Concerned Citizens

The Hon’ble President of Sri Lanka

Anura Kumara Dissanayake

presidential Secretariat,

Galle Face, Colombo 01,

Sri Lanka

Open letter to President Anura Kumara Dissanayake –Regarding the Debt Restructure Agreements with the IMF,Official Creditor Committee and Ad Hoc Groups of Bondholders

Dear Mr President,

This is written out of deep concern regarding the debt restructure agreements with the IMF, Official Creditor Committee (OCC) and ad hoc groups of bondholders which should NOT be signed without full review and DUE DILIGENCE by the new NPP government that was elected by the people of Sri Lanka to deliver debt justice and restore economic sovereignty. 

Also proposed here is a short strategic way forward for the new NPP government which should seek time to review the draft agreements rather than rush to sign agreements drafted by the previous corrupt Ranil Rajapakse regime, which is primarily responsible for the Odious debt trap and first ever Sovereign Default of Sri Lanka in 2022.

The NPP government owes to the people of Sri Lanka who have placed their trust in it to perform a proper review and DUE DILIGENCE with help of national experts. Due diligence performed in business transactions to ensure that no harm would be caused to the county due to these agreements.

Especially given its massive peoples Mandate, NPP must tell the IMF and bondholders that it needs 3 months to conduct due diligence as it has only just appointed a new Cabinet. This, especially since the IMF claims to be interested in good governance, transparency and fighting corruption it should not force agreements drafted by the previous.

Also, as the bondholders have supposedly waited 2 years already, they can wait a few more months in the interest of greater transparency and accountability for the people of Sri Lanka, who are saddled with their Odious Debt.

Meanwhile, the names of bondholders who stand to benefit from the debt restructure should be released and their identities reveals in the interest of accountability and to fight corruption.

Sri Lanka’s economy is resilient, solvent and will not crash because the new Government seeks 2-3 months to perform Due diligence and an audit of the agreements– in the interest of the citizens. Anyone who says otherwise, is lying and doing Economic Gaslighting. Indeed, even the IMF team leader Peter Breuer recently commented on the resilience’ of the country. Indeed, Sri Lanka is the wealthiest county of South Asia in terms of purchasing power parity per capita  (PPP) which is the metric that matters.

Hence, in the interest of debt justice for Sri Lanka and fighting corruption in the bond business, the NPP would do well to inform the IMF and ISBs and Official Creditor Committee etc. that it needs 3 months to perform DUE DILIGENCE and review the agreements before signing.

These are legally binding agreements that cannot be easily reverse, and have long term implications for the country. Already the JVP has said that they are forced to follow  Ranil Rajapakse’s agreements with IMF.  Hence, the JVP should not sign even more agreements drafted by Ranil Rajapakse regime without performing due diligence.

Such an approach would only deepen the debt trap and LAWFARE that is being waged on Sri Lanka in the form of debt restructuring agreements that are booby traps designed by Lazard, and Clifford Chance. These particularly include Macro-economy linked bonds – a supposedly new instrument for debt restructure — which should be scrapped. The NPP government owes this to the people of Sri Lanka who elected the NPP with such a huge mandate. Also, seek assistance from India, China and BRICS and NDB etc. if and when needed.

• THE NPP government in whom the people have placed a great deal of trust must NOT rush to sign agreements drafted by a previous corrupt regime without DUE DILIGENCE and proper review. The IMF and ISB’s cannot and should not pressure a new government to sign deals made by a previous regime accused of corruption without Due Diligence.
• Hence, NPP government must tell the IMF and bondholders that as a new government pledged to fight corruption, the new Cabinet needs 3 months to study the agreements and where necessary offer alternatives.
• Since bond holders claim to have waited 2 years, they should be able to wait another 2 -3 months! DUE DILIGENCE is expected of any new responsible government and since the IMF claims to be fighting corruption they should be the first to agree to extending the time for a new government to review of the DRAFT agreements made by the previous Corrupt Ranil Rajapakse Government as part of ACCOUNTABILITY AND GOOD GOVERNANCE FOR THE PEOPLE OF SRI LANKA WHO ELECTED THE NPP TO ENSURE DEBT JUSTICE.
• Debt restructuring is NOT rocket science, but it has been made to sound like it by the International Sovereign bond holders (ISBs) and their representatives Lazard and Clifford Chance.
• These Economic Hit men, Lazard and Clifford Chance have rather designed a debt restructuring operation which is highly complex to mask its fundamentally unethical and corrupt nature as it will result in working people of Sri Lanka being squeezed and even losing much of their retirement EPF pension funds to pay some of the world’s richest people.
• The new NPP government that got a huge mandate from the people of the country to fight corruption and ensure debt justice in recent elections must tell the IMF and the ISBs that as a RESPONSIBLE GOVERNMENT who owes it to their constituency to do DUE DILIGENCE, they need 3 months to review the agreements and do DUE DILIGENCE, especially since the previous Ranil Rajapakse regime/s were corrupt and responsible for the International Sovereign bond debt trap.
• Sri Lanka should NOT RUSH TO EXIT THE SOVEREIGN DEFAULT AT THIS TIME in order to service predatory creditors.  Indeed, because it is in Default and not being forced to service Odious debt of Bondholders the economy is doing OK precisely because of the default and the people are not being forced to borrow from the same predatory lenders, BlackRock being the main one, to pay them back as the IMF wants.
• Sri Lanka is resilient and solvent and can run on its annual income to settle expenditures and balance the budget at this time. It remains South Asia’s wealthiest country aside from the Maldives. What is needed is significant Odious Debt Cancellation, with haircuts on principle and interest, rather than the proposed Macro-economy linked bonds to pay off predatory ISBs.
• MLB agreements which are designed to deepen the debt trap and extend the IMF-ISB bailout business, eroding economic sovereignty and core principles of debt justice. They should be thoroughly reviewed.
• However, servicing the Odious Debt under the current agreements would cause great hardship to the people who will be squeezed and whose EPF Pension Funds are being taken. The current terms mean there will soon be another default as many national economists have pointed out. Hence, NPP govt must tread slowly and carefully, conduct a Due Diligence review to ensure these agreements are not harmful to the county, and must seek assistance from INDIA, CHINA, BRICS and other bi-lateral and multilateral donors, etc. as and when needed.
• Whatever gains are made anywhere else in enhanced income from ECONOMIC GROWHT or INDUSTRY or tourism would be wasted in any case due to the current inequitable debt restructure deal made by the corrupt Ranil Rajapakse regime, whereby the county needs to keep paying huge amounts to creditors.
• NPP must URGENTLY get a team of good SL economists and International Relations Experts to reach out to India, China BRICS Bank etc for help if borrowing is needed. Also set up a local team with people like Dr. Howard Nicholas, Nishan De Mel to review the IMF and ISB agreements

Also, check out Harsha de Silva’s proposals for an alternative DEBT SUSTAINABLITY ANALYSIS too to see if it is useful.

Also a proper National legal team to deal with the Hamilton Reserve Bank case which is LAWFARE as in WARFARE

Thank you

Yours sincerely

Concerned Citizens