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Governance issues, etc., will have to be sorted out to avert further debt restructuring: Verité Research

Published

2 years ago

2023/07/7

By Rathindra Kuruwita

Unless Sri Lanka addressed its governance issues, the country would have to restructure its debt again like most countries that had unsustainable levels of corruption, Executive Director of Verité Research Nishan de Mel said in a recent televised interview.

Dr. De Mel said that as the government had decided to pay the Employees’ Provident Fund (EPF) only 9% for its investment until 2038 instead of the average Treasury bond interest rate of 13.5 percent, it would lose 12 trillion rupees.De Mel also said that Domestic Debt Optimization (DDO) was a phrase that the Sri Lankan government coined.

“Domestic debt restructuring usually means making credit owners take a loss for the benefit of the government. The word commonly used for this is restructuring, optimisation is a word that we have come up with,” he said.

De Mel said that the government’s proposal was to reduce the interest paid on the money at EPF and other such funds to 9.1 percent until 2038. However, the average interest paid for Treasury bonds over recent years was 13.5 percent, which is almost 50 percent more than the proposed interest for EPF, he said.

“We know the interest rates for Treasury Bonds because the government has released information about the interest rates of bonds issued because foreign creditors have been asking for transparency. By the end of 31 May this year, the average interest rate given to bondholders was 13.5 percent,” he said.

There had been years when interest rates for Treasury bills were below 9.1 percent. However, it was unlikely that the interest rates offered on Treasury bills would fall below 9.1 percent, he said. Sri Lanka was going through an uncertain time and governments could only lure people into buying bonds by offering attractive interest rates, de Mel added.

“We still can’t borrow from bond markets. So, the government will offer higher interest rates when it borrows from the domestic market. During the past two years, the government has paid about 30 percent interest to borrow from the domestic market. It is unlikely that interest rates for bonds will be less than 13.5 percent in the future,” he said.

De Mel said that at present there are 3.4 trillion rupees at the EPF, and it will reach about 25 trillion by 2038 at 13.5 percent interest. However, EPF funds would only grow to 13 trillion at 9.1 percent interest.

“That’s 12 trillion rupees less at 9.1 percent,” he said.

The Central Bank had a Monetary Board taking decisions on the EPF and there was a conflict of interest as CBSL was also entrusted with restructuring debt, de Mel said.

“A lot of people ask me why I am using 13.5 percent to calculate the losses. They tell me that the EPF already receives less than 13.5 percent in interest. The EPF is late in producing annual reports. The last available report was for 2020. The Central Bank produces its annual reports every year, but the EPF reports are delayed. There are many allegations about what happened. If someone tells me that EPF receives lower interest rates than the market rate for treasury bonds, that is another serious problem. All private sector employees are compelled to be a member of the EPF, so why are EPF beneficiaries receiving less than market rates?” he asked.

There are several pension funds, and CBSL workers have a special pension fund. De Mel said he was not aware if that pension fund, too, had been restructured.Although the parliament had approved a resolution on the domestic debt restructuring, the government could not change the interest rates given to EPF without changing some laws, he said.

“The laws governing the EPF say that the Central Bank must publish all investments it makes with EPF money. However, when we look at EPF’s financial statements, they have misinterpreted the above clause. Instead of listing out every investment, they are listing out every type of investment. This way, people can’t figure out what’s going on,” he said.

Those who are EPF beneficiaries will lose about 70 percent of the real value of their money because of inflation and the lower market rate of interest. However, foreign investors are only getting a 30 percent loss, he said.

“This is unequal treatment. There are two factors needed for sustainable domestic debt restructuring. One is that foreign creditors must take a deep haircut—over 50 percent. Secondly, the governance issues in a country must be addressed. Most countries have to restructure their debt more than once. And these countries have serious governance issues. So, to attain sustainability, we need foreign creditors to get a deeper haircut and we have to address our serious governance issues,.”

