MR wants USD3.5bn syndicated loan agreement tabled in Parliament

July 01, 2016 (LBO) – Sri Lanka’s ex-President Mahinda Rajapaksa has requested the government to table the USD3.5bn syndicated loan agreement along with the Attorney General’s observations before parliament.

Speaking at the Battaramulla office of the Joint Opposition former President pointed out that the legislature needs to be informed about the financial management of the country at this critical moment.

It is reported that using IMF credentials, the government has made arrangements to take a syndicated loan of up to 3.5 billion US dollars facilitated by a consortium of five banks including HSBC, Citibank and Credit Suisse.

“The Attorney General has pointed out that if this loan is recalled, and the government
is unable to pay the loan in full, it will automatically trigger default provisions in other loan agreements as well, making those loans also payable in full immediately,” Rajapaksa said.

Ex-President said such clauses are introduced to give the creditor priority over all other creditors.

He added that the banks in the consortium can transfer all their rights to other banks and whoever owns the debt will be entitled to cancel the loan and demand immediate repayment upon the ccurrence of certain events.

“At this moment, the government is desperate enough to agree to any condition to get their hands on some money. This would have been a factor causing concern to the credit ratings agencies as well.”

Ex-President said reckless borrowing by the present government is the main reason why Sri Lanka was given negative outlook categorizations this year by Moody’s, Fitch and Standard & Poor – the three top international credit rating agencies.

Rajapaksa said it is ironic to see that this government says that people earned a lot of wealth during his tenure which has to be taxed while insisting that he ruined the economy.

The government has announced that a capital gains tax will be introduced in the coming weeks on the grounds that people accumulated a lot of wealth in the recent past.

Ex-President further pointed out that when ordinary people hear the phrase ‘capital gains tax’ they may assume that this is a tax levied only on rich people who own ‘capital’.

“But what is meant by capital in this case is property owned by anybody,” he said.

“If a farmer, labourer or schoolteacher disposes of his land or house, he will have to pay a tax on the difference between the price at which he bought it and the price at which he sold it.”