Features
Debt Trap Lessons
By DEVENDRA SAKSENA
Currently, the words ‘debt trap’ have a distinctly Chinese connotation. According to the Western press, the Chinese, as part of their geostrategy, have inveigled poor nations into borrowing huge amounts from them for fanciful infrastructural projects; almost all borrower countries are in dire economic straits, because most such projects are lying incomplete, or not yielding anticipated returns. Referring to Chinese lending as ‘debt-trap diplomacy,’ Western leaders would have us believe that China deliberately lends money to poor countries on overly challenging terms, so that loans could not be repaid, forcing borrowers to accept eco- nomic or political concessions. Western nations blame China for using ‘debt-trap diplomacy’ to promote Chinese geopolitical interests in Asia and Africa.
Exact data about Chinese lending is not in the public do- main, as China does not report its international lending, and agreements with debtor countries prohibit disclosure about Chinese loans. In many cases, Chinese companies advance loans to state-owned companies of the borrower nation, which do not figure in the borrower country’s budget. Also, China is not a member of the Paris Club or the OECD, so it is under no obligation to reveal details about the monies lent by it. But today, China is the world’s largest official creditor ~ surpassing traditional lenders such as the World Bank, the IMF, or all OECD creditor governments combined. Chinese credit is widespread.
According to Aid Data, China has financed 13,427 development projects, worth US$843 billion dollars in 165 countries, while the Harvard Business Review has estimated that the Chinese Government and State- owned companies have lent about US$1.5 trillion in direct loans, and trade credits, to more than 150 countries. For most poor countries, Chinese lending is substantial vis-à-vis their GDP. According to a study conducted by the Harvard Business Review: “For the 50 main developing country recipients, we estimate that the average stock of debt owed to China has increased from less than 1 percent of debtor country GDP in 2005 to more than 15 per cent in 2017.
A dozen of these countries owe debt of at least 20 percent of their nominal GDP to China (Djibouti, Tonga, Maldives, the Republic of the Congo, Kyrgyzstan, Cambodia, Niger, Laos, Zambia, Samoa, Vanuatu, and Mongolia).” Chinese lending gained impetus in 2013, when President Xi Jinping announced the Belt and Road Initiative (BRI), a global infrastructure development and investment strategy, under which China financed huge infrastructural projects like ports, railways, roadways, bridges, dams, and power stations in the poor developing countries of Asia and Africa ~ though BRI also includes 17 European Union countries and 22 countries in the Caribbean and South America. Repaying Chinese loans is not easy because unlike other official lenders such as the World Bank that provide finance at concessional, below-market interest rates, and longer tenures, China tends to lend at market terms, at interest rates close to those prevailing in private capital markets.
Additionally, the Chinese insist on collateral, meaning that debt repayments are secured by assets or future revenues. Western leaders cite the example of two of India’s neighbours, Sri Lanka and Pakistan, to drive home the dangers of taking loans from China. Initially, Sri Lanka got huge loans from Chinese government banks to build infrastructure like airports, sea- ports and bridges. However, revenue generated from Chinese-funded projects was insufficient to repay the Chinese loans. The largest such projects, Hambantota Harbour and Mattala Rajapaksa International Airport (MRIA), are case studies in the menace of easy Chinese loans; MRIA is lying unused while Hambantota Har- bour has been taken over by the Chinese, on a ninety-nine years lease, because Chinese debt could not be repaid. The Western press attributes Sri Lanka’s recent economic crisis, which saw day-long power cuts, soaring prices of food and other essentials, as inflation reaching twenty-five per cent, solely to problems created by Chinese loans. Sadly, for Sri Lanka, the economic meltdown metamorphosed into a political crisis. Following massive public protests, the Government had to resign. These twin crises brought Sri Lanka to the verge of sovereign default; only generous interventions by India and the IMF have kept the Sri Lankan economy afloat. A similar script is playing out in Pakistan, which had borrowed heavily from China, for its BRI project. However, Chinese ‘debt- trap diplomacy’ is not the sole reason for the economic ruin of Sri Lanka; Chinese loans accounted for only 10.8 percent of Sri Lanka’s debt burden, the rest comprising International Sovereign Bonds (36.4 per cent), Asian Development Bank (14.3 per cent), and Japan (10.9 per cent). Also, the Lankan economy was already on the verge of collapse because of the myriad unwise and populist policies of the Rajapaksa government. The failed projects, Hambantota Harbour and Mattala Rajapaksa International Airport (MRIA), were vanity projects of the Rajapaksa family, located in their backyard, at unsuitable venues; feasibility study of both projects had been conducted, not by Chinese, but by European companies. Finally, no planner could have factored in the humongous corruption, which made both projects unviable. Contrarily, China and the beneficiaries of its loans do not view Chinese loans as ‘debt-trap diplomacy’; Chinese see themselves as daring entrepreneurs, identifying economic opportunity in pro- viding loans to failing countries, and generating enormous profits from it ~ both in terms of money and resources. Many countries that have a colossal Chinese debt burden consider China as their closest friend. Acknowledging China as their prime growth catalyst, Kenyan and Comoros’ leaders hold that Africa’s only trap is ‘Poverty and Underdevelopment.’
