News
Harsha accuses govt. of being secretive about debt negotiations with international commercial creditors
By Saman Indrajith
The Samagi Jana Balawegaya (SJB) is not at all satisfied with the furtive manner in which the government is conducting discussions with Sri Lanka’s commercial creditors to restructure 12 billion dollars of debt, SJB MP and Chairman of the Committee on Public Finance (COPF), Dr. Harsha de Silva said.
The SJB MP added that the country’s international commercial creditors account for a large portion of its domestic debt and they have formed a group, i.e. ‘The Ad Hoc Group of Bondholders’ that has procured the services of two powerful consulting firms.
The Group is advised by Rothschild & Co and White & Case LLP as financial and legal advisors, respectively, he said.
Sri Lanka has made some progress with bilateral creditors including China and India, he said.
“China for the first time since it started lending has agreed to accept the same conditions that the other creditors receive. This is a great victory. However, the stumbling block seems to be our dealings with the commercial creditors and I am not sure if we are doing all we can to get a speedy resolution.”
MP de Silva said that early in 2023, the Ad Hoc Group of Bondholders came up with a “Macro-Linked Bond” (MLB) as a way of restructuring the debt. MLB links payouts to the evolution of Sri Lanka’s gross domestic product. They proposed the government the issuance of 10 bonds linked with the country’s macroeconomic health that will mature between 2027 and 2036, he said.
“They have proposed a 20 percent haircut and an interest rate up to 9.5 percent to be paid in cash and in kind.” But if GDP growth is lower than the bondholders expect the interest rates will drop further. The Sri Lankan government said, in October, it was not too keen on this and I don’t blame them.”
In late 2023, White & Case LLP issued a statement on behalf of the Ad Hoc Group of Bondholders. In this statement they said they have repeatedly tried to engage with the Sri Lankan authorities and its advisors in good faith. They say no substantive engagement has taken place between Sri Lanka and its private creditors by December 2023, de Silva said.
“Now it’s mid- March and no one knows what is going on. We have achieved stability, but we have done so by drastically increasing poverty, significant job losses and the closure of small and medium enterprises. Moreover, Sri Lankan workers sacrificed a lot for the government to restructure domestic debt. So people have sacrificed greatly for stability and therefore they need to know what is going on. But the government is secretive and does not tell us anything that is happening with foreign debt restructuring.”
The SJB MP went on to say that Sri Lanka will be able to dispel the moniker of a bankrupt state when it is able to access international capital markets. For this Sri Lanka’s credit rating must improve.
“President Ranil Wickremesinghe says Sri Lanka will shed the moniker of a bankrupt state by April. I think a lot needs to be done before we reach that stage. We are at the bottom of the ratings, and we need to at least get to where the country was before the Gotabaya Rajapaksa administration.”
MP de Silva said that Sri Lanka needs to grow at double digits to escape the current stagnation and that the best way to do it is to explore how the country can benefit from the fast-growing Indian South.
“This will be the fastest growing area in the world in the coming decades. We need to see how we can link with them and benefit.”
It has been reported that the former Inspector General of Police (IGP) Deshabandu Tennakoon has appeared before the Matara Magistrate’s Court this morning (19),
The former IGP had been evading arrest after the Matara Magistrate’s court had ordered his arrest regarding a shooting incident that took place in front of the W15 Hotel Pelena, Weligama, Matara, in 2023.
The government has begun recovering funds obtained by former Lands and Land Development, Environment and Wildlife Resources Minister SM Chandrasena for the Janatha Lanka Chilli Marketing Limited (JLCML), which he headed, Parliament was informed yesterday.
Agriculture, Livestock, Land, and Irrigation Minister Namal Karunaratne said that as the Chairman of JLCML, Chandrasena had obtained a loan of Rs. 1,275,000 from the Mihintale Govijana Seva Bank in 2001.
The principal of the loan had not been repaid until the end of last year. “After we came to power, we demanded that the loan be settled. Then, we discovered that the interest on the loan had not been paid for the past 24 years, and attempts had been made to have the loan written off. We stopped that and are now in the process of recovering the interest of Rs. 1,975,233 on the loan,” Karunaratne said.
Karunaratne added that JLCML was registered as a company with the Registrar of Companies on March 21, 2001. As Chairman of the company, Chandrasena requested a loan of Rs. 10 million on April 19, 2001, for the purpose of purchasing chillies from farmers in 12 farmer colonies in the Mihintale Agrarian Service area.
The request was approved by the Mihintale Agrarian Service Committee on the same day and referred to the Anuradhapura District Agrarian Operations Committee, which approved it on April 23, 2001. However, the Agriculture Development Commissioner General recommended that a loan of Rs. 1.2 million would suffice for this purpose. JLCML took the loan and failed to repay it until the end of last year. When the matter was raised, the principal was paid, and we are now in the process of recovering the interest that was not paid for the past 24 years,” Karunaratne added.
By Saman Indrajith
Chief Government Whip and Health and Mass Media Minister, Dr. Nalinda Jayatissa, told Parliament yesterday that the government would never be able to pay the salaries that health workers receive in the UK and Australia because the country simply did not have the funds to do so.
“If anyone hopes to receive salaries similar to those paid in the UK and Australia here, we must remind them of the reality that there are no funds for that,” Dr. Jayatissa said, making a special statement on the token strike action by healthcare professionals.
Dr. Jayatissa emphasised that strikes in the healthcare sector, which endangered patients’ lives, were unacceptable.
He acknowledged the need for fair wage increases but stressed that holding patients’ lives hostage during such strikes was condemnable.
Dr. Jayatissa also stated that despite the government’s efforts to increase basic salaries of healthcare professionals, certain groups had chosen to strike, causing significant disruption to medical services.
Dr Jayatissa said that the Ministry of Finance had arranged for a meeting with the striking groups on 17 March to discuss their concerns. However, the groups announced their strike immediately after the meeting.
The minister said: “As a government, we have given a basic salary increase for the Professions Supplementary to Medicine, and the Interim Medical Services. We have added Rs. 22,000 to the basic salary of Rs. 32,000. For a person with a basic salary of Rs. 37,190 we have added Rs. 26,120. For a person with a basic salary of Rs. 44,520, we have added Rs. 32,010-. For a person with a basic salary of Rs. 54, 590, we have added Rs. 43,320/-.”
Dr Jayatissa said that it was the taxpayers who funded those salary hikes. “It is unfair for senior citizens and other patients to be turned away from hospitals due to the strike.”
“The President is ready to make time to meet and discuss the real issues of the strikers. Instead, they are holding patients to ransom. We have given them a meeting on Wednesday (19) as well. We are ready for talks,” he said.
By Saman Indrajith
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