Main opposition Samagi Jana Balawegaya (SJB) yesterday charged that transparency remains a serious problem with the Government, amidst reports the State will look to restructure domestic debt by end next month having previously said there won’t be a domestic haircut.
Addressing the media, SJB MP Dr. Harsha De Silva said no one will be willing to volunteer to take a cut, and warned this could pose a major challenge to the sustainability of the financial sector.
“There is Rs. 9 trillion in domestic debt of which 45% is held by state and private commercial banks, 43% by EPF and 9% held by non-banking financial institutions. So the worst case scenario is there will be some sort of push by the authority to EPF and the banks to participate in the domestic restructuring exercise. The best case scenario is the Government sticks to Central Bank owned treasury bills, and reprofile it for a year or so. In a worst case scenario with domestic debt restructuring the public will see the net percent value of their investments fall dramatically. What is due now, won’t be due to them for a number of years,” he said.
De Silva pointed to Ghana, where despite no forcing by written law, the Central Bank of the country said it wouldn’t support old series bonds, whereby the risk rate rose 100% ensuring the bonds will be defaulted on. This would force BASL conditions to kick-in and put capital adequacy ratios at risk.
SJB MP Kabir Hashim
Pix by Lasantha Kumara
The Colombo district MP reiterated his party’s commitment to develop a production economy for Sri Lanka and build bridges to the world. He said there is no clear direction within the Government on the country’s future, as some sections of Government are encouraging industries to consider import substitution rather than promote exports. Despite inflation coming down, it is still high at 50.3% and questioned what the Government hopes to do to lift people out of suffering. He also charged the Government is moving towards draconian measures to curtail people’s right to freedoms of expression, and scoffed at Government efforts to pin everything on the IMF.
“We need to build a production economy and we must amend laws and regulations and do reforms so we can invite the kind of investments that will go to tradable segments. We want investment to come into production of tradable items. Items that have international demand as opposed to just domestic demand. The IMF will focus on economic stabilisation. The Government must take measures to grow the economy and come up with a programme for that. There must be a Government with a mandate in order to that,” De Silva added.
Joining the discussion, SJB MP, Kabir Hashim, stated he feels Government MPs don’t understand the role of the IMF, pointing to the SLPP General Secretary stating IMF funds must be used for investment. The IMF programme is towards stabilisation of the economy, said Hashim, and remarked if members of Government cannot understand the role of the IMF, how could the country trust them now to steer it out of trouble.
“Once again, there comes the question of transparency. The Government has dismantled institutions that offered a system of checks and balances and governance. They removed the positions afforded to the opposition in the parliamentary committee on public finance. Those in power are the ones responsible for the mess, they lack accountability. In that light, some nations have worked well with IMF programmes and others have failed. We need fresh thinking to steer this country and that is not a task for the IMF. We have no faith in this Government to do so. If we don’t manage this situation the queues for fuel and gas will return alongside power cuts,” Hashim stated.