Debt restructuring: Opp. won’t accept President’s assurances; COPF examines proposals

By Shamindra Ferdinando

SJB MP Dr. Harsha de Silva said that the all-party Committee on Public Finance (COPF) would have to examine the proposals presented by the Central Bank of Sri Lanka (CBSL) and the Treasury as regards the proposed domestic debt restructuring.

COPF Chairman de Silva said that the CBSL and Treasury representatives appeared before the watchdog committee yesterday (28) and tomorrow. Commercial Banks, EPF and other relevant institutions would appear today (29).

COPF would meet again on Friday to address outstanding issues, MP de Silva said.

The SJB economist said so when The Island sought his response to President Ranil Wickremesinghe’s declaration that the domestic debt restructuring wouldn’t be detrimental to the banking sector. The President also dismissed the Opposition’s claims that the proposed measures would have an impact on interests on bank deposits, the EPF, etc. President Wickremesinghe also holds the Finance portfolio.

Dr de Silva, a former UNP State Minister, emphasised that the SJB’s ‘Economic Blueprint’- a 10-point programme, which spelt out how to achieve stabilisation and equitable growth. He said he and his party were against domestic debt restructuring, but if absolutely necessary then the government should re-profile debt without hurting the public. He said there should be no face value haircuts; there could be maturity extensions with necessary regulatory measures to deal with capital adequacy issues so that there will be no adverse impact on individual depositors or EPF members, and the CBSL would be able to ensure liquidity for banks. “If done properly, the risk premiums will disappear and interest rates will fall. Will be positive for borrowers as well as banks … and will help growth.”

Speaker Mahinda Yapa Abeywardena yesterday issued a special gazette notification regarding the convening of Parliament on Saturday at 9.30 am. Director Legislative Services and Acting Director Communication, Parliament Janakantha Silva said that the announcement had been made in accordance with Standing Order 16 at the request of Prime Minister Dinesh Gunawardena.

Dr. de Silva said that the SJB had made its position clear ahead of the current crisis though the government continuously misled the public.

Top Opposition Spokesman Prof. G.L. Peiris said that their stand on the issue would not change simply because of a declaration made by President Wickremesinghe at a public event in Gampaha. Recalling the way the Wickremesinghe-Rajapaksa government had failed to brief Parliament on the IMF bailout package until the finalisation of the agreement in March, Prof. Peiris said that the basic problem was a chronic lack of clarity in the government’s stand. “Whether domestic debt restructuring is to take the form of coupon cut, haircut or adjustment of time of maturity is not clear. The idea is to take the country and, in particular, the banking system by surprise when the markets are shut down for five days. This has inevitably fuelled harmful speculation. Parliament and the Opposition have been taken for granted. The Business Committee meeting was postponed from Tuesday to Friday, and then the issuance of a special Gazette by the Speaker prior to the Business Committee meeting. Smoke and mirrors approach deprives the entire process of much needed candour and transparency. We therefore stand by the assessment we have already made.”