• This is the final of the two-part series of the speech made on 1 July in the Parliament by Opposition and SJB Leader Sajith Premadasa during the debate on the Government’s domestic debt restructuring and optimisation programme. Part 1 was published in yesterday’s (5) publication.

There are three methods of doing this local debt restructuring. One is through a debt haircut and the next is through a maturity extension. A debt haircut is the cutting-off of a certain amount of debt. The other is to reduce the coupon rate, which is called coupon clipping - reducing the interest rate. Now, the Government has decided not to go for a haircut but to extend the period and reduce the interest rate.

Now, what is the point that no one is talking about? In the recent past, a natural haircut took place with regard to domestic debt when inflation reached 70%. Its value has decreased by 40%. When the value of domestic loans decreases by 40% due to hyperinflation, we go and tell external creditors that 'we ask you for a haircut of 30%'. I would like to ask whether this Government is there to protect foreign creditors or local creditors. Are we here to protect these large multinational companies - external creditors - or to protect local creditors?

The people who came to power are talking about nationality, the pride of the nation, patriotism, the country and the motherland, and are now telling the external creditors that a mere haircut of 30% is enough from their side. But, in a situation where there has been a 40% reduction in the deposits of local creditors in this country during hyperinflation, we feel that the haircut you are asking from external creditors is insufficient. We want to make it 50%.

Also, there should be equality in this process. If there is any burden involved, there has to be equitable burden sharing. That is why we keep on saying that we need to go for a debt haircut that cuts off 50% of the debt of foreign creditors. That is our next suggestion.

Also, what does this Government mean in saying that the burden should be shared equally? This Government tells foreign creditors that it will give them equal treatment. There is equal treatment for foreigners, whereas there is no such equal treatment locally. You only end up hitting the stomach of the working people. No equal treatment there. There is a social divide. While saving the super rich with higher margins, you are hitting the common run of people, the middle class, the working class. You tell this class that their coupon clipping will be affected, loan interest dropped and maturity will be extended. But, what is the real inside story? A total of 43% of the Employees Provident Fund (EPF) and the Employees Trust Fund (ETF) is in Government bonds and the Government is now beating the working people who are the custodians of this 43%. Let us forget for a moment the banks and the insurance companies. We are not asking to touch them.

And what about those 9% private individual bond holders, primary dealers, companies, the super rich, the top class super rich? They have plenty of money. Not even touched. What instead has been touched? The working class. Where is the justice in this? Then, foreign countries are told, ‘Oh no, we are going to follow a policy of equal treatment’. Equal treatment to foreign countries, but unequal treatment within the country. This is extremely incorrect. There should be equal burden sharing in place if the local debt is to be restructured.

Also, when we asked about bilateral credit, the President himself says that there is equal treatment. I would like to know why the equal treatment policy adopted for bilateral creditors is not implemented locally.

I will now come to the solution. What is the solution? With this solution, I clearly say that if domestic debt restructuring is done - the Government calls it optimisation, at one time it is called restructuring, whatever word is used - there must be equity. There should be equal burden sharing. 

Almost 99% of the superannuation funds are the ETF and the EPF. Why are you damaging these funds? Why are you attacking the working people while letting go of private individuals with sole proprietorships, primary dealers, the super rich, and super companies? I would like to ask why should only the working people make sacrifices? Why have you not included the super rich into this list? I am not talking about the banking and insurance sectors. I am talking about that 9% who have not even been touched. It is unethical to cut funds by force. It is unfair and wrong to misappropriate the EPF and the ETF.

Also, we say, you should tell the foreign creditors that the haircut should be 50% and not 30%. What have you been doing after having hired Lazard and Clifford Chance? Foreign creditors are given an advantage. I thought that you people are hiring Lazard and Clifford Chance to give an advantage to the local communities. But, contrarily, you have hired them only for the good of foreigners.

