COLOMBO – Chandra Jayaratne, former President of the Ceylon Chamber of Commerce and LMD Sri Lankan of the year 2001, has in an open letter urged President and Minster of Finance, Ranil Wickremesinghe, to make a declaration personally committing to redress the grievances of Employees Provident Fund (EPF) stakeholders who number over 2.5 million and who are now aware that they have been inequitably, unfairly, and unreasonably impacted by the forced debt optimization process implemented by the government under his leadership.

He has also called for an announcement assuring democratic, equitable, fair and reasonable recompense measures alongside the finalization of the external debt restructure.

The letter in full:

10^th April 2024

An Open Letter to the President and Finance Minister

President and Minister of Finance,

Presidential Secretariat,

Galle Face Centre Road,

Colombo 1

Dear Mr. President,

Dawn of the New Year is the Time for Reflection & to Redress Citizens’ Grievances due to the DDO

You have on many occasions in the recent past, publicly pronounced before different audiences, as reflected in Media Releases of the Presidential Secretariat, that Sri Lanka is the only country in Asia that has completely protected democracy, you vow action against Economic Rights violations, always being respectful of Societal Rights of Individuals (reference to burial rites), and most importantly your commitment to rectify mistakes of the past, whilst recognizing the inability to change what has already transpired, but use the power to reverse the situation. As you often quote and commit to respect globally recognized Dhamma values, it may be relevant to note that Buddhist teachings state  “after one has hurt someone deeply, it is essential to Recognize what wrong was done, Acknowledge the act and apologize to the victims, Repair the damage, and Resolve never to do it again, even at the risk of death or defeat.

You will recollect the letter dated 5^th December 2023, (copy attached) titled ‘Did the Government Err with the DDO? And thus, fail to be Fair, Just and Equitable towards EPF/ETF and other Superannuation Members?’ This submission was acknowledged by the President’s Office and by the Ministry, with a Senior Assistant Secretary to the President, addressing the Secretary Ministry of Economic Stabilization and National Policies stating, “The letter is submitted for necessary actions within the existing legal framework” and “to inform the applicant regarding the action taken, with a copy to me”

The writer has not received any follow up communications nor seen in media any executive decisions to redress the impacted citizens grievances, despite the pleading para of the submission stating; “In the above context it may be most prudent, fair, reasonable and equitable that the Government led by you, in consultation with the International Monetary Fund and Debt Restructure Advisors, Finance Secretary and the Governor of the Central Bank, to consider how best to recompense the marginalized segment of society negatively impacted by unacceptable assumptions and justifications used in the development of the DDO terms, adopted by a hasty passage without public consultation, blocking avenues for judicial review and intervention, and ignoring the best advice and pleadings of many caring intellectuals in society”.

 It is also pertinent for you to note that despite the intervening policy rate downward adjustments, with the Monetary Policy Board of the Central Bank of Sri Lanka at its meeting held on 25 March 2024, deciding to reduce the Standing Deposit Facility Rate and the Standing Lending Facility Rate by a further 50 basis points to 8.50 per cent and 9.50 per cent respectively, the most recent long term secondary Bond market transactions of bonds maturing in 2027- 2032  are yet trading around 12 % and above; and thus at a significant premium over the newly exchanged long term bond yields of the bonds forced on the Employees Provident Fund stakeholders, as a consequence of the Domestic Debt Optimization process.

 In this context it is important for you to recognize that over 2.5 million stakeholder of Employees Provident Fund (EPF) and their families (who will be voters at the forthcoming elections) are now aware that they have been inequitably, unfairly, and unreasonably, negatively impacted by the forced debt optimization process implemented by the government under your leadership, and executed without transparency and entwined with gross misleading misrepresentations of ”no harm to the present fund balance and the future returns reducing by 4%”.

 These stakeholder families are now well aware that the actual loss of their previously earned future wealth value share of the Fund at retirement, recognizing the investment holdings of the Fund at the date of restructure, has deteriorated not by 4-6 % as alluded in public disclosures by the key officials who led the domestic restructure, but probably as now estimated by economist and analysts to have diminished by around 40%. They have vivid memories of how the Bond Scam and Share investment scams also took a big bite out of their future wealth value at retirement. These families are also aware that the Government undemocratically positioned a loaded gun at the head of the Trustees of the EPF, by placing an unacceptable alternative of a 30% tax on investment income, whilst being aware that most of the stakeholders were in fact not liable for tax at all, and over 90 % of them were not in receipt of monthly incomes of over Rs. 725,000/=, at which salary only the stated marginal rate of 30% becomes applicable. Further, they are aware that the rich private investors, primary dealers, banks and insurers and others (who invested in bonds issued in 2022 with high yields subscribing to much more than the investments of Superannuations) were also inequitably exempted from the debt restructure process.  

 In addition, the key officials who led the domestic restructure expressed expert opinions that future interest yields will significantly decrease with inflation coming down to around 5% and that in the longer term the market bond rates prevalent will yield an acceptable real return to the EPF stakeholders, even at the new exchanged bond yield rates. However, the media reports of 9^th April 2024 note that the Central Bank does not expect the government securities yields to ease further from their current levels, contrary to the expert opinion expressed earlier. The current grievances of the EPF stakeholders will certainly enhance significantly in the event external Private Creditors and International Sovereign Bondholders receive a sweeter deal than the equivalent effective loss forced on them.

 You and your advisors are well advised to evaluate on a timely basis, the likely fall out politically from failing to remedy the aforesaid grievances and thus also failing to redress by a recompensing offer to correct the injustice meted out to a majority of EPF stakeholders.

 In conclusion it is the writer’s fervent hope is that you, wisely keeping in mind the public statements referred at the inception of this submission, your public persona, and the political risks, will soon make a declaration that you will personally commit to redress the grievances of EPF stakeholders and assure democratic, equitable, fair and reasonable recompense measures to be announced, alongside the finalization of the external debt restructure.

 Yours Sincerely,

Chandra Jayaratne

cc: Minister of State for Finance, Governor Central Bank of Sri Lanka, Secretary Finance, Secretary Ministry of Labour, Chairman Committee on Public Finance, Country Director, IMF Mission Sri Lanka, Media for Publication

Letter re DDO December 6 2023