Emphasising the importance of the recently-approved Domestic Debt Optimising (DDO) strategy, the Sri Lanka Banks’ Association has highlighted the risk of funds, including the Employees’ Provident Fund, being compromised if such optimization measures were not taken.
Speaking during the ‘101 Katha’ programme hosted by the President’s Media Division (PMD), Mr. Russel Fonseka, the Chief Executive Officer of the Bank of Ceylon and SLBA member, expressed the importance of the DDO strategy, highlighting that the need for such a programme is not a recent development.
“I want to emphasize that there will be no reduction in treasury bonds. Instead, alternative solutions such as interest rate reductions and debt deferment are being employed. These measures ensure the security of employees’ funds in EPF/ETF and other similar funds,” he said.
Moreover, the Bank of Ceylon CEO said that the government has guaranteed an interest rate of 12% for these funds until 2025, followed by a guaranteed interest rate of 9% until the maturity date.
“It is true that some may argue that the expected interest income might not be attained. However, the current trend indicates a significant decrease in market interest rates.”
“We hope that the market interest rates align with the government-guaranteed rates for employee funds,” he said.
He stressed that considering the decrease in inflation, the interest income provided by the government for employee funds is quite substantial.
Mr. Fonseka said it is important to note that this interest income issue pertains only to contributory funds, and the reduced amount for other funds will be addressed by the relevant institutions.
“Therefore, employees will not suffer any loss,” he said, adding that it is indeed a positive outcome to receive substantial interest on the right amount of money through domestic credit optimization, rather than losing all the funds.
source adaderana
