The opportunity loss of the Employees’ Provident Fund (EPF) from undergoing the Domestic Debt Optimisation (DDO) would be 4% by 2038 and 21% if choosing the 30% income tax rate based on Central Bank calculations, Governor of Central Bank of Sri Lanka (CBSL), Dr. Nandalal Weerasinghe said.

Speaking to reporters yesterday (6), at the Monetary Policy Review press briefing, the Governor said that according to gross calculations done by the CBSL, the EPF will have an opportunity loss of 4% by 2038 if EPF chooses DDO and  21% loss if the 30% income tax rate is selected avoiding the DDO. “So the choice the EPF has is whether they will go for the 4% loss or the 21% loss,” he stressed.

Moreover, according to the calculations done by Verité Research, EPF will have about 200% opportunity gain if the tax rate is opted for, “I don't know based on what assumption that happened, it is an analysis done without any basis and logic which will mislead the people,” he added commenting on the finding.

Dr. Weerasinghe said that the Monetary Board has asked the EPF to conduct their analysis on the two options provided by the Government under the DDO, considering the current bond series and the new bonds that will be included in the future and make a recommendation to the Monetary Board upon which a decision will be taken on what option to participate out of the two options provided.

Under the DDO plan for superannuation funds, the Government has given the option of undergoing debt restructuring with a maturity extension up to 2038 with a step-down coupon structure of 12% up to 2025 and 9% thereafter until maturity while enjoying a 14% income tax rate or the option of avoiding the DDO and be subjected to a 30% income tax rate.