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Tuesday, January 31, 2023

Sri Lanka’s further indebtedness over improper use of project funding

Image courtesy of https://www.debtsafe.co.za/.

Moreover, most of these foreign projects had been started on an unsolicited basis and as a result, the country had not achieved the investment needs and advantages of the procurement procedures.

The government is compelled to repay over Rs. 30 billion to foreign funding agencies as additional charges for these irregularities in projects commenced during the period of 2014-2016, the report divulged.

This amount in foreign exchange consists of US$93.17 million, Euro 1.33 million and Renminbi (Chinese Yuan) 70.21 million.

Since many project loans obtained during the past had been invested without considering the benefits, these foreign borrowings from donor agencies and friendly countries have tightened the external debt trap.

This massive sum of money had to be paid for the balance unutilised foreign funding for several infrastructure projects including the Southern Expressway extension from Beliatta to Wetiya (26 km), Urban Health and Sanitation project, Anuradhapura Integrated Urban Development, Anamaduwa Integrated Water Supply scheme and Greater Matale Water Supply scheme.

Only a sum of Rs. 3,754 million had been utilised out of the total allocation on foreign borrowings amounting to Rs.17,129 million for nine projects implemented under the Road Development Authority for the year 2021 and Rs. 13,371 million or 78 per cent had not been utilised.

Due to the slow progress and the depreciation of the rupee, a foreign exchange loss amounting to Rs. 369 million as at 31 December 2021 had been recorded in the Port Access Road Construction Project.

The Baseline road project, which commenced in the year 2009, had been implemented so far without a funding agency and without awarding civil work contracts and Rs.30 million had been spent for the Project Management Unit until 31 December 2021.

Even though the activities of the road construction project from New Kelani Bridge to Athurugiriya had commenced in the year 2016, civil work had not been started until August 2022.

An investor had not been selected for this project until 31 June 2022 and a sum of Rs. 227 million had been incurred for the project.

A loan amounting to $40 million had been obtained from the Organization of the Petroleum Exporting Countries (OPEC) for the Rakwana – Suriyakanda road construction project in the year 2019.

Although the loan had exceeded two years from the date of entering the Loan Agreement up to 31 December 2021, the construction work of the project had not been commenced even by 8 August 2022. Furthermore, this Loan Agreement is scheduled to expire on 30 September 2023.

By Bandula Sirimanna /ST

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