Monday Nov 25, 2024
Monday Nov 25, 2024
Saturday, 21 September 2024 00:52 - - {{hitsCtrl.values.hits}}
A fundamental rights petition was submitted to the Supreme Court yesterday, challenging the Government’s decision to restructure Sri Lanka’s international sovereign bond (ISB) debt, which the petitioner claims has violated the basic human rights of the nation’s citizens.
The petition was filed by former Inter-University Students’ Federation (IUSF) convenor Wasantha Mudalige, and names key figures in the Government, including the Minister of Finance, the Secretary to the Ministry of Finance, and the Governor of the Central Bank of Sri Lanka (CBSL), as respondents.
According to the petition, the interest rate on ISB debt was originally set between 5% and 7%. However, under the new debt restructuring program, the rate was increased to 8.2% before being slightly reduced to 7.4%. The petitioner alleges that as a result of this restructuring, Sri Lanka’s debt obligation for ISBs surged from $ 16.4 billion to $ 19.1 billion, placing an enormous economic burden on the country’s people.
Mudalige asserts that this escalation has compromised the basic rights of citizens, requesting the Supreme Court to rule that the debt restructuring program violates fundamental human rights.
This legal challenge comes on the heels of the government’s announcement on Thursday that it had reached Agreements in Principle on the restructuring of approximately $ 17.5 billion in external commercial debt as of the end of 2023. The agreements were reached with holders of ISBs, following negotiations with the Ad Hoc Group of Bondholders (AHGB), representing international investors, and the Local Consortium of Sri Lanka (LCSL), a domestic group.
Collectively, these bondholders hold over 50% of the bonds, and the agreements involve a 40.3% present value concession in the baseline scenario, using an 11% discount factor. The terms also offer Sri Lanka enhanced debt relief, with a reduction in interest payments compared to the framework agreed upon in July 2024.
In addition, Sri Lanka has announced an agreement in principle with the China Development Bank (CDB) on the key financial terms of restructuring its debt with the bank. These developments come at a critical juncture as the country navigates its severe economic challenges.
