A vote of confidence

The Government pulled off a coup of sorts when the sovereign bond it floated achieved more than anticipated success with the issue oversubscribed by as much as 200 per cent.

While the bond issue was for $ 500 million the orders received so far had crossed US $ 1.25 billion according to our front page report yesterday.

No doubt the overwhelming response would have surprised even some of the ardent supporters of the Mahinda Rajapaksa Government, leave alone its detractors who would not have expected such a response even in their wildest dreams.

In fact, the UNP which prides on its international outlook did everything to sabotage the effort to market the bond. That the Government beat the UNP at its own game is clear testimony that the Grand Old Party no more has the monopoly on tact and acumen when it comes to international affairs.

The success with the bond would certainly give a turbo boost to the economy which was somewhat caught up in a tailspin chiefly due to the a steep rise in global oil prices. The achievement no doubt is a clear endorsement of the economic direction of the present Government contrary to the gloomy picture painted by the cassandras and doomsday prophets.

More than anything it is feather in the cap of President Rajapaksa who is often described by his adversaries as a leader resorting to populist economic measures. This is also seen in many quarters as a slap in the face of the more ‘internationalist’ UNP which contrary to its private sector friendly posture agitated before the HSBC which brokered the bond issue even going to the extent of threatening to cancel its license under a future dispensation, not to mention its pledge not repay the loan.

This is the first time that the Sri Lanka floated a sovereign bond abroad and augers well for the country’s integration into the international financial market. Although the loan carries a considerable interest as is the case with commercial borrowings one hopes that dividends contemplated though the Government’s ambitious development programmes would offset any financial drain on the country’s exchequer.

The Government should hence get down to drawing up a sound economic blueprint that would make maximum use of this financial harvest. It is said that the bulk of this money would go towards the rebuilding of the East and infrastructure development. It would also be prudent if part of this money is invested in projects that have huge economic potential if we are to have the maximum benefit of this loan.

The Government’s success with the bond issue would also spur investor confidence in the country that could see the opening up of new frontiers in the development sphere. Therefore it would be ideal if a solution is found to the protracted conflict at the earliest so that a more conducive economic climate is created that would realise the maximum benefit of the bond.

True, there would be those who would question this massive influx of funds to the country at a time when the country is already running debts. This has been the constant refrain against all Governments since independence and was a popular slogan of the Marxists.

But the introduction of the open economy blurred all political and ideological lines and this Government too which boasts of socialist antecedents is compelled to move with the tide if it is to ensure the country does not lag behind the outside world.

There will also be others who would be keen to know how the Government will manage such a mind boggling sum. This is where the Government should act and put in place a foolproof mechanism for ensuring that every dollar is accounted for.

This, while allaying the misgivings of the general public would also get more donor funds pouring into the country for the mega development projects envisaged. The President should ideally appoint a special Task Force to oversee the operation of these funds and ensure waste is avoided at all costs.

Like it won the confidence of the international banking sector as demonstrated by the success in the bond issue it would do well to win the confidence of the public who would be keen observers on how this money will be spent. In a way, it is a massive vote of confidence in the public of Sri Lanka, known for their resourcefulness.