A haircut on local debt cannot be entertained – Eran

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Addressing a recent media conference Samagi Jana Balawegaya (SJB) parliamentarian Eran Wickramatatne said, Debt sustainability should be primarily achieved before the country expects donor assistance and that it has to be taken forward in a sensible manner.

“When we are dealing with this type of situation, we have to be very clear that standard prescriptions will not work, always. Creating another problem when solving a problem will not work either”, emphasised MP Wickramatatne.

“We cannot create another problem at the expense of solving an existing problem. We cannot afford to give even a signal about a banking crisis in the country when there is no such crisis. We can’t go for solutions that will basically create a banking crisis.’’, elaborated, Wickramaratne.

“A haircut (Debt reduction) on local debt cannot be entertained. But there are other solutions that can be looked at, and we will look at those solutions. So, the government and those who are involved in debt structuring should handle them in a sensible manner.”

He reminded that the President made a remark, the other day, on debt restructuring and that, we need to understand its content. The international parties who are working on debt restructuring were talking about foreign debt restructuring and debt held by foreigners.

“The Sri Lankan government that took debt in the past did not take good financial decisions. Rather than putting debt on investments that give a return, we have put them on investments that did not give a return.”

The MP also pointed out that those who gave debt also have the responsibility to ensure that such debtsare being invested in a productive manner so that the country would achieve the desired economic and financial returns.

“Instead of investment in human resources, most of the debts were invested in infrastructure development and largely in non-tradable sectors. We have made mistakes, in not being able to make good use of the debt.

“When we were talking of restructuring debt on the pretext that we have to expand the perimeter of foreign debt restructuring we cannot entertain any other idea.”, he concluded.