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DDO has no impact on banking sector stability, customer deposits: CB chief
- Confirms the proposed DDO strategy will be announced and approved this week
- Says special banking holiday on June 30th declared to facilitate the process
- The proposed DDO strategy set to be presented to the Cabinet of Ministers on June 28
- Says 5-day bank holiday will have no impact on ATM withdrawals, online transactions
Central Bank Governor Dr. Nandalal Weerasinghe strongly affirmed yesterday that the forthcoming domestic debt optimisation (DDO), set to be announced this week, will have absolutely
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Dr. Nandalal Weerasinghe |
no adverse effect on the stability of the country’s banking sector or on the deposits held by
individuals in banks.
In a hastily organised press conference, Dr. Weerasinghe confirmed that the DDO strategy has successfully entered its final stages. He further announced that it will soon be presented for approval before the Cabinet of Ministers and parliamentary committees, followed by a thorough parliamentary debate.
He said the process will at least take four days and that was why June 30 was declared a special bank holiday, so that there will be adequate cool-off time from June 29 to July 3.
“The main reason behind the announcement of a bank holiday on June 30 was to create a sufficient number of days for the domestic debt optimisation strategy that has been discussed with the Central Bank and the Ministry of Finance,” he said.
Dr. Weerasinghe stressed the importance of maintaining a controlled environment during the specified dates, stating that both the economy and debt markets are highly sensitive to such critical information.
He further said public discussion of these proposals could disrupt the functioning of the markets, hence they should not be operating during the
said period.
According to sources, the proposed DDO strategy is set to be presented to the Cabinet of Ministers on June 28 and then to relevant parliamentary committees on June 29. It is expected to be debated in parliament on July 1 and 2.
Meanwhile, Dr.Weerasinghe assured that deposits people are having with financial service providers will not be affected by the proposed DDO strategy and there will be no cut in the interest rates they are currently receiving on such deposits.
He also said the five-day bank holiday will have no impact on withdrawing money from ATMs or carrying out online banking transactions.
As of April last year, Sri Lanka’s total debt stood at US$ 83.6 billion, with US$ 41.5 billion as foreign debt and US$ 42 billion as domestic debt.
In order to achieve debt sustainability, Sri Lanka is seeking a US$ 17 billion debt reduction from its foreign and domestic creditors through restructuring.
Sir Lanka is yet to announce a debt restructuring deal with its foreign creditors, which include Paris Club and non-Paris Club creditors such as China and private creditors.
The government maintains that the negotiations with foreign creditors up to now have been successful and a deal is expected to be announced by October-November.
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