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Foreign debt is a major problem facing the nation. Every Sri Lankan born today inherits close to a staggering 100,000 rupees debt at birth and increases this debt burden through their life. What is the main evil that made Sri Lankans debtors and tied them eternally to service this humongous debt as bonded labourers?

 Although foreign debt was around, it escalated after 1977 and particularly after 1987. Today it stands at US$ 18 billion. In order to pay (retire) older debt more debt have to be borrowed. With a meagre foreign reserves position of US$ 6 billion, Sri Lanka is a net debtor to the tune of US$ 9 billion. Interest on debt takes a large chunk of available funds that can be used for development.

 It was the 13A that cleared the Constitution to set up Provincial Councils under the Provincial Council Act of 1988. According to Central Bank reports, Provincials Councils costed 111 billion rupees in 2009; in 2000 it was 29 billion rupees.

 http://www.asiantribune.com/news/2011/04/14/provincial-councils-sri-lanka-political-economy-perspective

 Based on the increase recurrent cost of provincial councils can be estimated since 1988. Refer Appendix.

 In addition there’s the cost of elections. Billions of rupees are wasted for election campaigning. A humongous number of candidates contest PC elections. The cost of distributing election cards, administering the election, counting votes, policing and resultant violence also cost dearly. The election day and the following day are affected with less economic activity as people line up at polling booths to vote and due to other election related activities. All these costs cannot be measured accurately. It is fair to say a day’s economic activity is lost due to PC election though the true cost may be more than that. A day’s economic cost is calculated by dividing the total GDP by 365.

 http://www.econstats.com/weo/V003.htm

 Both the recurrent cost and the election cost (in the years where there were elections) could have been invested at a very prudent interest rate of 10%. This earns interest over the years.

 This is the true cost of provincial councils which comes to 2.3 trillion rupees at the end of 2011. With 120 rupees for one US dollar, it is equal to $ 19 billion. Total public debt is $ 18 billion. In other words if not for the cursed 13A and provincial councils it created, this country would be debt free.   

 So much about sharing power with Tamils through devolution!

 Needless to say a similar amount was invested to bring peace through a successful military campaign. What a waste in using two alternative means to bring peace – one succeeding while the other failing.

 This is the financial cost of the 13A. It costed the nation dearly for 24 years since 1988 and continues to bleed the economy.

 People of this country paid $ 19 billion over the years for PCs. Unable to find this money, governments resorted to borrowing from the IMF and sold off profit making state owned entities. $ 19 billion does not take into account the cost of borrowing from IMF, World Bank and Donors; interest thereupon and the cost of selling off family silver.  

 The calamity of the situation is further aggravated by the fact the entire parliament has only a handful of economists or people with economics knowledge. 

 Going by the expense trend, PCs will have a recurrent expenditure of 140,278 million in 2012. If there were no PCs this money could have been invested at 10% interest (at least). Therefore the total cost of PCs in 2012 is going to be 154,306 billion rupees. That is $ 1.3 billion. If the 13A is scrapped tomorrow, every Sri Lankan would have an additional 7,500 rupees in their hands this year and save over a million rupees (adjusted for annual increase) over their life; sufficient to allow them undertake an expensive study course that will uplift their living standards; or to invest in anything else.

 13A was a deliberate plan by India to stifle economic progress and impose its policy on the island nation. People sensed the danger in July 1987 and protested. However, the government with the help of invading IPKF and gun boats brutally murdered peaceful protestors. Soon protests turned violent but the invaders managed to constrain Jayawardena and his UNP government and forcibly conceive the 13A with them.

 There is absolutely no benefit of Provincial Councils. All work done by PCs was performed by the central government and local government bodies previously with better efficiency. People felt absolutely no improvement in governance through decentralisation or devolution – absurd words that have no worth whatsoever.

 It is time to scrap the Provincial Councils and the Constitutional amendment (13A) that allows the creation of provincial councils.

