AG backs loan of contention

Attorney General C. R. De Silva has informed a group of foreign bankers and their legal representatives that any Government secured commercial loan will need to be honoured by a future governments. Mr. de Silva has stated that the governments had always honoured these loans and international agreements, and had not defaulted on any of them up todate.

A delegation from the banks -- Hongkong Bank, Barclays and J.P. Morgan from which the Government is securing a commercial loan to the tune of US $ 500 million (Rs. 5.5 billion) were in Sri Lanka last week to seek clarification from the Central Bank on the status of the loan.

This follows a public announcement from Opposition UNP leader Ranil Wickremesinghe that a future UNP Government would not honour this loan on the grounds that these funds were being asked for projects that had already received foreign aid commitments. The Central Bank has sent the delegation to seek clarification from the Attorney General.

Sources at the Attorney General's Department confirmed Mr. de Silva conveyed to the delegation his view that a future Government was bound by any loan taken today, but added that it was not a formal opinion that had been given. The delegation had not gone into any intricacies of the Rs. 5.5 billion loan the Government was seeking on commercial rates. They were interested in knowing the legal structure and the political situation in the country, the sources added.

It is learnt that the Central Bank has sent some papers to the Attorney General to study in regard to the loan, but the formal agreements have yet to be drafted. Prime Minister Ratnasiri Wickramanayake told Parliament this week that this loan would help the nation, and not harm the nation. Opposition Leader Ranil Wickremesinghe re-iterated his party's stand on the matter at a public rally in Nittambuwa on Friday.