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Message: <blockquote data-quote="saraprobe" data-source="post: 5773418" data-attributes="member: 13914">Oct 30, 2009 (LBO) - Sri Lanka's state workers have recieved billions of rupees of housing loans at rates as low as 4.0 percent while homeless ordinary citizens were forced pay high rates as fiscal deficits pushed interest up, it has been revealed.A government statement said during the past four years, state workers had been given 32.59 billion rupees in subsidized housing loans from state bank money.Loans up to 500,000 rupees had been given at 4.0 percent, up to a million rupees at 8.0 percent and above a million rupees at 11.0 percent.While state workers got loans at rock bottom rates, far below inflation, ordinary homeless citizens were forced to tighten their belts and pay 20.0 percent or more for their housing loans.The last four years has seen some of the worst deficit spending since the early 1980s, pushing inflation to 29.9 percent, causing a housing credit bubble which subsequently collapsed.In another peculiarly discriminatory practice for a modern democracy, Sri Lanka's state workers get tax free salaries and unfunded tax-payer financed pensions. An attempt to create funded pensions was also scrapped recently.Critics say Sri Lanka's constitution lacks essential absolute guarantees of equality that make democracies work by blocking discriminatory laws and practices by the state against certain classes of citizens, through the tyranny of simple parliamentary majorities.Sri Lanka's citizens have taken up arms against the government three times since independence in 1948. The majority Sinhalese community has led two uprisings and the Tamil minority once.Under a presidential directive issued this week, state banks have been ordered to process a further 20,939 applications for subsidized housing loans by December 10.Financial analysts say banks that give loans at rock bottom rates to one class of citizens would then charge higher rates from other customers to prevent their banks from making losses and becoming unstable.State banks are active in rural areas and raise deposits country-wide. During the high inflation period from 2004, state banks have kept savings rate as low as 5.0 percent giving negative returns to savings accounts holders, while inflation shot up.Chronic high inflation due to fiscal dominance of monetary policy has kept inflation and poverty high for more than half a century, despite unemployment coming down, since a central bank was created in 1950 with money printing powers.Currency depreciation, weak productive sector growth has also made more than a million people go abroad for menial jobs.In the past two years, the Central Bank has tightened monetary policy and has brought inflation down to low single digits and stabilized the economy.This could allow all classes of citizens to eventually get credit at low nominal rates if state deficit spending and fiscal dominance of monetary policy can be resisted.Under a 20-month program with the International Monetary Fund in July, ceilings have been put on government domestic borrowings to reduce 'crowding out' of ordinary citizens by government through excessive appropriation of savings.Sri Lanka's government has run a deficit in the current account of the budget since 1987, indicating that the savings that come from ordinary people tightening their belts are being mis-used for day to day government spending.</blockquote>

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