Connect with us

News

Sri Lanka’s debt negotiations stall over GDP growth projections and repayment terms – Nishan de Mel

Published

on

Dr. de Mel

In a recent televised interview, Nishan de Mel, the Executive Director of Verité Research, stated that holders of Sri Lanka’s International Sovereign Bonds (ISBs) have expressed concerns about specific aspects of the debt sustainability analysis conducted by the country alongside the IMF. This disagreement is one of the key hurdles in reaching an accord with them, he said.

Dr. de Mel said holders of Sri Lanka’s ISBs disagree with the IMF’s and Sri Lanka’s GDP growth projections. They believe that the potential economic growth of the country has been underestimated, he added.

He said that bondholders believed Sri Lanka had underestimated its economic growth potential, and therefore, its capacity to repay debt. “If the GDP growth potential is higher, then we can pay more. The bondholders argue that if Sri Lanka’s economy grows more than the IMF’s projections, then we should agree to pay them more,” he said. He further noted that Sri Lanka has acknowledged this possibility and has provided the bondholders with estimates of higher repayments contingent on achieving greater than projected GDP growth.

According to Dr. de Mel, while Sri Lanka has agreed to higher repayments if GDP exceeds forecasts, it has sought the flexibility to pay less if growth falls short of IMF estimates. There is currently a disagreement regarding the discrepancy between the higher payments Sri Lanka is willing to make and the amount the bondholders expect, centered around this variance in growth projections, Dr. de Mel said..

“This is natural, and we don’t need to panic,” he said.

He also said there are many challenges of forecasting, noting that the results of GDP growth projections rely heavily on the underlying theories and hypotheses used. He mentioned that the IMF had developed its GDP

projections for Sri Lanka by examining other countries that have undergone debt restructuring processes.

“However, neither Sri Lanka nor the IMF has revealed how they came up with these figures. Also, there is no one way of calculating this. If we underestimate the GDP growth, it’s good for Sri Lanka. If GDP growth is overestimated, this benefits the bond holders,” he said.

It was unlikely that IMF would delay the next tranche of the three-billion-dollar financial package due to the delay in coming to an agreement with ISB holders, he said. The main reason why there would be a delay in issuing the third tranche was that Sri Lanka had not kept many promises it has made to the IMF, he said.

The Executive Director of Verité Research said his institution had come up with novel way of debt restructuring, called Governance-Linked Bond. “We will present this to the world during a conference in Paris next month. The basic design of a Governance-Linked Bond is to have a coupon (interest rate) reduction, which is triggered when specific governance actions are achieved by a certain date.

This structure makes the bond “index eligible” (an important feature for bond-holders), as opposed to the Value Recovery Instrument, which has also been mooted in current negotiations. The same structure was recently proposed by bond-holders in a GDP-Linked rather than a Governance-Linked Bond. A good set of criteria for the Governance-Linked Bond will be that they (a) improve the probability of sustainable recovery, (b) are easily observable and verifiable, (c) have a high level of public support.”



Continue Reading
Click to comment

Leave a Reply

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

News

UN asks govt. to vacate ‘remaining lands still occupied and used economically by the military’

Published

on

Volker Türk

Military-held land down to 9% in North and East

The Office of the High Commissioner for Human Rights (OHCHR) has said that the UN High Commissioner for Human Rights Volker Türk, during discussions with the Sri Lankan government, stressed the importance of releasing the remaining lands still occupied and used economically by the military.

OHCHR has included updated information provided by the government on land releases in its reports to the Human Rights Council, the OHCHR said.

OHCHR team member Jeremy Laurence said so in response to The Island query regarding the HC’s call for release of land which both serving and retired officers considered unfair.

The Island posed the following question to the HC’s office: “At the conclusion of the UNHRC Chief’s visit to Sri Lanka recently, one of the issues he raised was the failure on the part of the armed forces to vacate public and private property held in the Northern and Eastern provinces. However, the military insists that approximately 91% of the total land held at the time of the conclusion of military operations, in May 2009, had been released. We would like to know whether the UNHRC Chief hadn’t been briefed by the government of Sri Lanka or the UN Mission in Colombo on the vacation of approximately 91% of the land held by the military in 2009.

The Island contacted OHCHR as suggested by the UN Mission in Colombo.

The military pointed out that of over 24,000 acres held in the Jaffna and Kilinochchi sectors in 2009, less than 2,500 acres remained in their hands. “We are down to the bare minimum. Further reductions will pose major challenges,” one retired officer said.

By Shamindra Ferdinando

Continue Reading

News

Need to attend to sick wild elephants promptly discussed at high-level meeting

Published

on

A high-level discussion on the urgent treatment of sick wild elephants was held on Monday (July 7) at the Ministry of Environment under the patronage of Minister of Environment Dr. Dhammika Patabendi and Deputy Minister Anton Jayakody.

Senior veterinary officers representing the Wildlife and Zoological Parks Veterinary Officers’ Association participated in the discussion alongside Secretary to the Ministry of Environment Rohitha Udawawala and Director of Veterinary Services of the Department of Wildlife Conservation Dr. Tharaka Prasad.

The focus of the meeting was to streamline rapid response measures to treat elephants suffering from illnesses in the wild and to ensure timely access to life-saving antibiotics and medical resources.

Commenting on the need for swift intervention, Environment Minister Dr. Dhammika Patabendi said:

“We cannot allow delays when it comes to the treatment of our wild elephants, especially those suffering from life-threatening conditions. These majestic creatures are an integral part of our natural heritage, and it is our duty to act fast. We are committed to providing our veterinary officers with the tools, resources, and policy support necessary to carry out this responsibility efficiently.”

Discussions also focused on identifying infected elephants promptly, administering treatment without delay, and addressing any shortages in medical supplies such as antibiotics. The officials explored avenues to ensure logistical and infrastructural support for veterinarians working in the field.

Significant attention was drawn to the existing cadre shortages within the Department of Wildlife Conservation’s veterinary and technical teams. Plans were discussed to address these gaps with the approval of the Department of Management Services and the Ministry of Public Administration.

Additionally, the need to provide field veterinarians with appropriate technical facilities and mobility support was emphasized as a key priority in enabling effective on-ground operations.

The meeting concluded with an understanding that urgent procedural and administrative steps would be taken to fast-track recruitment, supply of medication, and operational improvements necessary to protect the health of Sri Lanka’s wild elephant population.

By Ifham Nizam

Continue Reading

News

Navy seizes contraband pesticides and seeds in Puttalam and Kalpitiya

Published

on

The Navy detected a significant haul of smuggled pesticides and seeds during operations conducted in Puttalam and Kalpitiya from 20 to 30 June, 2025. The separate operations also resulted in two dinghies and a lorry also being taken into custody, Navy Headquarters said.

In a search operation on 20 June, the Northwestern Naval Command’s SLNS Vijaya inspected a suspicious lorry near Alankuda Beach, Puttalam, resulting in the vehicle, along with 32 sacks of pesticide materials and seeds suspected to have been smuggled into the country, being taken into custody.

On 28 June, during another search near Ippantivu Island, Kalpitiya, naval personnel spotted and took into custody two dinghies carrying 15 sacks of pesticide materials intended for smuggling.

It is suspected that the smugglers abandoned the contraband, along with the lorry and dinghies, due to heightened naval surveillance. The seized items were handed over to the Katunayake Customs Preventive Office for further investigation and legal action.

Continue Reading

Trending