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Govt accused of postponing debt debate due to issues with private bondholders

July 04, Colombo (LNW): The government postponed the scheduled parliamentary debate on recent debt agreements with bilateral creditors due to complications with private bondholders.

This allegation was levelled by Tamil Progressive Alliance (TPA) Leader MP Mano Ganesan.

In a statement, Ganesan refuted the government’s claim that the debate was postponed due to the death of Tamil National Alliance (TNA) MP R. Sampanthan.

He asserted that the real reason was the government’s difficulties in negotiations with private bondholders, which prevented it from providing Memorandum of Understanding (MoU) copies to the parliamentary finance committee.

“There were no MoU copies and no debate; hence, the debt restructuring process remains incomplete,” Ganesan stated.

He highlighted that the opposition had sought the debate to address these issues but was pressured to oppose the MoUs in parliament.

“We, the United People’s Alliance, acted responsibly as the prime opposition and decided not to vote against it but to abstain from voting if the debate had occurred. We wanted to send positive signals to our bilateral debtors, the Official Creditor Committee (OCC) and China, showing our support for restructuring,” he wrote on his official X wing.

Ganesan also praised India’s significant role as a co-chair of the OCC alongside France and Japan, acknowledging India’s $4 billion contribution to stabilise Sri Lanka’s economy.

This aid helped end shortages and brought the country back to near-normalcy, facilitating progress towards the International Monetary Fund (IMF).

He criticised the government’s unsuccessful attempt to align the debt restructuring process with its local electoral calendar, emphasising the opposition and bilateral creditors’ responsibility towards Sri Lanka’s interests.

On June 26, Sri Lanka signed agreements with China and other creditor nations to restructure about $10 billion in bilateral debt, marking a step towards concluding a restructuring process initiated in September 2022 after the country’s reserves plummeted, forcing it to default on foreign debt.

Sri Lankan officials in Paris signed the agreement with the OCC, co-chaired by Japan, India, and France, and a separate deal with China EXIM Bank to rework $4.2 billion of debt.

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