The main opposition UNP and its ally SLFP (M) charged yesterday the government was negotiating for a loan of US$ 500 million from a consortium of foreign banks when it had not even utilized the US$ 4.7 billion received as aid and grants for development projects including post-tsunami reconstruction activities.
SLFP (M) parliamentarian Sripathi Sooriyarachchi told journalists that even the utilization of 20% of committed funds each year could be considered satisfactory, but the amount utilized did not even amount to 10%.
He said these funds were available in the form of aid and grants only for specifically identified development projects and proper records of the monies spent should be maintained.
`Even amid this shortfall in spending the government is negotiating for a massive US$ 500 million loan from three foreign banks to be spent on projects where commissions could be collected,` he charged.
The total aid commitment made by donors to Sri Lanka from January to May this year was US$ 874 million and US$ 803 million of this amount was from project loans.
The rest had been committed as grants. Japan is the largest donor committing US$ 362.8 million and the Asian Development Bank US$ 300 million. China had committed US$ 66.1 million with the World Bank commitment being US$ 32.5 million.
Of the total Japanese aid, US$ 338 million is earmarked for infrastructure projects in the areas of roads, water and rural development. The Greater Colombo Urban Transport Development project is the largest project included in the Japanese aid package.
Mr. Sooriyarachchi said the National Congress would take legal action against the HSBC according to financial regulations if it granted the loan under these circumstances.`We will even cancel its license if there are violations of financial regulations by granting this loan to the government which is in dire straits today,` he said.
Mr. Sooriyaarachchi said the government was hoping to collect revenue of Rs.25 to 30 million by increasing the levy on mobile-phone users.
`There has been an increase in the presidential vote. In 2005, it was only three billion rupees. The amount has increased to Rs.5.7 billion in 2006 and Rs.5.9 billion in 2007. How could this happen?` he asked.