20.09.2024
The incumbent Sri Lankan government led by the unelected President along with the Adhoc Group of Bondholders announced the completion of an Agreement in Principle vis-à-vis International Sovereign Bonds worth US$ 12.55 billion, a sizable portion of Sri Lanka’s external debt. Such an announcement just two days before a significant presidential election which will see citizens vote post-Aragalaya for the leadership they desire, is a political move that is anti-democratic and undermines the sovereignty of the people of Sri Lanka. The economic question is key in this election, and this is an attempt to use currently held power to manufacture a threat of losing a ‘deal’, it is a direct interference in a free and fair election.
The debt restructuring process with the private and bilateral creditors conducted under the auspice of the International Monetary Fund (IMF) over the last year has lacked transparency and good intentions. To render debt restructuring appealing to the private creditors, the Government of Sri Lanka started with an ad hoc, technical, and authoritarian subjection of working people’s pension funds to bear a tremendous blow, unlike in any other developing country that has gone through debt restructuring processes before. The President, leading ministers, and bureaucrats purposefully kept the public in the dark about the risks of the pension funds. Hoodwinking the public continued with the private and bilateral debt restructuring by projecting the tentative debt deals as the best deals when, in reality, Sri Lanka failed to secure substantial debt reduction. Failing to reduce debt stock significantly threatens debt distress and default as a recurrent issue in the coming years.
The hasty ‘in principle agreement’ of debt restructuring with private creditors demonstrates how the ruling regime has trapped Sri Lankans’ economic prospects for narrow political gains. The silence of the IMF, supposedly a UN organization mandated to ensure the best interests of all states, irrespective of their political and economic power, speaks to the undemocratic nature of the institution, which is biased towards creditor interests.
We call on the Election Commission, election monitors, and all civil society groups to publicly condemn and declare that the deal announcement prior to elections is a clear interference in the Presidential Elections in Sri Lanka.
We call on the IMF to respect the sovereignty of the Sri Lankan people and immediately publicly declare that they do not endorse this announcement of a bond deal.
We call on fellow citizens to scrutinize this announcement of an ‘in principle agreement’, and to ensure that the ruling regime and bondholders are prevented from meddling in Sri Lanka’s election process.
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