A financial advisory institute to Sri Lanka for the debt restructuring with the foreign creditors, Lazard, is advised not to divulge any details of the agreement between the Government of Sri Lanka and the Export-Import Bank of China (China EXIM Bank) without the consent of the Chinese Government, Samagi Jana Balawegaya (SJB) Parliamentarian and economist Dr. Harsha de Silva, revealed yesterday (15).
Speaking in Parliament yesterday, he stated: “We have not been updated on the restructuring talks between Sri Lanka and China. Please be transparent on any deal you enter, so that we are all on the same page.”
Dr. de Silva questioned whether such consent was obtained by the Government from the Chinese Government. He further inquired whether the Paris Club members, mainly Japan and India, agreed to the EXIM Bank deal.
According to the Ministry of Finance, the agreement with China Exim Bank covers approximately $ 4.2 billion of outstanding debt of Sri Lanka with the expectation of the approval by the International Monetary Fund (IMF) during its first review of the IMF-supported programme, allowing for the disbursement of the second tranche of IMF financing which is about $ 334 million.
Speaking at a panel in October, the Governor of the Central Bank of Sri Lanka (CBSL), Dr. Nandalal Weerasinghe said that Sri Lanka has requested China to share the terms of the said deal with all other creditors as soon as possible to make it more transparent and ensure comparability so that we can make progress.
“What about the ISP Holders? Their ad hoc group has made a proposal to the Government of Sri Lanka on adding on a debt instrument called a ‘Macro Lint Bond’ (MLB) to the proposed exchanged bond series replacing the existing defaulted bonds,” the SJB Parliamentarian pointed out. Such would give further benefit to aforesaid bondholders if Sri Lanka overperforms on its gross domestic product (GDP) growth projections.
Let it be known that if anyone is to be overcompensated, that group must be those that took the biggest beating in this whole restructuring exercise and those are the whose Employees Provident Fund (EPF) is the hardest hit, he explained.
Therefore, de Silva urged the Government not to bind any future administration to an unfair deal with the ISP holders.