Domestic debt restructuring could have devastating impact on country, warns GL

By Shamindra Ferdinando

The International Monetary Fund (IMF) owed an explanation as regards the recent government declaration that domestic debt restructuring was part of the programme implemented in terms of Sri Lanka’s agreement with the lending agency, top Opposition spokesperson Prof. G.L. Pieris, MP said yesterday (10).

Having repeatedly assured that domestic debt wouldn’t be restructured, the government had announced the controversial move, Prof. Peiris said at the weekly media briefing at Freedom People’s Alliance Office at Nawala.

Prof. Peiris asserted that the proposed domestic debt restructuring involved as much as Rs 04 trillion in Treasury bills and Rs 08 trillion in Treasury bonds.

The Central Bank recently declared that it was also exploring the possibility of a domestic debt optimisation (DDO) operation aimed at liquidity relief while preserving financial stability to avoid further eroding of Sri Lanka’s repayment capacity. The Central Bank has stated this DDO would be conducted on a voluntary basis and be based on consultations with major T-Bonds holders.

Prof. Peiris said that they expected to take up the entire gamut of issues with the IMF in June when a Fund delegation was expected to visit Colombo for the first review of the USD 2.9 bn bailout package. The MP said that the IMF couldn’t absolve its responsibility for what was happening here where the ruling alliance went to the extent of targeting Supreme Court judges.

The former minister said though they were still not sure whether the IMF agreement was made available.

The SLPP rebel group spokesman questioned the impact the domestic debt restructuring/DDO operation would have on the Employees Provident Fund (EPF) and Employees Trust Fund (ETF). A significant impact on those funds would cause a crisis of unprecedented magnitude, Prof. Peiris said, adding that overall the growing public anger over the proposed privatization of profit making public enterprises and new tax regime were likely to trigger protests.

Prof. Peiris alleged that the new Anti-Terrorism Act was meant to suppress public protests. Describing the new law as repressive legal regime, the former Law Professor said that the Wickremesinghe-Rajapaksa dispensation was preparing to launch massive onslaught on public freedoms.

The former minister said that having disrupted the Election Commission, now the government was busy attacking the Human Rights Commission. The SLPP MP questioned the rationale in influencing selected members of the HRC against its Chairperson Justice Rohini Marasinghe.