Although the government says that the debt restructuring has no effect on the banking system in Sri Lanka, the loss to the banks due to this debt restructuring is more than 97 billion rupees, according to Pivithuru Hela Urumya’s leader lawyer Mr. Udaya Gammanpila. Sri Lanka Latest News
He stated this while joining a press conference held at the Pivithuru Hela Urumaya Party headquarters.
The Pivitura Hela Urumaya leader further commented as follows.
The loss to banks from debt restructuring is more than 97 billion rupees.
Even though the government says that banks are not affected by debt restructuring, a deep study of the government’s cabinet papers and concept papers reveals that it is a lie. The value of the Sri Lanka Development Bonds to be settled is 886 million dollars or 272 billion rupees as indicated on the third page of the Cabinet Memorandum submitted to the Cabinet by the Minister of Finance dated 28.06.2023. According to page 29 of the proposal presented by the Central Bank to the Cabinet, 30% of the value of these bonds will be cut. That means a capital cut of 81.6 billion rupees.
85% of the development bonds are owned by banks in Sri Lanka. Accordingly, the loss to the banks from the capital cut alone is 69 billion rupees. In addition, the amount of dollar loans given by banks to government institutions is 323 million dollars or 92 billion rupees. 30% will be deducted from that amount. That means 28 billion. 97 billion rupees loss to banks only from decapitalization of both bonds and dollar loans. Apart from this, the interest is reduced by about 35%. We have not calculated the loss to the bank. That means the loss to banks through domestic credit optimization is more than 97 billion rupees.
The central bank shares with a big spoon. it is 9% for the people 29% for Central Bank
The central bank manages the 190 lakh mutual funds in this country. It is the responsibility of the Central Bank to provide the highest interest rates to Trust fund members by investing in safe investments that yield the highest profits. While the Central Bank manages our escrow accounts, we maintain a separate escrow fund for the officers of the central bank. The year 2022 is the year in which the highest interest rates were recorded in Sri Lanka’s recent history. Interest rates on bonds and treasury bills rose as high as 32%. In the year 2022, an interest income of 29% was credited to each member’s account from the profit received by investing the Central Bank’s Artha Factor funds. But from the income of the People’s Provident Fund managed by the same central bank, only 9% interest income was given to its members. Why did the central bank manage both the funds and pay 29% interest to the members while the people of the country were given a paltry 9% interest?
How unfair is it to invest the funds of the central bank in the places where the returns are highest and the people’s funds are invested in the places where the returns are low? The central bank officials have committed the offense of criminal breach of trust which can be punished with imprisonment. The Governor of the Central Bank must explain this injustice to the country. Also, if this mistake is not to be repeated, we suggest that the central bank officials’ trust funds should be added to the people’s trust funds and managed as one fund.
When checking the accounts of the Artha Factor Fund, the highest income in the history has been received in 2022. It is 357 billion rupees. But the fact that this income was not credited to the members’ accounts as interest raises a reasonable suspicion that the government was planning from the beginning to sacrifice the financial factor in debt restructuring.
Media Unit
