For example mobile phones are today used by those like three-wheeler taxi drivers, fish and vegetable vendors and even the humble undergraduates. Even washing machines are needed by the urban lower middle class living in small apartments with no gardens to dry their laundry and cannot afford to pay high laundering charges. These items, however, are not as important as food, clothing, shelter and fuel – rising costs of which have left the government high and dry.

It is quite apparent that after one and a half years, the so called Mahinda Chinthana has turned out to be absolute balderdash economics, where the people, especially the poor, are concerned. The government has not only no answer to the rising costs of imported products such as fuel but also rising prices of local produce such as vegetables, rice, and coconuts.

In desperation the Rajapakse administration has retreated to the position taken by the former SLFP government of Sirima Bandaranaike in the mid 1970s when the cost of living soared. The then prime minister called for self reliance and local production such as inauguration of ‘Waga Sangramayas’ (food wars). We now see the Rajapakse administration too trying to pull itself up by its bootstraps which only the great Mao Tse Tung was able to do.

An increase in large scale food production or vast dairy farms cannot be done overnight. It needs sustained commitment and determination of all concerned. Over the years, the public has witnessed such publicity stunts such as the newly inaugurated Api Wawamu – which after providing grand photo opportunities to the state media – fizzle out within weeks.

The only option available to the Rajapakse government appears to be to borrow from foreign banks and that is what they are attempting to do with the issue of Treasury bonds amounting to US$ 500 million. It is claimed that this money is to be used for infrastructure development but the UNP is rightly querying its ultimate objectives and the costs it would entail for future governments and generations.

Firstly, the funds are to be borrowed from foreign banks at commercial rates of interest which would amount to about 7 per cent and would have to be payable in 10 years. International lending institutions such as the World Bank and the IMF usually give long term loans at concessionary rates of interest as low as 0.5 per cent and a grace period as well. The government claims that since Sri Lanka’s per capita income now exceeds US$ 1000 it is no longer considered eligible for such concessionary rates and thus has to borrow from commercial banks. It is perhaps worthwhile noting that the government’s policies have resulted in at least two countries, United States and Britain suspending loans which were earmarked for Sri Lanka.

The other objection of the UNP is that already there is another US$ 400 million of unutilised foreign aid with the government.

It has also been pointed out that the Rajapakse government had during the first one and a half years borrowed US$ 250 million and this together with the proposed loan of US$ 500 million would amount to $ 750 million at seven per cent interest. Besides, the government has confidentially informed the lending banks that repayment would be possible by cutting off subsidies such as on fertiliser and Samurdhi disbursements.

Another point at issue is that while this US$ 500 million is supposed to be utilised for infrastructure projects such as the Norochcholai and another power plants as well as ports and super highways, the government has upto now maintained that all these projects are to be funded by different governments handling such projects.

President Rajapakse has quite a lot of explaining to do to the public, being elected to office on a mandate which called for self-reliance and condemned links with international monetary institutions such as the World Bank and the IMF. It is quite apparent that the pound of flesh demanded by the Shylocks of commercial banks would cost this country much more.

The JVP, the main political ally of the government is highly critical of government policies, particularly regarding borrowing from foreign banks but is still continuing to support the government. They appear to be doomed to go down with the SLFP ship because they have no other ship to jump into. The JHU seems to be in the same plight.

Rajapakse it appears has to change his strategies. The one thing he can do is to set an example by imposing austerity on his colleagues and cut down wasteful expenditure. Some ministers appear to be having the time of their lives, travelling first class and living in the best of international hotels. Our Foreign Minister Rohitha Bogollagama is on the move much more than UN Secretary General, Ban-Ki Moon. It is reported by COPE that the Export Development Board had spent Rs 72 million on foreign trade fairs — the UK fair alone costing Rs 26.5 million.

This should certainly not be the lifestyle of ministers when the poor cannot even afford a cup of tea in a boutique.

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