Govt. two-faced on debt: Harsha

Thursday, 14 January 2021 01:53 -     - {{hitsCtrl.values.hits}}

Samagi Jana Balawegaya Parliamentarian Dr. Harsha de Silva addressing reporters yesterday 

  • Questions why Govt. raising $ 200 m through local advertisements if macro fundamentals solid and ratings downgrades have had no impact 
  • Says different ministers painting different pictures to public 
  • Questions reasoning behind Gammanpila asking for debt rollover if Cabraal’s positive statements are true
  • Calls for clarity from Govt. on debt repayment challenges for 2021
  • Warns record-breaking stock market performance requires vigilance 

By Asiri Fernando

Main Opposition Parliamentarian Dr. Harsha de Silva yesterday accused the Government of following a “two-faced” policy on debt management by reassuring the public of a healthy economy while publishing advertisements calling for investors to purchase $ 200 million worth of bonds this month. 

Samagi Jana Balawegaya (SJB) Parliamentarian Dr. Harsha de Silva speaking at a press conference charged that the Government frequently defends its economic policy in and out of the Parliament, claiming that investor confidence was growing and that the Government will not seek the support of international financial institutions such as the International Monetary Fund (IMF) to manage its debt repayment requirements in 2021. 

However, he pointed out that the same Government has published advertisements calling for dual citizens, foreigners and foreign entities, licensed banks and licensed finance companies among others to purchase $ 200 million worth of bonds to be released by the Central Bank this week. The newspaper advertisement says bids can be submitted from 15 to 19 January with the settlement date set for 22 January.

He also pointed out that Cabinet Co-Spokesman and Energy Minister Udaya Gammanpila earlier this week appealed to creditors to rollover part of $ 6.86 billion of debt due in 2021, acknowledging it would be a “great help to the country”.

“The Government sends State Minister Ajith Nivard Cabraal to Parliament where he paints a rosy picture of the economy and claims that the country doesn't need to get assistance from organisations like the IMF to better manage debt repayments. Cabraal has stated that economic policies are working well and that investor confidence is growing. But then we have the Cabinet Co-Spokesman Udaya Gammanpila making an appeal to creditors a few days later,” Dr. de Silva said. 

“Who is telling the truth? Is it the State Minister in charge of the subject who paints a nice picture about the economy every day or the Cabinet Co-Spokesman?” Dr. de Silva questioned, charging that the Government was incoherent and opaque in communicating its economic policy and debt repayment strategy to the public and other stakeholders. 

Sri Lanka’s sovereign rating was downgraded multiple times by all three international rating agencies last year after COVID-19 impact worsened an already tenuous fiscal situation and the Budget for 2021 failed to introduce measures to substantially raise public revenue to rectify deficit concerns and outline a viable debt sustainability strategy. 

Experts opine that the Government is opting to raise funds from different sources by encouraging mostly domestic-linked or Sri Lankan investors through advertisements for $ 200 million as it faces high interest rates in international financial markets after the ratings downgrades.      

Dr. de Silva argued that the Government claims that it has taken effective measures to control the devaluing of the rupee but insisted such statements were exaggerated. “If you go online now, on Wednesday, and check the dollar exchange rate on the Central Bank website, you will see the buying rate at Rs. 197. So how can we believe what the Government is saying?” 

The parliamentarian appealed to the Government to place accurate information before the public and make them aware of the challenges that still face Sri Lanka on the debt and macroeconomic fronts. 

He also warned that the record-breaking performance of the stock market may not last as it is not grounded on economic fundamentals and warned that there could eventually be a downturn that could impact many investors, especially inexperienced ones. 

“The Colombo Stock Market has seen ‘pump and dump’ schemes before and investors and regulators need to be careful.”