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Sunday, June 16, 2024

Sri Lanka Central Bank spreading misinformation over meeting with TU collective

(Statement) A  collective of trade unions, along with a group of civil society activists, protested against the anti-working people policy of the Government and the CBSL to destroy EPF, ETF, and other superannuation funds in the name of Domestic Debt Restructuring (DDR) on August 28, Monday, at noon, in front of the Fort Railway Station. We demanded that,

  1. EPF, ETF, and other superannuation funds should be excluded from DDR. Pension funds are working people’s only savings for use in old age. They are not investment funds related to assets and wealth used to amass profit. As savings on wages, our pension funds are nowhere near the investment assets of the private creditors demanding equal treatment. 
  2. Slash the bonds owned by tax evaders equivalent to the present value of the evaded taxes. Take over their deposits. The Department of Inland Revenue has stated that the total value of evaded taxes is Rs. 904 billion. The current value of the evaded taxes exceeds Rs. 2 trillion as tax evasion had happened over a period that offered bondholders high interests. Slashing bonds worth Rs. 2 trillion allows savings over three times the amount the Government proposes to save by cutting EPF and ETF in the next 16 years. 
  3. Do a forensic audit to repatriate US$ 53 billion in funds expatriated through transfer mispricing and trade-misinvoicing in international trade. The Global Financial Integrity revealed that over US$40 billion was lost to the country through transfer mispricing and trade-misinvoicing in international trade between 2009 and 2018. Wijedasa Rajapakshe, the Minister of Justice, stated that the value is US$53 billion. Therefore, we demand that CBSL launches a forensic audit to repatriate these funds to enhance the Government’s financial position.
  4. Conduct a forensic audit of foreign and domestic loans and declare the Government debt as odious. The former Auditor General Gamini Wijesingha revealed that the value of the domestic assets remaining in the country is significantly low compared to the foreign project loans obtained by the government as of 2017. This indicates that foreign loans were largely embezzled to enrich a corrupt political establishment and business elites that maintain close ties with those in power. Both international law and US domestic law hold that the burden of proof lies with the creditors when there is widespread evidence of chronic misuse of external borrowings. Creditors should reclaim the funds from those accused of misusing or embezzling them, and not from those who suffered under their control. The recently published statement signed by 182 eminent economists and academics worldwide supports this position on debt cancellation in Sri Lanka.     
  5. Remove tax holidays given to BOI firms. BOI firms are entirely exempted from import taxes and provided with windfall tax holidays on their income despite IMF’s demands that these tax holidays be removed. Eliminating tax holidays given to BOI firms will significantly increase the tax revenue of the Government, given that the tax ratio has declined from over 22% of GDP since the mid-1990s to around 9% currently. 

Over the past couple of months, many trade unions, including us, attempted to discuss the issue of pension funds related to domestic debt restructuring with the Central Bank. However, CBSL did not show any interest in engaging us. CBSL did not provide a meeting even during a protest organised by a broad coalition of trade unions on July 25.

At first, CBSL attempted to complete the DDR process by misleading the public by couching the impending dangers on pension funds inside numbers and technical language. However, explanations we made on the dangerous impact of DDR on pension funds, mobilisation of the EPF members, and protests have made it impossible for the CBSL to continue their fraudulent tactic.

Nevertheless, they tried to follow the same path on August 28 by obtaining a court injunction to prevent several trade union leaders from entering the vicinity of the CBSL.

They also called not only the Police with water cannons but also the military to quell and disperse our protest. However, we communicated our request for a meeting with the CBSL. Following our request, CBSL informed us through the Police that they could accommodate a meeting with five representatives. They were trying to undermine the diversity of the protest organised through a coalition of over 40 organisations.

We communicated our willingness to discuss with the CBSL and requested a meeting accommodating twenty of our representatives. CBSL agreed to our request and informed us that a comprehensive meeting with the participation of twenty of our representatives, along with the Governor of the CBSL, including the Secretary to the President, would be arranged within two weeks. Until then, a decision to finalise the DDR process will not be made. Following our mutual understanding, we called off our protest.

We are ready to participate in the agreed discussion.

Our demands to engage CBSL go beyond EPF/ETF and DDR to last year when we raised concerns over capital outflows through imports and exports. We have continued to demand CBSL engagement with working people over the issue of EPF and pension funds. However, CBSL has adopted an arrogant and technical approach, purposefully to keep a majority of working people at bay and in the dark about the harsh impact of DDR on pension funds. It is a shame that CBSL behaved cowardly, and resorted to repressive measures by calling the Police and obtaining court injunctions. It did so to damage and humiliate trade unions that were challenging the CBSL’s plan to destroy workers’ savings.

We call on the broad community of EPF/ETF members, other pension funds, and the public to gather around trade unions to defeat CBSL and the Government’s efforts to rob our savings! No to deceit or robbery!

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