 ITAK, TULF, ACTC and TNA demand for devolution is aimed at bleeding Sri Lanka to the tune of $ 1.3 billion every year so that their Indian and IMF counterparts can ruin the rest of the country.

 Obviously a federal system would cost many times more than Provincial Councils. District councils, regional councils and any other devolution model would be as costly as Provincial Councils. If addressing Tamil grievances and/or aspirations is so costly, Sri Lanka should flatly refuse to address them. Simply put it Sri Lankans cannot afford it. Money wasted to address Tamil grievances and/or aspirations can be better utilised for development that benefits all. There is no justification for 20 million to sufferer just to meet the aspirations of a mere 3 million people. And they are certainly not willing to be so damn generous. If insatiable TNA wants the Indian model there is no need to reinvent the wheel; India is just across the sea!

 Scrap the 13A now and abolish all Provincial Councils. Political, economic and social factors are all stacked up against them.

 Annexure (All figures in millions)

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IRVINE, Calif.–(EON: Enhanced Online News)–Persolvo Data Systems, a leading provider of web-based settlement software and analytics tools designed to locate, identify and settle accounts enrolled in debt settlement programs, announced today that The American Fair Credit Council (AFCC), the leading association of consumer credit has named Teresa Dodson, Chief Operating Officer of Persolvo, to its executive board.

“I’m looking forward to working with an organization that focuses on guiding consumers to companies that are held to the highest ethical standards in our industry so that good people who have encountered financial challenges can receive fair treatment while they resolve their debt.”

Ms. Dodson brings to the Council her experience in managing three of the largest debt settlement companies in the industry. As COO at Persolvo, Dodson has worked to bridge the gap between the debt settlement industry and creditors and collectors by delivering Persolvo’s web-based settlement solution to many of the nation’s largest credit card issuers, debt buyers and legal recovery firms.

“Teresa will offer a unique perspective to the AFCC Executive Board and its member companies, and we are very fortunate to have her join us,” said Robby Birnbaum, AFCC President. “She will be able to share her knowledge and understanding of the accounts receivable management industry to help create more meaningful and productive relationships between creditors, collectors and the AFCC member companies and their clients.”

“It’s always been my goal at Persolvo to help consumers burdened by overwhelming debt in seeking a negotiated resolution that allows them to manage their financial obligations in a credible manner,” commented Dodson. “I’m looking forward to working with an organization that focuses on guiding consumers to companies that are held to the highest ethical standards in our industry so that good people who have encountered financial challenges can receive fair treatment while they resolve their debt.”

Dodson went on to note that she fully supports the policies and practices of the AFCC as it relates to marketing practices, a performance-based compensation model for member companies and a transparent audit and review process to ensure compliance with the association’s Code of Conduct.

About Persolvo Data Systems

CONCERTO 3.0 from Persolvo Data Systems is the first patent-pending system to aggregate account information on debtors enrolled in debt relief programs with leading debt settlement companies and law firms. Persolvo’s web-based PCI-compliant settlement application allows creditors and collectors to locate debtors, analyze their account information to uncover highly-liquid settlement opportunities, and settle large numbers of accounts online with hundreds of debt settlement companies. The Persolvo system is the largest database of aggregated debt settlement accounts available today and provides the most accurate and up-to-date information, including the settlement savings balances of debtors enrolled in debt settlement programs. For more information, visit our website at http://www.persolvo.com.

Persolvo: Latin Verb – to unloose, explain, expound/pay off a debt, pay.

About the American Fair Credit Council

The American Fair Credit Council is the leading association of professional Consumer Credit Advocates. The AFCC was formed in April 2011 by a group of industry-leading companies to advance the goal of an industry in full compliance with the regulatory initiatives of the Federal Trade Commission. The AFCC is organized around three very simple yet powerful principles:

• To support consumers dealing with overwhelming credit and debt problems
• To promote and enforce industry “best practices”
• To advocate for consumer-centric legislation at the state and federal level that protects consumers through strong regulation and preservation of choice in debt relief options.

