• Main Opposition party demands better clarity 
• Questions Govt.’s real position on debt negotiations with bondholders 
• Opines more space needed to restructure liabilities without reneging 
• Insists parties and public must comprehend associated technicalities up to 2040
• Rebukes claims by NPP it will first move to conduct audit of all loans taken and look at reclaiming monies lost to corruption, and then proceed to present a repayment plan
• Warns Employees Provident Fund impacted by mismanagement and corruption

By Darshana Abyasingha

Following the failure by Sri Lanka to strike a deal with holders of its International Sovereign Bonds (ISBs) the main opposition, Samagi Jana Balawegaya (SJB), yesterday asked what is the real position of Government with respect to restructuring. 

The SJB stressed the need for greater transparency engaging all political factions, as multiple governments in the run up to 2040 will have to shoulder the burden posed in any agreement that is penned now. 

SJB MP Dr. Harsha De Silva at a media briefing, acknowledged it was strategically positive the Government did not agree to a bad deal, but lamented the lack of clarity on the process. 

Expressing confidence that his party will form the next Government, De Silva explained if “Macro Linked Bonds” (MLB) connected to economic performance is the chosen path, he wishes to retain some flexibility to restructure liabilities if the situation was not optimum for Sri Lanka. 

“MLB are state specific situations where restructuring mechanisms can change. How will any upside be shared between bondholders and the Government? Will that be based on USD or an average. On the other hand, we have the IMF’s debt sustainability framework, where maximum payment can be 4.5% of GDP. How does that figure with bondholders? It becomes very technical. Suppose we form the next Government, and we see it is not optimum for Sri Lanka, then we would want to restructure our liability. We will not renege on the agreement, but perhaps we would want to buy back some bonds and warrants. I don’t want my hands to be tied,” De Silva explained.      

He added there is still no clarity on the actual position of the Government with regards to negotiations with bondholders, and asked if its representatives were participating in the discussions or if it was left completely in the hands of Lazard and Clifford Chance. As restructuring agreements run up to 2040, transparency alongside public and political buy-in is critical, the MP stressed. “This process must be looked at as a national policy, as it must be understood and honoured by all concerned. There must be a very real consensus in Parliament, not like what happened during the No Confidence motion against former health minister Rambukwella,” he stated. The Government must think of a post restructure liability management program. 

De Silva also rebuked claims by the NPP that it will first move to conduct an audit of all loans taken and look at reclaiming monies lost to corruption, and then proceed to present a repayment plan. The SJB MP said international financial markets do not function in this manner, and that it was time for political elements to better understand the gravity of the situation and put a stop to misleading the people. 

“As the SJB, as people who have dealt with international financial markets, we know about the responsibility attached to international finance transactions. If we default twice that would bring about serious consequences to our stability and investor confidence. We cannot afford that. People must understand how global financial markets work. Yes, we need to apprehend people who have robbed, which is why we want to push the Stolen Asset Recovery bill as a primary objective. We have a program that devoid of politics. You cannot link that to agreements with international bond holders and their payments. Such claims are ridiculous, they just cannot happen,” De Silva said. 

Joining the briefing was SJB MP Eran Wickremaratne, who also stressed on the need for some political elements to stop misleading the people. He pointed to comments the SJB too is looking to sell Sri Lanka’s state resources, and remarked his party’s strategy is to optimise resources and share their benefits with the people. 

“The state has a responsibility to grow its wealth and share it with people. Sri Lanka has a lot of resources that are lying idle and going to waste. There is no benefit to the people, because Governments have done nothing. When we say restructure that is to gain benefits for the people. Politicians with decrepit ideologies are stating we simply want to sell. There is a right time and way to employ our resources that we have failed to do. Look at our phosphate deposits, it’s a massive resource we have sat on for 50 years with no value addition. Such resources are owned by the Government and can never be sold off. These comments are made by persons who are uninitiated. We must drive foreign investments to better employ these resources,” Wickremaratne said. 

The Colombo district MP also touched on the need to offer better protection to the ageing population, in addition to pregnant mothers and children. He said it was imperative to ensure there is no malnutrition. He said the SJB will develop programs to ensure these groups alongside youth can live with dignity. This includes programs to support senior citizens through retirement and safeguard and better manage the Employees Provident Fund, which he noted had been impacted by mismanagement and corruption. The IMF had also pointed to the need for an independent management authority to oversee the EPF fund, which would happen under an SJB Government, Wickremaratne stated. 

 

Govt. says continuing to engage with ISB holders on debt restructuring