FactCheck.lk responds to Ranil on EPF losses due to debt restructuring

Colombo, April 24 (Daily Mirror)- FactCheck.lk has responded to the feedback from the office of former President Ranil Wickremesinghe regarding fact-check published in the Daily Mirror newspaper on March 21, 2025. 

FactCheck.lk said it appreciates and welcomes the feedback from the office of former President Ranil Wickremesinghe regarding our fact-check published on 21 March 2025 in the Daily Mirror newspaper. 

FactCheck.lk said its original analysis found his claim on the losses to the EPF following debt restructuring to be blatantly false.

"This response addresses only the former president’s specific objections to our fact-check and will not engage with any tangential remarks or ad hominem attacks directed at FactCheck.lk or Verité Research.

We have taken the response of the former president seriously. We believe those we factcheck deserve the benefit of the doubt and that their responses should be given the highest consideration," FactCheck.lk said.

The response of the FactCheck.lk as follows:

The former president contests our analysis on three grounds—we will discuss each in turn.

(1) Alleges that the word “only”used in analysing Wickremesinghe’s claim results in a misrepresentation After reviewing this claim carefully, we think that if there is any misrepresentation of his claim, it is in his response to the fact-check, and not in the fact-check itself. There are at least three reasons (linguistic, attributional and logical) for reading his statement as claiming that “the EPF was subject to only a maturity extension”. We set out these three below.

(i) The statement, which we quoted verbatim was “[…] In the case of EPF, what we dealt was the maturity extensions so not a single person has lost a cent in that.” The phrase "what we dealt" is, linguistically, a complete description of the action taken to restructure the EPF.

The president did not say “one of the things we dealt” or “among the things we dealt”; he only said "what we dealt.”

(ii) It is an exclusive attribution. He mentions only the “maturity extension”. Nowhere in the interview does he leave any room for the listeners to hear him attributing anything other than a maturity extension to the restructure of the EPF.

(iii) Independently of the above two, the statement is logically coherent only if he was referring to the maturity extension as the only restructuring action on the EPF. The logical flow of the claim is as follows: Because X, therefore (“so”) Y did not happen. That is, the action X (maturity extension) is posited as the reason for result Y (“any EPF member losing even a cent”) not happening. This claim is logically incoherent if it were possible for there to have been other actions (other than X) that caused Y. It follows logically, therefore, that to assert as he does that Y did not happen only on the basis of action X is also to assert that in

the space of actions with a bearing on Y, action X was the only action taken. That is, “the EPF was subject to only X (a maturity extension)”.

(2) Cites current market rates to argue that the rate of return on the EPF is “a significant differential in favour of the EPF’s bonds”

The former president’s response seems to argue that “In the case of EPF…not a single person has lost a cent”because “the new bonds receive a coupon rate of 12%.” which is higher than the current market rate of 10.1%.

However, this is a spurious comparison, that does not support the fact-check contestation. The key comparison is between the EPF’s returns on the bonds that were surrendered (exchanged)—SBonds, and the replacement bonds (those received after the restructure)— RBonds. 

The average rate of return on SBonds was 12.1%; but the average return on RBonds was only 9.7% (because the RBonds will be stepped down to 9% from mid-2026 to maturity).

That means, the restructure reduced the interest rate (return) on the bonds held in the EPF. That reduction constitutes an economic loss—similar to having your long-term fixed deposit where your interest rate is restructured down from, say, 15% to 10%. This is a loss, even if the new fixed deposits available in the country pay only 8%. This is the comparison relevant to the fact-check, and it remains uncontested by the former president’s response.

(3) Claims that a “loss [to the EPF] cannot occur due to maturity extension of an instrument that is held to maturity and accounted in the amortized cost portfolio” and that the loss is not reported in the EPF accounts either The former president cites the reporting of amortized value as a reason for believing that the EPF did not suffer a loss in the restructure. He references the EPF’s 2023 Annual Report, which states: “The EPF does not recognize any gain/loss on bond exchange” (page 312). This argument is a red herring.

It is because amortized value is not relevant to the calculation of the loss of returns. The loss to the EPF is from the reduction in the coupon interest rates (as discussed in part 2 above).

The EPF exchanged bonds that had a higher coupon for those with a lower coupon, directly affecting the payouts to EPF beneficiaries. This loss in coupon returns on the asset is not captured in the amortized value, which is only the current capital value of the asset. To explain with the example above, you can have your fixed deposit amount unchanged but still suffer a reduction in the interest rate you get on it. Therefore, the EPF not reporting a reduction in the amortized value of the assets is irrelevant to the fact-check; it is a redherring in the response received.

We thank the former president for his response. Our detailed response to that here is to explain why it does not warrant us updating the verdict of the original fact-check.