AFCC-certified Consumer Credit Advocates work on behalf of consumers to help them get back on the road to financial stability. They do this by negotiating directly with creditors to secure a resolution that reduces the amount owed to a level the consumer can manage. In return for their services, AFCC-certified Consumer Credit Advocates are paid a fee by the consumer (never by the creditor) but ONLY WHEN THE DEBT IS RESOLVED. For more information about the American Fair Credit Council, or to contact a member company, visit http://www.americanfaircreditcouncil.org/.

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Bahrain Telecommunications Co. (BATELCO), the state-controlled company known as Batelco, is debt-free and posted a 24 percent annual increase in cash and bank balances to $ 286.2 million as of Dec. 31, the company said in an e-mailed statement today.

Batelco reported a profit of 80 million dinars ($ 212 million) for 2011 on Jan. 23.

To contact the reporter on this story: Tamara Walid in Dubai via twalid@bloomberg.net

To contact the editor responsible for this story: Inal Ersan at iersan@bloomberg.net

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Fees payable when continuing service is provided. Repaying debt over a longer period may increase the total amount to be repaid. Calls are recorded and are usually free from UK landlines. Mobile phone users may be charged and should check with their service provider. Cards are provided by third parties and are subject to eligibility, status and terms and conditions. Applicants must be UK residents aged 18 or over.

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However, equity release isn’t for people with serious debt problems who have to take more serious measures.

Mirfin says: “It’s a great way of getting rid of relatively minor debts. It can take a huge weight off your mind.”

Unlike other ways of raising money such as a personal loan or credit card, you don’t have to undergo credit checks. “Lenders use your property as security instead. This is good news for elderly people who often find it hard to borrow money as banks tighten their lending criteria,” says Mirfin.

Last year 22,366 people took out an equity release plan, raising an average £42,291 according to figures from Key Retirement Solutions.

Many also set up a drawdown facility which allows them to release more cash from their property if they need it later.

Clive Bolton, a retirement director at Aviva, says: “The average home owned by a 55-year-old is worth £238,284.

“This is a valuable asset that can be used to fund the later stages of your life.”

The most popular use for the payout is to fund home improvements with more than half using at least some of the cash on that. Many people use a chunk of the payout to enjoy a holiday.

Some people spend it on a conservatory or remodelling their home, says Peter Lucas, chief executive at provider Newlife Equity Release.

“Others spend it on everyday items such as a trip to the opticians, dental work or help with the gardening and decorating,” he says. Steve Wilkie, managing director at broker Responsible Equity Release, adds: “The toxic combination of high debts, high inflation and high unemployment has stretched people to breaking point. Some 16 per cent of our customers have released equity to meet their soaring utility bills.”

Equity release can make more sense than downsizing to a smaller property. Wilkie adds: “It means you can remain in your home for the rest of your life. Most schemes allow you to move house as long as the new property meets the lender’s criteria.”

Unlike a traditional mortgage, equity release plans can guarantee you a fixed interest rate for life.

“That means you don’t have to worry about any interest rate rises in the future,” says Wilkie.

Always discuss your decision with your family because the payout will eat into their inheritance.

In practice, most children support their parents’ decision because it drastically improves their quality of life.

Claire Barker, chairman of the Equity Release Solicitors’ Alliance, says: “The older generation has a large amount of wealth tied up in their properties and younger people are struggling with the financial downturn.

“Many older people use equity release to help children and grandchildren pay their university tuition fees or put down a deposit on a home.

“Equity release can also help reduce any inheritance tax bill when you die by reducing the value of your estate.”

How much you can borrow depends on your age.

The older you are the more you can raise because life expectancy is lower and the lender doesn’t have to wait as long to get his money back.