Also, there should be transparency in this. There is no transparency. The Central Bank Governor says there are options. What is the alternative? The EPF and ETF holders have no option. Their Funds will definitely be cut. Who controls the EPF and the ETF? The Monetary Board and the Central Bank. That is why in the recent past, they have been stealing, earning and running bond scams from the EPF and the ETF - the funds of the working people. We have witnessed the Prime Minister claiming that, 'We don't want bond thieves, bond thieves will be caught'. That was your slogan when you were in the Opposition. You are silent today. Now, bond thieves have become good people to you all. How did the thief become better today? These are the words of the Premier. You named him a thief in this very chamber. Do you remember? Whom did you make those charges against? None other than the President, the current Prime Minister Dinesh Gunawardena, said so at that time. Now, the same thief has become a good person because he is the President of the country.

Please read the 2019 forensic audit report. Theft, exploitation, extortion and the destruction of the EPF and the ETF funds are recorded there. Not a single legal step has been taken. You are silent. Now they say there is a choice. Now they say that there are various options to be selected. Who decides? Decisions are taken by the Monetary Board and the Central Bank. The very institutions that have stolen the Provident Fund of this country are the ones who make the decisions about the working people’s money. So, I say please don't come to play hide and seek. Now look, the international sovereign bond holders have asked you to publish all the bond holdings in our country. They have asked to publish everything. What has the Government done? Except the EPF and the ETF, everything else has been published. Indeed, according to the law of the country, they have to be published. The Monetary Board and the Central Bank are duty-bound to publish these bond portfolios, the bond holding EPF. But, they are not doing it. However, the entire bond portfolio of the Government has been published at the request of international creditors. The EPF and ETF bond portfolios have not been published. I would like to say at this point that another deception, a theft, a fraud is in operation here.

In such a situation, can the working people who own the Provident Fund have faith in the Monetary Board and the Central Bank? Therefore, we need an independent verification on this. I would like to tell you that crony capitalism is in operation in this country – even in this bankrupt country - today. It is as a result of this crony capitalism that the Government is misusing the EPF and the ETF funds carrying money of some two – 2.5 million working people in the country without even touching the funds of 9% bond holders and the super rich classes. I would like to point out that until February of this year (2023), no casino entrance levy - the $100 fee to enter a casino – has been collected. Even though the country was bankrupt, it was not collected until this February. But, then they started collecting it in February. 

Still, the value added tax (VAT) was increased up to 15% for the common people of the country. Income tax was increased up to 36%. But, you started collecting the casino entrance levy only in February. These are the results of crony capitalism in this country.

Also, do you know that the budget proposes to collect Rs. 137-140 billion from the cigarette tax? Only Rs. 92 billion will be collected according to the way they have increased this tax. The country will lose Rs. 40 billion. Now, one on your side says that the tax was increased today. You must have increased it knowing that this issue will be raised in the Parliament today. Why did you fail to do it this far? Anyway, we are happy that you did it at least now after listening to our voices. It wasn’t just today but we continued to talk about this cigarette tax and raised the matter a few weeks ago. State Minister of Finance Ranjith Siyambalapitiya came and read something in response, which was not factual. There is a shortfall of Rs. 40 billion.

Now look, I will go back to the report of the Governor of the Central Bank. It says that the gross financing needs (GFN) ratio should be brought to 13%. What is GFN? Deficit plus maturing debt that has to be rolled over. So, if the current Government does not collect the required amount from taxes - if the amount of Rs. 40 billion is not collected through cigarette taxes, if the casino entrance levy was not collected up to February this year, the GFN ratio would increase automatically. Now, the working people are asked to directly bear the burden of the increased GFN ratio. The casino owner need not bother about it; he can avoid paying taxes. The cigarette company will have no burden out of this. The cigarette company can also deal with certain officials of the Ministry of Finance to come to a condition of not paying Rs. 40 billion in tax revenue. I state with responsibility that there is such a deal. Because, the Ministry itself says that the revenue should be Rs. 137-140 billion. If the actual revenue is only Rs. 92 billion and if Rs. 40 billion in revenue is lost accordingly, then surely there must be some kind of deal going on between the cigarette companies and various officials. I don't know who else is involved. The biggest joke is your claim to the country that you have negotiated with the International Monetary Fund to bring the GFN ratio to the level of 13%. But, the Government is not taking action to collect the necessary money from cigarette companies and casino operators to reduce the deficit, which is a GFN indicator. This is crony capitalism.

