Dr. Harsha de Silva, Member of Parliament, stated that from the beginning, the Samagi Jana Balawegaya (SJB) emphasized the necessity of the International Monetary Fund’s (IMF) assistance to solve the economic crisis. He expressed these views today (27) at a media briefing held at the Opposition Leader’s Office in Colombo.
Dr. Harsha de Silva mentioned that during the President’s address to the nation, he did not talk about the 7 million poor people in the country and that the President seemed unaware of their plight. In contrast, the SJB is fully aware of the existence of these 7 million impoverished individuals.
Further expressing his views, Dr Harsha de Silva said:
“From the beginning, the SJB stated that IMF assistance is essential to solve the economic crisis. The person who wrote the President’s statement may not have known this, but the President should have investigated the SJB’s statements about the IMF. If the government had acted on the SJB’s calls for IMF assistance at the time, the country would not have gone bankrupt. Additionally, we wouldn’t have faced fuel and gas shortages. The SJB did not vote against the agreements the government reached with the IMF. The SJB never said not to deal with the IMF; if such a claim exists, it should be substantiated.
The Leader of the Opposition, Sajith Premadasa, Kabir Hashim, Eran Wickramaratne, and I discussed with IMF representatives about the necessary changes to the agreement between Sri Lanka and the IMF. The SJB is not prepared to work with the agreement signed by President Ranil Wickremesinghe with the IMF; it needs to be changed. The SJB has understood the issues with the agreement analytically.
Moreover, some government members voted against the agreement with the IMF but are now saying that we must work with the IMF. The SJB welcomes the agreement reached with the creditor group, including China, Japan, and India. If the agreements made by the government benefit the people of the country, the SJB will not oppose them. During the debt restructuring process, the SJB requested China, Japan, and India to provide necessary assistance to Sri Lanka. The debt relief from China, Japan, and India was a result of their longstanding diplomatic relationships with Sri Lanka. It is due to this international cooperation that Sri Lanka was able to reach an agreement with the official creditors.
The government has announced that a report on the agreement with the creditors will be presented to Parliament and has requested support for it. Detailed explanations are needed regarding whether there will be an interest payment deferment until 2028.
The President also mentioned discussing restructuring international commercial debt along with domestic debt restructuring. However, Sri Lanka has not successfully restructured its domestic debt. In domestic debt restructuring, Sri Lanka has burdened the superannuation fund by removing banks and private creditors. Other countries that restructured domestic debt targeted only pension funds. If Sri Lanka views this as a success, we are disappointed. While Sri Lanka has reached an agreement with bilateral creditors, we oppose the discussions with international bondholders. The proposal presented by international bondholders is not favourable for the country.
Sri Lanka is incapable of repaying its debt. Independent institutions have labelled Sri Lanka as a country defaulting on debt in the international financial market. If Sri Lanka rises above its current position, independent institutions will notify the world. Debt restructuring with commercial creditors would allow the swapping of unpayable international bonds with new ones. When new bonds are issued in the market, they are re-rated, which elevates Sri Lanka’s standing. This is not something a politician can dictate. If an agreement with commercial creditors is reached, it should be beneficial for the country.
The latest IMF report states that Sri Lanka’s GDP will be 40 trillion by 2027. International creditors have presented a proposal to determine whether GDP will be higher or lower than their estimates by 2027, based on which the decision to cut the principal value by 28% will be made starting in 2028. If the GDP is $84.2 billion, the principal value cut will be 28%. If the GDP is higher, the principal value cut will be less. If the GDP exceeds $96 billion in 2027, the principal value cut will be reduced to 7.3%. Agreeing to a significant principal value cut is detrimental to Sri Lanka.
The IMF says the country’s economy is on a knife-edge. The President’s speech did not address the poverty of the country’s population. The country has 7 million poor people, which the President did not mention, but the SJB is aware of their existence. The President did not utter a single word about them.”