Some lenders stipulate your property must be worth at least £70,000 and say that you must borrow a minimum of £25,000.

If you smoke, are overweight or have suffered a serious illness you may be able to get a bigger payout by shopping around for an “enhanced” equity release plan.

Ged Hosty, managing director at Partnership, which specialises in enhanced plans, says: “Any medical lifestyle condition that affects a life expectancy could help you get a significantly higher loan, anything up to 70 per cent extra.”

Remember that any payout could also reduce your entitlement to means-tested benefits, so talk over all the implications with a specialist independent financial adviser and possibly a solicitor as well.

Equity release plans are regulated by the Financial Services Authority. Look for a company that belongs to Safe Home Income Plans (Ship), the equity release trade association.

It offers a valuable “no-negative equity” guarantee which pledges that you can never owe more than your property is worth regardless of what happens to house prices.

Sorting out an endowment shortfall

John and Florence Coomber expected to clear their mortgage before they retired, but it didn’t work out that way.

Like millions of older homeowners, their mortgage endowment plan underperformed and left them with a shortfall of tens of thousands of pounds.

To make matters worse John, from Swindon, Wiltshire, was made redundant in 2009. “I’ve been employed as an agency worker ever since but there isn’t a lot of work around. I’m 64 and due to retire in the next few weeks. I wanted to clear my debts,” he says.

They contacted Key Retirement Solutions, the equity release specialists, for information.

“They explained everything and answered all our questions,” says John. “There was always someone at the end of the telephone. They were never pushy and told us to take our time. We were impressed.”

John and Florence talked over their plans with their three grown-up children. “They’re all working and have their own houses. They said they didn’t need an inheritance. They encouraged us to go ahead.”

The couple have now cleared their mortgage, a small personal loan and still have some cash left over.

“Now we don’t have to worry about money but can get on with enjoying our retirement,” adds John.

Our free guide to cashing in on your home

The Daily Express has teamed up with independent specialist adviser Key Retirement Solutions to produce an updated, simple guide to raising money through equity release. The guide, Releasing Cash From Your Home, is available free to Your Money readers.

To order your copy, call 0800 531 6030 or write enclosing your name and address to Key Retirement Solutions, FREEPOST NWW201A, PRESTON, PR2 2TF. Visit www.keyrs.co.uk/express.

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LONDON–(BUSINESS WIRE)–

DRAFT – RESTRICTED

Eastcheap Court

11 Philpot Lane

London EC3M 8UD

Tel. 020 7862 6500

Fax. 020 7862 6509

21 February 2012

United Kingdom

Debt

Management

Office

PRESS NOTICE

RESULT: RE-OPENING BY SYNDICATED OFFERING OF £3.75 BILLION OF 0⅜% INDEX-LINKED TREASURY GILT 2062 AND CANCELLATION OF THE GILT MINI-TENDER SCHEDULED FOR THE WEEK COMMENCING 26 MARCH 2012

The United Kingdom Debt Management Office (“DMO”) announces that the re-opening by syndicated offering of £3.75 billion nominal of 0⅜% Index-linked Treasury Gilt 2062 has been priced at £113.456 per £100 nominal, equating to a gross real redemption yield of 0.0995%. The offer was priced at a yield spread of 0.25 basis points (bps)¹ below the yield on 1¼% Index-linked Treasury Gilt 2055 which was at the tight end of the published price guidance. Proceeds from today’s transaction are expected to be approximately £4.3 billion.

The offer will settle, and the second tranche of this gilt will be issued, on 22 February 2012, after which 0⅜% Index-linked Treasury Gilt 2062 will have £8.25 billion nominal in issue. The UK domestic market provided the main support for the issue, taking around 96% of the allocation. This transaction was the eighth and final offering of the 2011-12 syndication programme, which has raised £34.4 billion relative to plans of £32.7 billion announced at the Autumn Statement 2011.

