Parliament Passes Govt’s Domestic Debt Optimisation Plan by 60 Vote majority; 122 vote for and 62 against; SJB,NPP and TNA Vote against while SLPP in Govt and some SLPP dissidents in Opposition vote for;SLFP keeps away while Dissidents vote for;COPF chair Harsha de Silva votes against

By

Asiri Fernando

The special parliamentary session on the Domestic Debt Optimisation (DDO) plan of the Government was approved last evening (1) with a majority of 60 votes, following a lengthy and occasionally-heated debate about the impact on superannuation funds.

Secretary General of Parliament Kushani Rohanadeera then informed Finance Ministry Secretary Mahinda Siriwardana in writing that the DDO programme had been passed by Parliament.

The vote on the plan saw 122 votes in favour and 62 against, with the members from the Sri Lanka Freedom Party (SLFP) leaving the chamber prior to the vote while dissident SLFP MPs voted in favour of the proposal.

There was also a split in the votes of dissident Sri Lanka Podujana Peramuna (SLPP) MPs in the Opposition, with some voting in favour of the DDO and some voting against.

The Samagi Jana Balawegaya (SJB), National People’s Power (NPP), and Tamil National Alliance (TNA) voted against the DDO plan.
The Parliament was adjourned till Wednesday (5) following the vote.

The DDO plan will be presented to the public on Tuesday (4). Superannuation funds Employees’ Provident Fund (EPF) and Employees’ Trust Fund (ETF) have been given 21 days until 25 July to review and agree or disagree with the proposed plan.

The plan, which the Government strongly claims will ensure stability of the local banking sector and thereby reduce a possible backward slide economically, is stated to be an important step in proceeding with sovereign debt restructuring and a signal to the embattled island’s creditors that the Government is serious about its reforms.

Since the topic of domestic debt restructuring and optimisation gained traction, the impact on the superannuation funds of the working class and private sector has been a controversial stumbling block, with many in the Opposition blaming the Government for once again affecting the two funds, which have a history of questionable management under consecutive governments.

“We have a history with the EPF; through bond scams and various methods you [Government] have eaten into EPF funds. You have always stolen from the EPF. All the platitudes by the honourable Prime Minister fall flat, because it’s always the EPF and ETF that you have dipped your hand into, because they are voiceless, because they are the working class, and it’s easy for you to do this. You don’t give them a voice.

“You appoint the Central Bank and the Monetary Board to be custodians. The very same people from the Central Bank and Treasury who draft the DDO get to make decisions on behalf of the voiceless about the EPF. There is no voluntariness in this. The Government doesn’t publish the plan. It is able to publish about foreign debt holders, because they insist on it, but with the EPF no one has a voice,” TNA MP M.A. Sumanthiran charged.

The Opposition MP went on to allege that as per Government reports, the entire weighted average return of Government bond holdings are currently at 13.52% while the Government is only promising superannuation fund interest of 9.1% by 2038.

Replying to Opposition criticism, Minister of Foreign Affairs Ali Sabry charged that the allegations by the Opposition were baseless and stressed that EPF and ETF funds would not be significantly impacted. He argued that the figures and interest rates alleged by the Opposition were based on a false representation of facts.

On Wednesday (28 June) the Cabinet unanimously approved the proposed domestic debt restructuring strategy for restoring sovereign debt sustainability.

The Committee on Public Finance (COPF), chaired by MP Dr. Harsha de Silva, also approved the proposed plan, with amendments binding the Finance Ministry to the proposed plan to ensure adherence to the approved concept paper and addressing concerns about potential deviations.

However, MP de Silva voted against the plan in accordance with the policy decision taken by his party, the SJB. Nevertheless, several SJB MPs such as Vadivel Suresh voted in favour of the DDO.

MP de Silva pointed out that the EPF and ETF had an opportunity to analyse the impact on the funds and highlight it in Parliament.

However, the former State Minister accused the Monetary Board of not being representative of the nearly 450,000 members of the funds.
MP de Silva called for a Government guarantee about the interest rate for the funds, pointing out that it must at least be reflective of the market interest at the time.

“We need someone to speak for the voiceless. There are no representatives from the contributors of the fund at the board level who make decisions about it,” he stressed, adding that as the main Opposition party, the SJB had decided to vote against the injustice caused by the plan to the superannuation funds.

Courtesy:Sunday Morning