Therefore, this domestic debt restructuring and domestic debt optimisation alone will not work. There needs to be a change in this governance, system of governance, and the system of working. We must work to implement an optimal and enlightened governance that eliminates corruption, fraud and theft. I, in particular, would like to remind you why we are against this proposal. No transparency, no equality. The EPF and ETF depositors have no choice. No voice, no weight given to their choices and decisions, and their funds will be restructured by force. Have you ever given an opportunity for those two - 2.5 million working people contributing to the EPF and the ETF to express their views and make choices? Never. But, the Monetary Board and the Central Bank take decisions for them. Both those institutions have been accused of bond scams including the misappropriation of the EPF and the ETF.

I had the opportunity yesterday and the day before to go to the Public Finance Committee as a silent observer. What a shame, the country is bankrupt, there is a shortage of medicine, people's lives have collapsed, and false rules and regulations are brought to prevent the Opposition Leader from going to a Committee in such a bankrupt country and making queries. Not only that, they also took a vote to ban such entries of the Opposition Leader. The result was six out of 10 votes. However, no one can stop me from talking about the things I realised there while I participated in the Committee meeting. No one can put conditions here. Many of our MPs asked how much of the net present value would be reduced by this restructuring. No answer came from the officers of the Provident Fund, the Trust Fund and the other authorities. What was the answer? They said that they haven't calculated this yet. This restructuring will not harm the net present value of the super rich, the primary dealers, and private bond holders representing the already said 9%. Those guys will instead get a profit windfall with supernormal profits. But, what will happen to the working people through this restructuring? What will happen to their deposits? When asked what will happen to the net present value, the officials of the ETF and the EPF said, 'We have not found the information yet, we too saw it only on social media and it will be calculated and informed later upon receipt of the information'. Then, it is clear that this Government is taking action to pass this extremely substandard resolution by assembling the Parliament on a Saturday without any calculation about the fate of and impact on the workers. These guys are afraid of the rich and the super rich, because they are already in their pockets. In the existing system of this country, the voices of the super rich have a place and are represented in decision making. But, there is no such place for the working people. We declare on this occasion that we will work to defeat this despicable and inferior proposal for the sake of the working people.

Therefore, especially on this occasion, in the end, I would like to say that State Minister of Finance Shehan Semasinghe has been 'spoiled' by the 'Aswesuma'. Instead of being a relief to the people, it has become a blindfold. A wrong programme was implemented blindfolding the people of the country. I will make a proposal to you now. We presented our suggestions on how to do this. We ask you to accept this. Please conduct a census with immediate effect. Also conduct a Household Income and Expenditure Survey with the census. Do that and establish the poverty line. It is without any of these that the programme of cutting off the benefits of these people was put into effect. I would like to ask you to end the era of silencing the public voice, in such a bankrupt country. Give us the opportunity to present these facts. We mentioned these facts in the debate on the 'Aswesuma'. None of them have been implemented. Don't play dirty games. We are asking you not to touch the deposits and savings of the working people in the country while providing every possible concession to the super rich. I would like to conclude my speech with this statement of Benjamin Disraeli: Power has only one duty – to secure the social welfare of the people. 

Finally, I would like to say that the Samagi Jana Balawegaya (SJB) and the Samagi Jana Sandhanaya will continue in that journey with the progressive groups joining us day by day.

(The writer is the SJB and Opposition Leader.)

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The views and opinions expressed in this article are those of the author, and do not necessarily reflect those of this publication.