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‘P’ment to be informed of debt restructuring only in final stages’

22 Sep 2022

  • State Finance Minister Shehan Semasinghe says cannot disclose tomorrow’s initial talks
BY Safrah Fazal Regarding the meeting scheduled to be held tomorrow (23) between the Government and its external creditors, State Minister of Finance Shehan Semasinghe reasoned in Parliament yesterday (21) that this is the initial round of discussions held with the financial and legal advisors, and that the Government is therefore not in a position to disclose to Parliament about discussions which are at their preliminary stages, and therefore, will keep the House informed once the Government reaches the final discussions. Semasinghe made these remarks in response to Samagi Jana Balawegaya (SJB) Opposition MP and Committee on Public Finance (COPF) Chairman Dr. Harsha de Silva’s request to keep Parliament aware of the direction that the Government is headed in terms of the discussions with the external creditors.  Speaking in Parliament yesterday, de Silva said: “Reuters has reported that the sketch of the agreement between the Government of Sri Lanka and the International Monetary Fund (IMF) will be transparently discussed with all external creditors tomorrow. Not disclosing sensitive information is not an issue, but I believe that it would be beneficial if Parliament is made aware as to which direction we are headed, before these are discussed with our creditors. This is the first time in recent history that we are doing so.  “Therefore, if the Government is going for an agreement for a loan write-off with our creditors, then I strongly believe that the agreement of Parliament is required because it cannot be predicted for how long this Government will last. We are not asking for sensitive information, but which direction are we headed? What are you telling our creditors? It's good if we are aware of it, at least a sketch.” In response, Semasinghe stated that the Government does not intend to hide matters related to the progress of the IMF discussions from Parliament but that it intends to keep Parliament informed of the discussions once they have been concluded.  “We don’t intend to hide anything related to this. The discussion that is to take place is the initial round of discussions held between the financial and legal advisors, and the creditors. Once we arrive at the final discussions, the Minister of Finance will make efforts to keep the House informed of this.  “We are not in a position to inform you of the output at these preliminary stages because once these discussions are concluded is when we can present the output. As the COPF Chair, if you have any particular suggestions as to what should be discussed, you can present them to the Secretary to the Finance Ministry, or the President, and we will ensure to discuss those.” De Silva reiterated the necessity of informing the Parliament of the discussions with the IMF and the external creditors, as the country will be compelled to abide by strict conditions in order to undergo a debt restructuring process.  “There has been no instance previously where discussions were held with creditors to restructure Sri Lanka’s debt. This is the first time. We will have to abide by strict conditions if we are to do so. These have to be passed in the Parliament. It cannot be done otherwise.  “We cannot accept that an agreement hasn’t been reached with the IMF as Semasinghe says, because we have reached a staff-level agreement. What we don’t have is the signing of the Extended Fund Facility. In the staff-level agreement, we come to some agreement as to what we hope to do.” Minister Dr. Bandula Gunawardana also stated in Parliament yesterday that an agreement with the IMF is still not reached but is under discussion.  “There is no agreement as of yet, it is still under discussion. They are providing us policies and measures as to how we can retain our reliability among the international community. There have been 16 IMF meetings which took place even during the previous Government, but these have never been disclosed to Parliament. We can give the necessary information as we have nothing to hide. The responsibility of informing about it lies with the Minister of Finance and he will present it to Parliament.” On 18 September, the Reuters reported that the country will make a presentation to its international creditors tomorrow, laying out the full extent of its economic troubles and plans for debt restructuring and a multi billion United States Dollar IMF bailout. The Reuters further stated that the Ministry of Finance had said in a statement via the legal firm Clifford Chance that an online call tomorrow would be open to all its external creditors and be “an interactive session” in which the participants can ask questions. “The authorities intend to update their external creditors on the most recent macroeconomic developments, the main objectives of the reform package agreed with the IMF and the next steps of the debt restructuring process,” the statement dated 17 September said.  


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