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Govt. urged to take action against deputy minister

Published

13 hours ago

2025/12/15

Sahan Weerasooriya

Ajith / Eranga

Allegation of doing business with state:

Civil society activist Oshala Herath has said that regardless of the political party one represents, all members of Parliament should abide by the law of the land. Herath said so when The Island sought his response to a report that he was planning to move court against Deputy Minister Eranga Weeraratne, Deputy Minister of Digital Economy, accused of holding the top positions at Omobio (Pvt.) and Eimsky Business Solutions (Pvt.) Ltd., at the time of the nominations, and took oaths as a National List MP of the NPP government.

President Anura Kumara Dissanayake is the Minister of Digital Economy, in addition to being Minister of Defence and Finance.

Herath is the Chairman of Abhinawa Niwahal Peramuna. Herath, whose legal challenge to SJB MP Diana Gamage over her citizenship issue, led to her removal from Parliament by the Supreme Court on 08 May, last year. He said the latest case underscored the responsibility on the part of political parties to ensure transparency in the nomination process as well as in the finalisation of National List.

Herath pointed out that the court rulings on petitions filed by him against two serving MPs were pending. He moved court against Jaffna District Independent MP Ramanathan Archchuna for handing over nominations to contest the 2024 November parliamentary elections without resigning from his post as a government medical officer. He also moved court against Minister of Rural Development, Social Security and Community Empowerment, Dr. Upali Pannilage, alleging that he had been an employee of the University of Ruhuna at the time he was declared an MP and subsequently appointed as a Cabinet Minister.

Our efforts to contact Deputy Minister Weeraratne were in vain. Our calls went unanswered.

Pointing out that there were many attorneys-at-law in the current Parliament, Herath emphasised the responsibility on their part to take up the issue. The Speaker should, on his own, inquire into such allegations in addition to the Parliamentary Privileges Committee stepping in, Herath said. Responding to another query, Herath said that such violations as well as cases of conflict of interests were far more serious than the recent controversy over NPP National List MP Asoka Ranwala’s educational qualifications.

SJB MP Ajith P. Perera told The Island that the Deputy Minister concerned admitted in Parliament that he had held top posts in the companies mentioned at the time he took oaths as an MP. Therefore, there couldn’t be any ambiguity with regard to his fault. Perera said that the conflict of interest issue involving NPPer was far more serious.

Referring to the issue at hand that had been first raised by SJB lawmaker Amila Prasad Siriwardena in Parliament during committee stage of the debate on the 2026 Budget, Attorney-at-Law Perera said that Weeraratne’s companies were engaged in mega business deals with the government. Declaring that they had secured contracts for government projects since 2019, Perera said that one of the companies Weeraratne was involved in had recently won a major contract from the incumbent government regarding the electronic ticketing system.

Kalutara District MP called for a comprehensive inquiry into the issue as the NPP had come to power, accusing all other political parties of waste, corruption, irregularities and mismanagement of state funds. MP Perera queried whether the current dispensation followed proper procedures in selecting Weeraratne’s company for the ticketing project

Both Herath and Perera urged the JVP and NPP to look into what they called the Weeraratne affair.

Over the years, several MPs had been disqualified to hold parliamentary seats. Dr. Rajitha Senaratne is one of them. When the Court of Appeal dismissed Dr. Senaratne from Parliament for being a supplier to the government, Ranil Wickremesinghe brought him back to Parliament, through the National List.

MP Perera said that since the last parliamentary election, the NPP had been embroiled in many controversies, including the release of 323 containers from the Colombo Port, in January this year, followed by signing of seven Memorandums of Understanding (MoUs)/agreements with India in April.

By Shamindra Ferdinando

News

India sends stock of life-saving medicines

Published

13 hours ago

2025/12/15

Sahan Weerasooriya

Misri with Colonne

The government has appealed to India for immediate help to overcome the serious shortage of life-saving drugs and injections.