As a result of the larger than even-flow size of today’s syndication, the DMO is announcing the cancellation of the gilt mini-tender previously scheduled for the week commencing 26 March 2012.

Commenting on the result, Robert Stheeman, the Chief Executive of the DMO said:

“Today’s sale of our 50-year index-linked gilt, represents a very successful conclusion to the DMO’s syndication programme in 2011-12, which has raised £34.4 billion. Once again we have been very impressed with the market’s capacity to mobilise a very large and high quality book of demand, of some £8.6 billion, within one hour. We do not underestimate the amount of risk for the market – as well as us as issuer – represented by today’s transaction. Given the ongoing challenging financial market backdrop, today’s result provides an encouraging demonstration of the resilience of the gilt market and the underlying strength of investor demand for our inflation linked securities.

Indeed, for the second syndicated offer in succession, such was the size and quality of demand that we decided to set the size of today’s deal at £3.75 billion (nominal). This was some £500 million nominal more than would have been necessary to reach the planned index-linked gilt syndication sales target and took proceeds today to £4.3 billion. As a consequence of this, we have cancelled the remaining index-linked gilt mini-tender.

The deal also represents good value for the taxpayer, with the yield at the sale being the lowest at which the DMO has ever sold a 50-year index-linked gilt via syndication or auction Despite a recent back up in real yields, today’s sale was priced at a yield of 0.995bps, almost 40 bps below the yield at the launch of the 2062 bond last October.

I am grateful for the commitment shown by all those involved in today’s transaction and by all gilt market participants in the syndication programme throughout 2011-12 as well as the gilt financing programme more generally.

NOTES TO EDITORS

The syndicated offering was managed by four Joint Bookrunners: Deutsche Bank, Goldman Sachs International, RBS and UBS. All other panel member Index-linked gilt-edged Market Makers were Co-Lead Managers. The composition of the syndicate was announced by the DMO on 9 February 2012.

The order book managed by the Joint Bookrunners was opened at 9.00am on 21 February 2012 with indicative price guidance for investors at a spread of 0.25bps below to 0.75bps above the yield on 1¼% Index-linked Treasury Gilt 2055. The value of orders in the book passed £4 billion within 15 minutes. At 9.30am the Joint Bookrunners announced that the value of orders in the book was in excess of £6 billion, and that the book was expected to close at short notice. At 9.53am the Joint Bookrunners announced that orders were at £8 billion, that the price guidance was being tightened to a spread of 0.25bps below to flat relative to the reference bond and that the book would close at 10.00am. At 10.20am the Joint Bookrunners announced that the pricing spread had been set at 0.25bps below the yield on the reference bond. The book closed with 85 orders totalling £8.6 billion.

At 11.25 am the size of the deal was announced to be £3.75 billion (nominal) and allocations were confirmed. The price was set at 12.20pm. Proceeds from the transaction are expected to be approximately £4.3 billion and will take index-linked gilt sales for the financial year to-date to £36.6 billion. Total gilt sales for the financial year are now £167.2 billion (cash), relative to the remit target of £178.9 billion.

The DMO’s decision to cancel the mini-tender scheduled for the week commencing 26 March 2012 is consistent with the use of mini-tenders in the 2011-12 remit primarily to support the syndication programme by providing operational flexibility to accommodate any unanticipated variations in proceeds from the syndication programme. Going into the syndication a transaction size of £3.00 billion nominal would have been sufficient to reach the planned syndication sales target. By increasing the size of the transaction by £0.5 billion nominal, additional proceeds of some £0.57 billion (cash) were raised and the final mini-tender is no longer required.

The combined outturn for sales of index-linked gilts via syndications and mini-tenders is £20.2 billion (compared to the remit plan of £20.1 billion published at the Autumn Statement 2011).

This press notice will be appearing on the DMO’s website at: www.dmo.gov.uk

The United Kingdom Debt Management Office is an Executive Agency of HM Treasury

¹ 0.0025%.

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