Undoubtedly, China is the lender of last resort; unlike the World Bank and IMF, China does not insist that borrowing countries change their economic policies; it also does not check the credit history of its borrowers. Like Shylock, it could be that China is more sinned against than sinning. Since time immemorial, kings had borrowed money to secure borders, or to launch foreign military campaigns, but by the end of the twentieth century, countries were borrowing not to prosecute wars or to overcome crises but on revenue account ~ for pensions, health care, and other social services i.e., ‘revdis’ in current political parlance. The Latin American debt crisis of the 1970s and 80s, primarily affecting Brazil, Argentina and Mexico, unfolded with these countries contracting loans for development ~ mainly infrastructure projects. Slowly, borrowings, mostly from private banks, ballooned to fifty per cent of the region’s GDP. Mexico borrowed against future oil revenues; when the price of oil collapsed, so did the Mexican economy. Other Latin American countries’ economies collapsed for a diametrically opposite reason; when oil prices skyrocketed, interest rates increased, and debts became unsustainable. Ultimately, loans had to be restructured with help from the World Bank and IMF.
Currently, soaring Indian sovereign debt is causing concern to the IMF. As on 31 March 2023, the Central Government owed Rs.152.61 lakh crores amounting to 57 percent of GDP, while State Governments owed around Rs.75 lakh crore, which is 28 percent of GDP. According to Budget Estimates, the Central Government debt, which has more than doubled in the last ten years, is projected to increase to Rs.169.47 lakh crore by 31 March 2024. Worryingly, the IMF has forecast that public debt will exceed India’s GDP in the medium term, at a time when considerable investment will be required to improve resilience to climate stresses and natural disasters.
The IMF has suggested “ambitious” fiscal consolidation over the medium term, in order to curb India’s public debt. During the course of Article IV discussions with the IMF, Indian officials rightly pointed out that foreign debt was barely three percent of the public debt, so a ‘debt-trap’ situation was not in the making. Moreover, given the high Indian GDP growth rate, debt to GDP ratio had not increased significantly over the years. Yet, ill-effects of profligate spending, resulting in high indebtedness, are becoming visible. Deficit financing, used to finance the Government’s ambitious infrastructure development programmes and ‘revdis’ like Kisan Sanman Nidhi, has risen to Rs.17.86 lakh crore, or 5.9 per cent of the GDP. Also, during FY 2023-24, out of total expenditure of Rs.38.50 lakh crore, approximately Rs.11 lakh crores will go towards interest payments. Thus, a vicious cycle is created; the Government garners resources by deficit financing, which increases the interest burden, leading to more deficit financing. Foreign rating agencies hesitate to improve our ranking, despite our strong fundamentals, only because of weak financial management and high debt. Ultimately, we have to realise that the Charvaka philosophy of drinking ghee from borrowed funds, is totally inappropriate for modern economic management.
by Kaushalya Perera
Time has, by and large, stood still in the business of academic staff recruitment to state universities. Qualifications have proliferated and evolved to be more interdisciplinary, but our selection processes and evaluation criteria are unchanged since at least the late 1990s. But before I delve into the problems, I will describe the existing processes and schemes of recruitment. The discussion is limited to UGC-governed state universities (and does not include recruitment to medical and engineering sectors) though the problems may be relevant to other higher education institutions (HEIs).
How recruitment happens currently in SL state universities
Academic ranks in Sri Lankan state universities can be divided into three tiers (subdivisions are not discussed).
* Lecturer (Probationary)
– recruited with a four-year undergraduate degree. A tiny step higher is the Lecturer (Unconfirmed), recruited with a postgraduate degree but no teaching experience.
* A Senior Lecturer can be recruited with certain postgraduate qualifications and some number of years of teaching and research.
* Above this is the professor (of four types), which can be left out of this discussion since only one of those (Chair Professor) is by application.
