ECONOMYNEXT – Sri Lanka domestic debt restructuring (DDR) will not affect the stability of any public or private bank or the member balance of any provident funds, President Ranil Wickremesinghe has said.
Sri Lanka will announce its DDR this week amid market speculations over instability in financial and banking sectors.
However, Wickremesinghe, speaking at an event in Gampaha district said that the DDR “will have no impact on the membership balance of any public funds, including the Employees’ Provident Fund (EPF)”.
He also emphasized that the rate of return for superannuation funds will not be affected in any way, the Presidential Media Division said in a statement.
“Furthermore, the President stated that the restructuring of domestic debt will not pose any threat to the stability of the country’s banking system, whether it be public or private banks. He specifically mentioned that the deposits of more than 50 million bank depositors will remain unaffected, and there will be no changes to the current interest rates paid on bank deposits.”
The proposals for restructuring both foreign and domestic debt will be presented to the Cabinet on Wednesday (28).
“It was highlighted that Sri Lanka’s total public debt, comprising both domestic and foreign debt, amounted to $83,700 million by the end of 2022, representing 128.3% of the Gross Domestic Product (GDP). Of this amount, the foreign debt totalled $41,500 million, accounting for 63.6% of the GDP. The President also noted that the domestic debt at that time stood at $42,100 million, which constituted 64.6% of the GDP,” the PMD said.
Sri Lanka is also seeking relief from foreign creditors to the tune of 17 billion US dollars
“To ensure debt sustainability in Sri Lanka, the President emphasized the need for restructuring both external and domestic debt,” the statement said.
“Acknowledging the significant burden carried by foreign creditors, he mentioned that the country is set to receive 17 billion US dollars from them in the next five years. The President emphasized the importance of local creditors also contributing to this effort.” (Colombo/June 27/2023)