Sri Lanka passes Domestic Debt Optimisation in parliament

The resolution received majority approval through a vote on Saturday, with the backing of several opposition Members of Parliament, as reported by ANI citing Colombo Gazette.

With 122 Members of Parliament (MPs) voting in favor and 62 against, the resolution on Sri Lanka’s Domestic Debt Optimization has been successfully passed. Speaker of the Sri Lanka Parliament, Mahinda Yapa Abeywardena, confirmed this information to the Parliament, mentioning that the resolution was passed with certain amendments.

Notably, opposition MPs Vadivel Suresh and Kumara Welgama, along with independent MPs Anura Priyadharshana Yapa and Dr. Sudharshini Fernandopulle, were among those who supported and voted for the resolution.

The Parliament of Sri Lanka made the decision to hold a full-day debate on the topic of Domestic Debt Optimization on Saturday. Prior to this, the resolution on Domestic Debt Optimization had received approval from the majority of the Committee on Public Finance (COPF).

Under the chairmanship of (Dr.) Harsha de Silva, the Committee engaged in extensive discussions on the topic of Domestic Debt Optimization, which greatly influenced the final resolution approved by the Parliament.

Colombo Gazette reported that discussions were held with key individuals involved in the matter, including Dr. Nandalal Weerasinghe, the Governor of the Central Bank of Sri Lanka (CBSL), K. M. Mahinda Siriwardana, the Secretary to the Treasury, and senior officials representing the Ministry of Finance, Economic Stabilization, and National Policies.

Furthermore, discussions were also conducted with creditors, such as banks, superannuation funds, and insurance funds. These conversations aimed to gather input and insights from various stakeholders involved in the domestic debt optimization process.

Crisis-hit Sri Lanka is estimated to see a contraction in its economic growth this year, according to Asian Development Bank (ADB) data. However, the country which is struggling with an unprecedented economic crisis will begin a gradual financial recovery in 2024.

In 2022, Sri Lanka’s economy contracted by 7.8% and is further expected to shrink by 3% in 2023 as it continues to grapple with the challenge of debt restructuring and balance of payments difficulties, as per ANI reports.

ADB stated that reform measures such as the reversal of the tax it cut in 2019, and the recent approval of the International Monetary Fund’s (IMF) loan arrangement will support the country’s efforts to stabilize its economy.

Updated: 02 Jul 2023, 11:44 AM IST