State universities cannot hire permanent academic staff as and when they wish. Prior to advertising a vacancy, approval to recruit is obtained through a mind-numbing and time-consuming process (months!) ending at the Department of Management Services. The call for applications must list all ranks up to Senior Lecturer. All eligible candidates for Probationary to Senior Lecturer are interviewed, e.g., if a Department wants someone with a doctoral degree, they must still advertise for and interview candidates for all ranks, not only candidates with a doctoral degree. In the evaluation criteria, the first degree is more important than the doctoral degree (more on this strange phenomenon later). All of this is only possible when universities are not under a ‘hiring freeze’, which governments declare regularly and generally lasts several years.
Problem type 1
– Archaic processes and evaluation criteria
Twenty-five years ago, as a probationary lecturer with a first degree, I was a typical hire. We would be recruited, work some years and obtain postgraduate degrees (ideally using the privilege of paid study leave to attend a reputed university in the first world). State universities are primarily undergraduate teaching spaces, and when doctoral degrees were scarce, hiring probationary lecturers may have been a practical solution. The path to a higher degree was through the academic job. Now, due to availability of candidates with postgraduate qualifications and the problems of retaining academics who find foreign postgraduate opportunities, preference for candidates applying with a postgraduate qualification is growing. The evaluation scheme, however, prioritises the first degree over the candidate’s postgraduate education. Were I to apply to a Faculty of Education, despite a PhD on language teaching and research in education, I may not even be interviewed since my undergraduate degree is not in education. The ‘first degree first’ phenomenon shows that universities essentially ignore the intellectual development of a person beyond their early twenties. It also ignores the breadth of disciplines and their overlap with other fields.
This can be helped (not solved) by a simple fix, which can also reduce brain drain: give precedence to the doctoral degree in the required field, regardless of the candidate’s first degree, effected by a UGC circular. The suggestion is not fool-proof. It is a first step, and offered with the understanding that any selection process, however well the evaluation criteria are articulated, will be beset by multiple issues, including that of bias. Like other Sri Lankan institutions, universities, too, have tribal tendencies, surfacing in the form of a preference for one’s own alumni. Nevertheless, there are other problems that are, arguably, more pressing as I discuss next. In relation to the evaluation criteria, a problem is the narrow interpretation of any regulation, e.g., deciding the degree’s suitability based on the title rather than considering courses in the transcript. Despite rhetoric promoting internationalising and inter-disciplinarity, decision-making administrative and academic bodies have very literal expectations of candidates’ qualifications, e.g., a candidate with knowledge of digital literacy should show this through the title of the degree!
Problem type 2 – The mess of badly regulated higher education
A direct consequence of the contemporary expansion of higher education is a large number of applicants with myriad qualifications. The diversity of degree programmes cited makes the responsibility of selecting a suitable candidate for the job a challenging but very important one. After all, the job is for life – it is very difficult to fire a permanent employer in the state sector.
Widely varying undergraduate degree programmes.
At present, Sri Lankan undergraduates bring qualifications (at times more than one) from multiple types of higher education institutions: a degree from a UGC-affiliated state university, a state university external to the UGC, a state institution that is not a university, a foreign university, or a private HEI aka ‘private university’. It could be a degree received by attending on-site, in Sri Lanka or abroad. It could be from a private HEI’s affiliated foreign university or an external degree from a state university or an online only degree from a private HEI that is ‘UGC-approved’ or ‘Ministry of Education approved’, i.e., never studied in a university setting. Needless to say, the diversity (and their differences in quality) are dizzying. Unfortunately, under the evaluation scheme all degrees ‘recognised’ by the UGC are assigned the same marks. The same goes for the candidates’ merits or distinctions, first classes, etc., regardless of how difficult or easy the degree programme may be and even when capabilities, exposure, input, etc are obviously different.
Similar issues are faced when we consider postgraduate qualifications, though to a lesser degree. In my discipline(s), at least, a postgraduate degree obtained on-site from a first-world university is preferable to one from a local university (which usually have weekend or evening classes similar to part-time study) or online from a foreign university. Elitist this may be, but even the best local postgraduate degrees cannot provide the experience and intellectual growth gained by being in a university that gives you access to six million books and teaching and supervision by internationally-recognised scholars. Unfortunately, in the evaluation schemes for recruitment, the worst postgraduate qualification you know of will receive the same marks as one from NUS, Harvard or Leiden.
The problem is clear but what about a solution?
Recruitment to state universities needs to change to meet contemporary needs. We need evaluation criteria that allows us to get rid of the dross as well as a more sophisticated institutional understanding of using them. Recruitment is key if we want our institutions (and our country) to progress. I reiterate here the recommendations proposed in ‘Considerations for Higher Education Reform’ circulated previously by Kuppi Collective:
* Change bond regulations to be more just, in order to retain better qualified academics.
