• Says Govt. failed to strike a deal favourable to people of Sri Lanka
• Acknowledges decision to withdraw from discussions rather than agree to a detrimental deal
• Highlights discrepancies in statements by Head of the President’s staff regarding agreement on two of the four issues, highlighting inconsistencies
• Finds bondholders’ insistence on maintaining original macro-linked bond structure unacceptable due to its negative impact on economy
• Insists on need for transparency, flexibility in restructuring discussions, especially regarding inclusion of a possible governance-linked bond structure
• Calls on Govt. to boost transparency in restructuring process particularly with elections approaching, to avoid a second default which would be catastrophic 

The main opposition Samagi Jana Balawegaya (SJB) MP Dr. Harsha de Silva yesterday expressed disappointment at the lack of transparency in the Government’s debt restructuring process, highlighting that despite requests, no meeting with relevant stakeholders was arranged.

“From the press note, it is obvious that the Government has failed to strike a deal favourable to the people of Sri Lanka. We acknowledge however, that it is better to withdraw from the discussions than to agree to a bad deal,” he noted via a post on Facebook, in response to the Finance Ministry press release yesterday regarding the failure to reach an agreement on ISB bond restructuring,

However, he pointed out discrepancies in the statement by the head of the President's staff, stating that while it was claimed that agreement was reached on two of the four issues, the press note indicates otherwise.

The main contention lies in the bondholders' insistence on maintaining the original macro-linked bond (MLB) structure, which Dr. de Silva finds unacceptable due to its impact on Sri Lanka's economy. 

“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 think 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 added

He highlighted the need for transparency and flexibility in restructuring discussions, particularly regarding the inclusion of a possible governance-linked bond (GLB) structure.

“We are happy to note the inclusion of a discussion on a possible GLB structure and would be interested in discussing how that can be worked into a possible instrument to be agreed upon,” he noted.

Dr. de Silva urged the Government to enhance transparency in the restructuring process, especially with elections approaching. 

“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,” he added.

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