The Sri Lankan High Commission in New Delhi confirmed the appeal made by the government. The following is the text of statement issued by the Sri Lankan mission in New Delhi: “The Foreign Secretary of India, Vikram Misri, over the weekend handed over a consignment of urgently required essential medicines to Sri Lanka’s High Commissioner to India, Mahishini Colonne, in New Delhi. The assistance, extended in response to a request from the Government of Sri Lanka, forms part of Operation Sagar Bandhu, India’s humanitarian mission supporting Sri Lanka’s relief, recovery, and reconstruction efforts following the devastating Cyclone Ditwah.

The consignment consists of over 400 boxes of life-saving medicines and injections, which will be airlifted to Colombo by an Indian Air Force C-17 aircraft, alongside further additional relief assistance from India.

Deputy Indian High Commissioner Pandey shaking hands with Health Minister Dr. Nalinda Jayathissa

Foreign Secretary Misri reiterated the condolences of the Government and people of India for the tragic loss of lives and the extensive damage to infrastructure caused by the Cyclone. He reaffirmed India’s steadfast commitment to supporting Sri Lanka’s immediate humanitarian needs as well as rebuilding and reconstruction efforts. He also highlighted India’s readiness to work with Sri Lanka on a mix of initiatives tailored to the needs of affected communities.

High Commissioner Colonne conveyed the sincere appreciation of the President, Government, and people of Sri Lanka for India’s timely, continuous, and sustained support, and handed over to the Foreign Secretary, a letter of gratitude from the President of Sri Lanka to the Prime Minister of India.

Describing the extensive nature of the damage, the High Commissioner appreciated the ongoing and consistent engagement of the Indian High Commission in Colombo, in collaboration with government officials and local authorities in coordinating relief, rescue, and recovery efforts.

SLAF personnel unloading medicine from IAF transport plane

The High Commissioner also requested India’s support in sharing its expertise and leadership in enhancing disaster-response capabilities and disaster-resilience frameworks, especially lessons from Odisha and Andhra Pradesh, both globally recognized for their advanced disaster resilience frameworks. Apart from this support that is under discussion, the New Delhi-based Coalition for Disaster Resilient Infrastructure (CDRI) has also been requested to undertake a visit to Sri Lanka to explore avenues for strengthening Sri Lanka’s disaster resilient infrastructure capacities. Noting the importance of having an effective and real-time warning system, efforts are being made to deploy a team to explore the establishment of an early warning system that would provide real-time geo-targeted alerts to citizens.

The High Commissioner reiterated Sri Lanka’s gratitude to the Government and people of India for their continued solidarity under Operational Sagar Bandhu, reaffirming the strength of the longstanding partnership between the two nations.”

News

George Keyt Foundation contributes to national disaster relief efforts

Published

13 hours ago

2025/12/15

Sahan Weerasooriya

(L-R): The donation was handed to Prime Minister Harini Amarasuriya by Professor Jagath Weerasinghe (Trustee), Suresh Dominic (Treasurer), Malaka Talwatte (Chairman) and Abbas Esufally (Trustee) of the George Keyt Foundation.

The George Keyt Foundation (GKF) has extended meaningful support to the Government of Sri Lanka’s disaster relief efforts following the severe devastation caused by Cyclone Ditwah.

The text of the press release issued by the GKF: “In 2023, the Foundation undertook its first major fundraiser in recent years by issuing 30 numbered limited edition prints of Kangodi Rangi, a painting by George Keyt entrusted to the Foundation. Twenty-eight prints were acquired by donors to support charitable causes, while another was gifted to the President’s collection. Print Number 1 of 30 was retained to support the Foundation’s long-term priorities.

In light of the unprecedented impact of Cyclone Ditwah and the urgent national need for disaster assistance, the trustees unanimously resolved to seek a donor for Print Number 1 of 30, with clear disclosure that the proceeds would be channeled directly to the Government’s disaster relief programme. This appeal received an immediate response, resulting in a private donation of Rs. 3 million.

The contribution was formally handed over to Prime Minister Harini Amarasuriya for utilisation in the Government’s ongoing relief and recovery efforts.

The George Keyt Foundation is honoured to support the people of Sri Lanka at this critical moment and reaffirms its commitment to serving national needs while preserving and promoting the artistic legacy of George Keyt.