* Update the schemes of recruitment to reflect present-day realities of inter-disciplinary and multi-disciplinary training in order to recruit suitably qualified candidates.
* Ensure recruitment processes are made transparent by university administrations.
Kaushalya Perera is a senior lecturer at the University of Colombo.
(Kuppi is a politics and pedagogy happening on the margins of the lecture hall that parodies, subverts, and simultaneously reaffirms social hierarchies.)
This week, too, the spotlight is on an outfit that has gained popularity, mainly through social media.
Last week we had MISTER Band in our scene, and on 10th February, Yellow Beatz – both social media favourites.
Talento is a seven-piece band that plays all types of music, from the ‘60s to the modern tracks of today.
The band has reached many heights, since its inception in 2012, and has gained recognition as a leading wedding and dance band in the scene here.
The members that makeup the outfit have a solid musical background, which comes through years of hard work and dedication
Their portfolio of music contains a mix of both western and eastern songs and are carefully selected, they say, to match the requirements of the intended audience, occasion, or event.
Although the baila is a specialty, which is inherent to this group, that originates from Moratuwa, their repertoire is made up of a vast collection of love, classic, oldies and modern-day hits.
The musicians, who make up Talento, are:
Prabuddha Geetharuchi:
Geilee Fonseka: Dynamic and charismatic vocalist
Prabuddha Geetharuchi: The main man behind the band Talento
(Vocalist/ Frontman). He is an avid music enthusiast and was mentored by a lot of famous musicians, and trainers, since he was a child. Growing up with them influenced him to take on western songs, as well as other music styles. A Peterite, he is the main man behind the band Talento and is a versatile singer/entertainer who never fails to get the crowd going.
Geilee Fonseka (Vocals):
A dynamic and charismatic vocalist whose vibrant stage presence, and powerful voice, bring a fresh spark to every performance. Young, energetic, and musically refined, she is an artiste who effortlessly blends passion with precision – captivating audiences from the very first note. Blessed with an immense vocal range, Geilee is a truly versatile singer, confidently delivering Western and Eastern music across multiple languages and genres.
Chandana Perera (Drummer):
His expertise and exceptional skills have earned him recognition as one of the finest acoustic drummers in Sri Lanka. With over 40 tours under his belt, Chandana has demonstrated his dedication and passion for music, embodying the essential role of a drummer as the heartbeat of any band.
Harsha Soysa:
(Bassist/Vocalist). He a chorister of the western choir of St. Sebastian’s College, Moratuwa, who began his musical education under famous voice trainers, as well as bass guitar trainers in Sri Lanka. He has also performed at events overseas. He acts as the second singer of the band
Udara Jayakody:
(Keyboardist). He is also a qualified pianist, adding technical flavour to Talento’s music. His singing and harmonising skills are an extra asset to the band. From his childhood he has been a part of a number of orchestras as a pianist. He has also previously performed with several famous western bands.
Aruna Madushanka:
(Saxophonist). His proficiciency in playing various instruments, including the saxophone, soprano saxophone, and western flute, showcases his versatility as a musician, and his musical repertoire is further enhanced by his remarkable singing ability.
Prashan Pramuditha:
(Lead guitar). He has the ability to play different styles, both oriental and western music, and he also creates unique tones and patterns with the guitar..
The JJ Twins, the Sri Lankan musical duo, performing in the Maldives, and known for blending R&B, Hip Hop, and Sri Lankan rhythms, thereby creating a unique sound, have come out with a brand-new single ‘Me Mawathe.’
In fact, it’s a very special milestone for the twin brothers, Julian and Jason Prins, as ‘Me Mawathe’ is their first ever Sinhala song!
‘Me Mawathe’ showcases a fresh new sound, while staying true to the signature harmony and emotion that their fans love.
This heartfelt track captures the beauty of love, journey, and connection, brought to life through powerful vocals and captivating melodies.
It marks an exciting new chapter for the JJ Twins as they expand their musical journey and connect with audiences in a whole new way.
Their recent album, ‘CONCLUDED,’ explores themes of love, heartbreak, and healing, and include hits like ‘Can’t Get You Off My Mind’ and ‘You Left Me Here to Die’ which showcase their emotional intensity.
Readers could stay connected and follow JJ Twins on social media for exclusive updates, behind-the-scenes moments, and upcoming releases:
Instagram: http://instagram.com/jjtwinsofficial
TikTok: http://tiktok.com/@jjtwinsmusic
Facebook: http://facebook.com/jjtwinssingers
YouTube: http://youtube.com/jjtwins
Six US soldiers killed in Iranian strike on Kuwait base
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