The Opposition, Samagi Jana Balawegaya (SJB) has expressed disappointment over the government’s lack of transparency related to the restricted discussions held with the Ad Hoc Group of Bondholders of its International Sovereign Bonds (ISBs).
The government, in a statement Tuesday, announced that it has held restricted discussions over the past three weeks (the “Restricted Period”) with nine members of the steering committee who agreed to take part in the restricted discussions (the “Steering Committee”) of the Ad Hoc Group of Bondholders (the “Group”, and together with Sri Lanka, the “Parties”) of its International Sovereign Bonds (ISBs).
The statement further said that despite constructive discussions, the Parties did not agree on restructuring terms, while the Steering Committee did not agree to an extension of the restricted discussions upon expiration of the current Restricted Period.
Commenting on the statement, SJB MP Dr. Harsha de Silva said the SJB was disappointed that there has been absolutely no transparency in the government’s debt restructuring process even though the SJB had requested for same.
“In fact, I personally requested for a meeting with the relevant stakeholders both as the economics spokesperson for the main opposition SJB and as the Chairman of the COPF. That opportunity was not provided, instead, a meeting with government officials was arranged to discuss the IMF program which we had no reason to attend as we anyway met the delegation during their visits and exchanged views on the same,” he said in a statement.
MP de Silva pointed out that from the press note, it was obvious that the government had failed to strike a deal favourable to the people of Sri Lanka, adding “We acknowledge, however, that it is better to withdraw from the discussions than to agree to a bad deal.”
“Having said that, the statement by the head of Hon President’s staff that the two sides agreed on two of the four issues is not accurate when the note categorically states that no agreement had been reached, only that they ‘came closer to meeting of minds’ if a significant additional payment was made and even then, contingent upon the government side agreeing to the bondholders remaining conditions.”
He further that it was clear that the participating bondholders do not want to move away from the original macro-linked bond (MLB) structure they proposed based on the performance of the Sri Lanka economy to be measured on their much higher ‘alternative baseline’ as opposed to that of the IMF.
“The main problem with this approach from the point of view of Sri Lanka is with their proposed structure of sharing the upside. It is not acceptable given the pain already incurred and will be incurred for decades to come by domestic creditors forced upon by the domestic debt restructuring. It is now clear the alternative restructuring proposal by the government consisting of a mix of plain vanilla and MLB has been rejected by the bondholders. We do understand the need for some type of value recovery instrument (VRI) that could be a component of the final restructured series, but we believe that to link the same to every bond takes away the freedom of a future government to manage the nation’s liabilities in the most beneficial way for Sri Lanka. It is possible to discuss the VRI structure that is detachable from the main instrument,” he explained.
MP de Silva, however, expressed satisfaction over the inclusion of a discussion on a possible governance-linked bond (GLB) structure, stating that the SJB would be interested in discussing how that can be worked into a possible instrument to be agreed upon.
He further urged the government to be much more transparent in this restructuring process given that elections are around the corner and that the next government and those to come will be held responsible for honouring the conditions agreed upon by this government in its final months.
“We are fully aware that any unilateral suspension of meeting any of the agreed payments would mean a second default which would be an absolute disaster,” the SJB MP added. (Newswire)
