A special session of Sri Lanka's Parliament on Saturday overwhelmingly approved the cash-strapped government's domestic debt restructuring (DDR) plan, a vital element in the bankrupt nation’s bid for recovery from the worst economic crisis.
Domestic debt restructuring (DDR) is a key condition in the International Monetary Fund (IMF) programme, through which a bailout package of USD 3 billion was approved for Sri Lanka in March.
The IMF programme unlocks more help from international funding agencies.
Accordingly, the World Bank, earlier this week, approved USD 700 million in financing as budgetary and welfare support for Sri Lanka, which is facing its worst economic crisis since it won independence from the British in 1948.
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The DDR plan won parliamentary approval with 122 lawmakers voting for it while 62 going against it.
After a 10-hour marathon debate, Speaker Mahinda Yapa Abeywardena opted to take the vote ending the debate at 7.30 pm.
The approval of the DDR came as members from the Sri Lankan government and the opposition on Saturday locked horns in the parliament during the DDR debate and saw aggressive arguments from both sides.
The noisy opposition protested that the agreement had been to extend the debate up to 9:30 pm.
However, Abeywardena overruled them and ordered electronic voting.
The main opposition Samagi Jana Balawegaya and its allies including, the main Tamil party, Tamil National Alliance legislators voted against the resolution.
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The state minister of finance Shehan Semasinghe kicked started the debate after the main opposition raised concerns over the document which was to be debated.
Semasinghe stressed that DDR was imperative in Sri Lanka’s hard struggle for recovery in its ongoing economic crisis.
The opposition legislator Harsha de Silva, who heads the committee on public finance, raised objections that there was a discrepancy between the document approved by the committee and the one that was presented by the government.
The government sought to restructure its domestic debt amounting to USD 42 billion to run parallel with ongoing negotiations on restructuring the external debt of USD 41 billion.
The main opposition leader Sajith Premadasa took the government to task over its alleged U-turn on the DDR.
"We were repeatedly told that there will be no local debt restructuring. I ask why the government lie,” he said.
The other opposition speakers were highlighting the threat from DDR on pension funds.
“The poor man is going to take the hit from provident fund returns”, Vijitha Herath of the opposition Janatha Vimukthi Peramuna said.
Nimal Siripala de Silva the minister of transport said that the governor of the Central Bank had assured that the Central Bank would not hesitate to step in if funds’ returns would be affected.
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President Ranil Wickremesinghe, who is also the minister of finance, was not in the House during the debate. He said the government’s primary focus was on maintaining stability in the local banking system.
The parliament had met in a special session to debate the DDR plan.
The Cabinet approved the debt restructuring plan on Wednesday which was to be referred to the public finance committee in parliament and finally for parliament’s approval on Saturday.
Sri Lanka’s banking and finance sector feared for the worse as the government set about restructuring the local debt of USD 42 billion, which is more than its external debt component.
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The island nation is facing its worst economic crisis in history due to a shortage of foreign exchange reserves.
An imperative in the IMF bailout is to restructure external debt, which needs to be completed by September.
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