Connect with us

News

ADB assures more support but not debt cancellation

Published

on

By Ifham Nizam

Instead of offers on debt cancellation, the Asian Development Bank (ADB) President Masatsugu Asakawa assured that they would provide more support to Sri Lanka to get out of the economic crisis.The ADB chief was responding to Hemantha Withanage, who was representing the Centre for Environmental Justice (ECJ) on behalf of the NGO Forum on ADB and other civil society organizations.

Asakawa also promised to support Sri Lankan people to come out of the humanitarian crisis.Withanage during the meeting requested the ADB President to investigate ADB loans to Sri Lanka from the lens of development effectiveness and debt crisis, as they are paramount.

“We request ADB to run an IED –Internal Evaluation Department- to evaluate failed projects and loans in Sri Lanka.

He also raised the issue of Policy Loans having direct impact on people, livelihoods, and environment. “We demand new safeguards and clear binding language pertaining to holding policy loans accountable and should be subject to accountability mechanisms.”Withanage said as a regional bank, they also demanded cancelling ADB failed loans in Sri Lanka. It will give a signal to other lenders to cancel some other illegitimate debt, Withanage stressed adding on their part they would continue to push on those recommendations.

He also requested the ADB President to put an end to all forms of support to fossil fuel finance and coal finance through a Renewable Energy Development Master Action Plan or any indirect and direct financing.Sri Lanka is a founding member of the ADB. To date, ADB has committed 479 public sector loans, grants, and technical assistance totalling USD 11 billion to Sri Lanka.

A report prepared by the Centre for Poverty Analysis on behalf of the ADB in 2007 concluded that “Together with the success stories, there were several reversals and failures of the ADB policies in the agriculture sector and several inconsistencies between GOSL and ADB policies.Withanage added that although ADB extended more lending to transport, energy, and agriculture, these sectors failed us. The main sources of income in Sri Lanka become migration workers and tourism.

“When COVID impacted Sri Lanka, we lost both these incomes. Can the ADB still justify its role as a policy bank? ADB is repeating some of the failures. Even at present in an ongoing project in Sri Lanka in the Energy sector ADB depends on the coal promoters as consultants to produce the Renewable Energy Master plan, Withanage pointed out.

He added: “We know that Sri Lanka has continued borrowing from private creditors and China since 2005 until we lost our debt sustainability by September 2020. There are many infrastructure projects which have not benefited the country. Some are now becoming illegitimate debts.

“Sri Lanka is not the only country in our region facing a debt crisis. Bangladesh, Pakistan, and Nepal are also losing debt sustainability. In that case ADB should revisit its approach on the development financing.”



Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Foreign News

Pakistan’s ex-president, Pervez Musharraf dies aged 79

Published

on

By

(picture BBC)

BBC reported that Pakistan’s former president General Pervez Musharraf, who seized power in a coup in 1999, has died aged 79.

The former leader – who was president between 2001 and 2008 – died after a long illness, a statement from the country’s army said.

He had survived numerous assassination attempts, and found himself on the front line of the struggle between militant Islamists and the West.

He supported the US “war on terror” after 9/11 despite domestic opposition.

In 2008 he suffered defeat in the polls and left the country six months later.

When he returned in 2013 to try to contest the election, he was arrested and barred from standing. He was charged with high treason and was sentenced to death in absentia only for the decision to be overturned less than a month later.

He left Pakistan for Dubai in 2016 to seek medical treatment and had been living in exile in the country ever since.

Continue Reading

News

The 75th Anniversary of National Independence celebrated under the patronage of President, PM

Published

on

By

(picture Presidents Media)

The 75th National Independence Day celebration was held under the theme “Namo Namo Mata – A Step towards the Century”, under the patronage of President Ranil Wickremesinghe and Prime Minister Dinesh Gunawardena on Saturday morning (04) at Galle Face Green.

