The Committee on Public Finance (COPF) is meeting today for the third consecutive day for constructive discussions on the proposed Domestic Debt Optimization (DDO) plan and to reach a consensus.
During the second session of discussions on the Domestic Debt Optimization (DDO) plan on Thursday, the COPF chairman MP Dr. Harsha de Silva said the committee looked into the concerns about the impact of the DDO plan on the superannuation funds.
The banking system is excluded from the DDO plan taking as it already contributes to the Treasury and the economy through taxes of over 50%. The government says this move aims to safeguard the Treasury and to ensure the safety of the 57 million public and private bank deposits in the country.
For the second session of discussions on the DDO program, the COPF invited all creditors including banks, superannuation funds, and insurance funds to hear their opinions and concerns.
Accordingly, concerns have been raised about burden falling on superannuation funds, especially the Employees’ Provident Fund (EPF) without considering the consent of depositors, COPF chairman said in a tweet.
Although banks are excluded from the DDO plan due to existing stress and non-performing loans, the COPF chairman said the EPF and the ETF, which carry most of the burden, face potential opportunity loss and lacks a say in the decisions impacting people’s life savings. “This raises questions about equity and transparency,” he added.
The participants of the meeting have acknowledged the urgency of passing the DDO plan without delay for the success of the IMF program and economic growth.
The COPF chairman went on to note that however, there is no contingency plan in the event foreign debt relief and primary targets are not met. “This leaves the EPF and ETF exposed to additional burden without alternative solutions.”
The creditors including banks and insurance funds have meanwhile expressed relief over the proposed DDO plan. Dr. de Silva noted that the exclusion of banks allows them to aggressively participate in the market, supporting businesses, especially the hard-hit micro small and medium enterprises (MSME) sector.
In his Twitter thread, the COPF chairman appreciated the tireless efforts of Central Bank and Treasury officials in stabilizing and reviving the Sri Lankan economy. “But it is crucial to address the concerns of superannuation funds EPF and ETF depositors and to ensure consent and explore a more balanced burden-sharing approach.”
Meanwhile, non-COPF members are expected to be briefed about the DDO plan for better understanding and fruitful debates in the parliament this weekend.
