Domestic debt restructuring will cripple EPF, ETF – JVP

By Sirimatha Rathnasekera

The Employees’ Provident Fund (EPF) and Employees’ Trust Fund (ETF) will lose about 600 billion rupees during the proposed domestic debt structuring, Co-Convener of the JVP affiliated National Trade Union Centre (NTUC) Wasantha Samarasinghe claimed.

Samarasinghe is of the opinion that the government is planning not to pay 20 to 25 percent of the loans it has taken from domestic sources. Successive governments have borrowed significantly from the EPF and ETF, he said.

Samarasinghe said that due to the depreciation of the rupee, the real value of EPF and ETF funds had decreased by half. “In such a context, can these institutions take a 20 percent haircut? This might be a big problem to the workers,” he said.

The NTUC Co-Convener said that a number of domestic banks, too, had lent to the government and domestic debt restructuring might lead to a collapse in the banking system.

However, Central Bank Governor Dr. Nandalal Weerasinghe says that they are confident of reaching debt sustainability without re-structuring domestic debt, which would lead to problems in the banking sector.

“There have been concerns among domestic bond investors about rupee debt/internal debt to be restructured following comments made by President Ranil Wickremesinghe to the effect that financial advisors were looking at domestic debt. However, there has been no request to restructure domestic debt. We are confident that we can make debt sustainable without restructuring domestic debt,” Dr. Weerasinghe told the media at the CBSL’s 6th Review of the Monetary Policy stance for this year, at the CBSL head office auditorium, in Colombo, on Thursday.