Continue Reading

News

Lanka sovereign bond holders write to the IMF

Published

on

ECONOMYNEXT –Sri Lanka’s bondholders have written to the International Monetary Fund expressing their willingness to engage in debt re-structuring talks but also raising matters related to the domestic debt re-structuring and economic assumptions and forecasts.

The group, styling itself as the “Ad Hoc Group of Sri Lanka Bondholders (the Bondholder Group) has written last week to the IMF Managing Director from New York said inter alia that the Bondholder Group through its Steering Committee stands ready to engage quickly and effectively with the Sri Lankan authorities to design and implement restructuring terms that would help Sri Lanka restore debt sustainability and allow the country to re-gain access to the international capital markets during the IMF Programme period.

The letter concluded with the paragraph: Recognizing the important commitments made by India in the India Letter, the Sri Lankan authorities will apply the principle of comparable treatment in respect of the debt relief requested and obtained from all their remaining official bilateral creditors.

Following is the text of the letter:

NEW YORK, Feb. 3, 2023

Dear Managing Director Georgieva,The Ad Hoc Group of Sri Lanka Bondholders (the “Bondholder Group”) acknowledges the Sri Lankan authorities’ engagement with their official creditors towards a resolution of the current crisis and restoration of debt sustainability.

The Bondholder Group further acknowledges that such engagement has recently resulted in the Government of India (in its letter to the IMF, dated January 16, 2023 (the “India Letter”)) delivering letters of financing assurances, committing to support Sri Lanka and contribute to its efforts to restore debt sustainability by providing debt relief and financing consistent with the IMF Extended Fund Facility Arrangement (the “IMF Programme”) and the IMF Programme targets indicated in the India Letter.

Similarly, the Bondholder Group through its Steering Committee stands ready to engage quickly and effectively with the Sri Lankan authorities to design and implement restructuring terms that would help Sri Lanka restore debt sustainability and allow the country to re-gain access to the international capital markets during the IMF Programme period.

Based on the limited information available to us at this time, including information contained in the India Letter, we understand that the IMF Programme’s debt sustainability targets are identified as

(i) reducing the ratio of public debt to GDP to 95% by 2032,

(ii) limiting the central government’s annual gross financing needs to GDP ratio to 13% in the period between 2027 and 2032, and central government annual foreign currency debt service at 4.5% of GDP in every year between 2027 and 2032 and

(iii) closing of the external financing gap.

The Bondholder Group hereby confirms it is prepared to engage, through its Steering Committee, with the Sri Lankan authorities in restructuring negotiations consistent with the parameters of an IMF Programme and the targets specified therein (the “IMF Programme Targets”), which the Bondholder Group understands to be the targets identified in the India Letter; it being recognized that these negotiations will necessarily be further informed by the receipt of the forthcoming DSA.

We would note that the finalization of an agreement will also be subject to the satisfaction of the following conditions:

The central government’s domestic debt – defined as debt governed by local law – is reorganized in a manner that both ensures debt sustainability and safeguards financial stability.

Assuming that annual gross financing needs should not exceed 13% of GDP in the period between 2027 and 2032, whilst allowing for central government annual foreign currency debt service to reach 4.5% of GDP in every year between 2027 and 2032, domestic gross financing should therefore be limited at 8.5% of GDP for the period 2027-2032.

While we recognize that the determination of the economic assumptions underpinning the IMF Programme Targets is ultimately the responsibility of the IMF and that the overall design of the IMF Programme is one that is negotiated between the IMF and Sri Lanka, it is nevertheless important that the Bondholder Group has the opportunity to express its views on both the economic assumptions underpinning these IMF Programme Targets and the adequacy and feasibility of the adjustment efforts contemplated under the IMF Programme.

When considering any restructuring proposal that is made to the Bondholder Group, it is the Bondholder Group’s intention to take into consideration the extent to which the economic assumptions and the adjustment efforts are consistent with these views.

Recognizing the important commitments made by India in the India Letter, the Sri Lankan authorities will apply the principle of comparable treatment in respect of the debt relief requested and obtained from all their remaining official bilateral creditors.

Continue Reading

Trending