulated processes.
yeah, but who were they planning to fight by the way 😂😂
War is health of the state.
Keep it up bro.. you’re doing great 👍
Thanks Hassan. Will do
Super interesting!
1stly....*0%+ debts is from IMF, EU finance company, India and Japan. China only make up of less than 20% debt.
2ndly, before China load, those other loan already killing them with interest and yet the spending power is more than income...Therefore these loans will never reduce infact will keep rising.
3rdly...if china do not help them...they do not have any chances to gain of income but unfortunately, tourist failing and covid case. These are mother nature causes. If China don't consider the repayment is trough land and property, then they will have to serve the debt interest like IMF and the rest.
Finally, their government are corrupted and it's of no other countries fault.
So from the based on the source of the problem is always when it first started with the debt...if they do not have debt in the beginning, they will not be in this ending phases.
Ask the question.....why they started IMF loan or those EU financial loans for???? Who teach them the corruptions?? No corruption, ten there wall not have loans and debts.
THINK!!! Always solve the problem from the root cause and not the last problem surface.
It must be mentioned that there was a successful foreign funded regime change operation in Sri Lanka back in 2015.
This new government headed by President Sirisena & new President Wicremasinghe was responsible for the disastrous amount of ISB borrowings.
Between 2009-2014, $5 Billion worth of ISBs were acquired.
This is manageable and normal.
However, between 2015-2019 alone, $ 12Billion worth of ISBs were borrowed.
This is a devastatingly high amount of debt to be thrust into for an economy the size of Sri Lanka's.
ISBs have extremely short maturity periods - as low as 2 years - and having a large number of them to be paid back within a span of 4 years is nearly destructive.
There was no clear cut reason for such large borrowings in the first place.
The country was in no dire need of foreign aid at that time.
President Rajapakse walked straight into this reckless debt pile when he was elected in Nov of 2019.
Needlessly to say things were about to get much worse due to Covid-19 in March of 2020.
It's been going downhill ever since.
The ONLY reason that President Rajapakse is being portrayed as the architect of this catastrophe is due to his pro-China, pro-Russia leanings.
Removing him will bring in a Western puppet - like in 2015 - who will bend over backwards to the West's needs, and bow to every demand made by the IMF.
Sri Lanka is NOT collapsing because of China
It is collapsing because of Western + Indian financial institutions.
%
China 10
ADB 13
Japan 10
Wold Bank 9
Others 9
Market Borrowing (Bond holders ) 47
Black Rock ,Alliance
UBS , HSBC ,J P Morgan
Chase Bank .Prudential
India 02
100
In other words Western Financial Instruments 79%
China 10 %
Others ( not China ) 11%
These data as end of April 2021.
there are more than a few holes in his video thank you for bringing that up
At least those western lenders does not do what ccp china had done of appropriating the hambantota port for 99 years and its adjacent lands as collateral for sri lankas failure to pay loans borrowed from ccp china, havent heard of western lenders doing that, ccp china does not want to help sri lanka what it wants is to appropriate collateral from country's unable to pay its loans from ccp china...✌
@@donntabale2054 well the ccp operate from a different level of hell, but the west arent too far behind them these days.
@@shachora5900 thats why there is a saying choosing the lesser evil...
@@donntabale2054 I just wish them all the best, sri lanka has been through so much. all these bastxxxds should be..well..you know..😁
Well presented of the Sri Lankan situation and main problems. I hope the future will be better as there is so many nice warm people there and its a beautiful county. I felt very welcome in my 2 visits 9 days in 88 and 5 weeks in 2001.
Government corruption is a terrible thing that sucks the life out of a any country, and this is clear here. May Sri Lanka people be blessed in future with good governance with intelligence and honest intentions.
Well researched video..