{"id":82288,"date":"2023-07-07T00:36:23","date_gmt":"2023-07-07T04:36:23","guid":{"rendered":"https:\/\/dbsjeyaraj.com\/dbsj\/?p=82288"},"modified":"2023-07-08T01:53:59","modified_gmt":"2023-07-08T05:53:59","slug":"central-bank-governor-dr-nandalal-weerasinghe-dismisses-the-assumption-that-ddo-will-result-in-rs-12-trillion-impact-to-the-employees-provident-fund-epf-and-alleges-it-was-wrong-misle","status":"publish","type":"post","link":"https:\/\/dbsjeyaraj.com\/dbsj\/?p=82288","title":{"rendered":"Central Bank Governor Dr.Nandalal Weerasinghe dismisses the assumption that DDO will result in Rs. 12 trillion impact to the Employees Provident Fund (EPF) and alleges \u201c it was wrong, misleading and a misrepresentation of facts, figures and reality\u201d"},"content":{"rendered":"

By Nisthar Cassim<\/strong><\/p>\n

The Central Bank yesterday allayed unfounded fears and debunked doomsayers over the Domestic Debt Optimisation (DDO) insisting it did what is best for Sri Lanka considering multiple factors and eyeing the broader goals of the country.<\/p>\n

Amidst criticism from the Opposition and some analysts, the Central Bank defended the DDO framework saying it was \u201cmost fair and reasonable\u201d and the best option carved out after considering multiple factors.<\/p>\n

\u201cBenefiting all stakeholders from a broader sense, the DDO framework is the best deal with which we can move forward,\u201d CBSL Governor Dr. Nandalal Weerasinghe told journalists yesterday. He said it has been positively received by the markets as well as internationally.<\/p>\n

\u201dWe as the Central Bank have responsibility for financial system stability. Our position has always been because of the high inflation rate our domestic debt has already been effectively restructured to a certain extent. Our position at that time obviously was that we do not see a need for a further restructuring and even today I maintain the same position,\u201d CBSL Governor said.<\/p>\n

<\/p>\n

\u201cBut what made us change the position as a compromise is in the interest of achieving a breakthrough in negotiations with external creditors and concluding the overall sovereign debt restructuring process. When we agree to certain next ten year debt targets then when we ask our external creators to make a contribution and on that basis based on the debt targets,\u201d he explained.<\/p>\n

It was pointed out that progress made in terms of higher taxation and achieving a positive primary balance wasn\u2019t sufficient for external creditors to consider relief for Sri Lanka.<\/p>\n

The Governor indicated that through the DDO, Sri Lanka has sent a strong message to external creditors to make significant contributions to the country\u2019s overall debt sustainability as well.<\/p>\n

\u201cExternal creditors would like to see a little more contribution domestically compared to what they are going to give us. So, this is a process of negotiations. In that negotiation obviously there are two choices. Either you can hold on to a position where you do nothing and expect the other party to suggest,\u201d Weerasinghe said. He dismissed the Opposition demand that Sri Lanka should ask external creditors for a 50% haircut.<\/p>\n

\u201cBut our interest in that negotiation is to while understanding there has to be a compromise, there has to be a domestic contribution how best we can optimise the contribution while protecting the interest of the central bank in terms of, as I said, securing financial stability minimising impact comes into a balance sheet,\u201d CBSL Chief added.<\/p>\n

Referring to Verite Research assumption that DDO will result in Rs. 12 trillion impact to the Employees Provident Fund (EPF), the CBSL Governor alleged it was wrong, misleading, and a misrepresentation of facts, figures and reality.<\/p>\n

He emphasised that since EPF holds T-Bonds until maturity, the net present value doesn\u2019t arise. He also claimed that EPF would face a bigger damage if not included in DDO treatment.<\/p>\n

\u201cPreliminary projections point to opportunity loss of 4% for EPF if it takes up DDO treatment and 14% if it opts out and starts paying higher tax,\u201d Dr. Weerasinghe said, though adding that the EPF is currently engaged in analysing proper impact.<\/p>\n

Justifying the exclusion of private bondholders and primary dealers from DDR treatment, Weerasinghe said they account for only 0.1% and 0.9% respectively of total T-Bond stock and they are subject to higher taxation.<\/p>\n

Courtesy:Daily FT<\/em><\/p>\n

Tweet<\/a><\/div>","protected":false},"excerpt":{"rendered":"

By Nisthar Cassim The Central Bank yesterday allayed unfounded fears and debunked doomsayers over the Domestic Debt Optimisation (DDO) insisting it did what is best for Sri Lanka considering multiple factors and eyeing the broader goals of the country. Amidst criticism from the Opposition and some analysts, the Central Bank defended the DDO framework saying …<\/p>\n

Continue reading ‘Central Bank Governor Dr.Nandalal Weerasinghe dismisses the assumption that DDO will result in Rs. 12 trillion impact to the Employees Provident Fund (EPF) and alleges \u201c it was wrong, misleading and a misrepresentation of facts, figures and reality\u201d’ »<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[12],"tags":[],"_links":{"self":[{"href":"https:\/\/dbsjeyaraj.com\/dbsj\/index.php?rest_route=\/wp\/v2\/posts\/82288"}],"collection":[{"href":"https:\/\/dbsjeyaraj.com\/dbsj\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/dbsjeyaraj.com\/dbsj\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/dbsjeyaraj.com\/dbsj\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/dbsjeyaraj.com\/dbsj\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=82288"}],"version-history":[{"count":1,"href":"https:\/\/dbsjeyaraj.com\/dbsj\/index.php?rest_route=\/wp\/v2\/posts\/82288\/revisions"}],"predecessor-version":[{"id":82289,"href":"https:\/\/dbsjeyaraj.com\/dbsj\/index.php?rest_route=\/wp\/v2\/posts\/82288\/revisions\/82289"}],"wp:attachment":[{"href":"https:\/\/dbsjeyaraj.com\/dbsj\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=82288"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dbsjeyaraj.com\/dbsj\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=82288"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dbsjeyaraj.com\/dbsj\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=82288"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}