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Women’s rights groups reject current debt restructuring that places burden of repayment on working class

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Women’s rights groups in Sri Lanka yesterday (11) rejected the current debt restructuring solutions that place the burden of repayment on Sri Lanka’s working classes, particularly its women.

Addressing a press conference, a number of women’s groups said they are demanding urgent and sustainable solutions to the ongoing debt crisis in Sri Lanka that respond to the actual lived experiences, struggles and needs of the people.

At the ‘National Convening on Debt and Women’s Human Rights’ held in Colombo on 9-10 August 2023, women’s rights groups from Sri Lanka and other Asian countries discussed the ways the ongoing crisis has impacted their lives and the inadequacy of government solutions to respond in meaningful ways. They also severely criticised the historical and current roles played by international financial institutions, mainly the World Bank and IMF, in imposing unjust austerity measures and their lack of accountability in worsening economic crises in the region.

Sri Lanka is currently going through a crippling economic crisis because of an unsustainable debt burden of 103.8 percent of GDP as of March 2023. This crisis hit households at a time when many had not yet recovered from the shocks of COVID-19. The government response of austerity measures to secure an International Monetary Fund bailout are being hurriedly rolled out, with no public consultation. This has included cuts in public spending, steep increases in utility tariffs, food and energy costs, indirect and regressive taxation, and limited cash handouts as social security.

This has particularly impacted low to middle income families, and labour laws that threaten to rollback gains in wage and job security, especially for women. Critically, the Government of Sri Lanka has decided to use the funds of the Employee Provident Fund to repay Sri Lanka’s debt – forcing Sri Lanka’s working class to bear the burden of repaying the wealthiest creditors – and has blocked resistance and legal challenges to the same.

“The social security funds of workers are being compromised to pay the debt for the richest income earners in the world. The government has decided to trade off the savings – for many of them this is the only savings – of some of the most hardworking people in Sri Lanka,” said lawyer and activist, Lakmali Hemachandra.

“There are severe violations going on with the domestic debt restructuring. The restructuring process is due to finish in September and by that time, workers will lose the security of their savings. We need the international community to hear and condemn the fact that creditors are being paid with workers’ savings and the Government and IMF is continuing to hold the position that there is people’s buy-in for this. There is no people’s buy-in, people just don’t have a way to communicate that,” Hemachandra said.

Juan Pablo Bohoslavsky, Former UN Independent Expert on Debt and Human Rights, said: “We also need to question why only domestic creditors have been asked by the government to make a sacrifice and accept, to some extent, a haircut in their credit. External debt holders should also be asked to make a similar contribution to bring sovereign debt to a sustainable level. According to international law, in the Sri Lankan context, prohibition of discrimination means inter-creditor equity in sovereign debt restructuring.”

The national convening was co-organised by the Law and Society Trust (LST), National Fisheries Solidarity Organisation (NAFSO), The Women and Media Collective (WMC), Colombo Urban Lab, The Asia Pacific Forum on Women, Law and Development (APWLD). Participants included representatives from groups of labour activists, trade unions, rural and urban women, academia, and civil society from Sri Lanka and Asia.

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