NEWS

Published

on

The Sri Lanka Parliament’s Committee on Public Finance (CoPF) has discussed the lack of consent of beneficiaries of the Employment Provident Fund on a planned domestic debt restructuring plan, its chair Harsha de Silva has said.

“…#COPF meeting discussed the #DDO plan but concerns were raised about burden falling on superannuation funds esp #EPF without considering the consent of depositors. Let’s explore this issue,” de Silva said in a twitter.com post.

“While banks were excluded due to existing stress and non-performing loans, the EPF/ETF, which carries most of the burden, faces potential opportunity loss and lacks a say in decisions impacting peoples’ life savings. This raises questions about #equity and #transparency.”

Sri Lanka’s EPF has long been called a ‘captive fund’ where its money’s have been invested in government securities long-term by its manager the central bank which operates inflationary open market operations that trigger forex shortages and depreciation.

Sri Lanka unveiled debt restructuring strategy which involves extending the maturities of the EPF and possibly ETF which will get interest between 12 and nine percent to meet an International Monetary Fund ceiling on maturing and new debt ceiling gross financing need (GFN).

The central bank, in the past printed the GFN (bought maturing debt) triggered currency crises and economists have blamed budget deficits. Bangladesh’s central bank is now buying 25- year maturing debt to trigger external stability and depreciate the Taka.

Sri Lanka now has to meet the GFN targets which the IMF has determined will make debt ‘sustainable’ and grow out the bankruptcy.Current central bank Governor Nandalal Weerasinghe has appreciated the currency from 360 to the US dollar when he took over to around 310/320 raising the real value of the EPF as well as bank deposits.

However, the agency has a high inflation target about two to three times the target of countries with greater monetary stability, and may persuade legislators to rubber stamp it, critics say effectively getting ‘goal independence’.

“We appreciate the tireless efforts of @CBSL and #Treasury officials in stabilizing and reviving the #lka economy,” de Silva wrote.

“However, it’s crucial to address the concerns of superannuation funds #EPF #ETF depositors, ensure consent and explore a more balanced burden-sharing approach.”

The EPF is now taxed at 14 percent, far below banks and the government may hike the tax to 30 percent to those who do not take up the offer, officials have said. (Economy Next)

Author


Hit Counter provided by technology news