SJB opposes ISB proposals, warns of dangers of lack of discourse

SJB MP Dr. Harsha De Silva gestures during the media briefing yesterday – Pic by Lasantha Kumara

• Insists ISB haircut must be comparable to DDR impact
• Says USD-based haircut that comes into place is just 7% and is grossly inadequate in comparison to up to 30% during DDR
• Opines counter proposal by Govt. is better but complex
• Claims no conclusion before IMF third tranche is concerning
• International Bondholders had met with all political stakeholders in Colombo last week

By Darshana Abayasingha

The Samagi Jana Banalawegaya (SJB) yesterday expressed its opposition to the proposal put forth by external bondholders last month, and stated there must be comparability between domestic debt restructuring (DDR) and the haircut for international creditors.

Addressing the media in Colombo yesterday SJB MP Dr. Harsha De Silva, said USD-based haircut that comes into place is just 7% and is grossly inadequate in comparison to up to 30% during DDR.

De Silva lamented the lack of discourse on the matter publicly or even before the Parliament, and noted they were even in the dark as to who is providing direction locally in these negotiations on behalf of Sri Lanka. He also said whilst International Bondholders had met with all political stakeholders in Colombo last week, neither the Government nor parties like the JVP have made their stance clear on the matter.

“The Government had made a counter proposal, which was better than what bondholders proposed. But this was a complex proposal with 64 options, and bondholders too said it is too complex. So this matter has to be discussed and the public must be engaged. There must be strong negotiation from Sri Lanka, or is the President simply going to sign it because this is an election year, to get the restructuring done. Some parties are out shouting on trivial matters, but no one is talking about this serious concern that will impact us up to 2038,” De Silva stated.

The SJB MP also reminded that the third tranche of the IMF disbursement is dependent on the external debt restructuring agreements with the Paris Club, and positive movement with respect to private Bondholders. However, no such movement is apparent despite the need to close this matter next month. Wherein, De Silva raised the concern if the restructuring agreement could be signed for the sake of getting it done, and effective negotiation. 

“After the President signs it, then everyone will be out shouting and stating how they are opposed to it to get political mileage. But that discussion must take place now, not later. Only the SJB seems to be raising the alarm, as we did when we advised the Government to go to the IMF back in 2019 or face bankruptcy,” de Silva recalled.