Sri Lanka to seek competitive bids for state asset sales
ECONOMYNEXT – Sri Lanka will adopt a competitive bidding process for asset sales and will shortly call for expressions of interest from transaction advisors to support the divestment program, the head of the state enterprise re-structuring unit Suresh Shah said.
All assets will be sold through a competitive bidding process and no unsolicited bids will be accepted.
The first step will be to select transaction advisors.
“We will work with development financial institutions and qualified and experienced consultancy firms to provide transaction advisory services,” Shah said.
“After the transaction advisors study the companies, we will call for bids.”
Sri Lanka’s cabinet of ministers has given the go ahead for the sale of SriLankan Airlines including Sri Lankan Catering which has large volumes of debt from losses after it was taken back to state management from Emirates.
Sri Lanka Telecom, Sri Lanka Insurance Corporation, Litro Gas Lanka Ltd/Litro Gas Terminals Pvt Ltd, Canwill Holdings Pvt Ltd which owns the Grand Hyatt building, Hotel Developers (Hilton) are also in the list.
The transaction advisors will assist in “sell-side due diligence, valuation, data room creation, transaction strategy and marketing” of the firms, according to a statement from the re-structuring unit.
All assets will be sold through a competitive process. Both domestic and foreign investors could bid.
“We will not accept unsolicited bids,” Shah said. “We will follow a transparent and credible process. Whoever want to make a bid will be given the opportunity. We will call for bids both locally and internationally.”
A decision to list any unlisted firms has not has not been taken as yet but will be considered, he said.
In addition to getting immediate cash from asset sales, helping boost cashflows, the government will also bet a share in any higher future profits under private management through corporate income tax, not counting turnover taxes.
The debt of SriLankan Airlines will be re-structured before a divestiture.
According to IMF program related documents, a plan to re-structure debt of several state companies including SriLankan Airlines has to be approved by cabinet by June 2023 under a structural benchmark involving a World Bank program.
By September residual dollar loans would be transferred to the government. (Colombo/Mar28/2023)
Sri Lanka to seek competitive bids for state asset sales
Karaikal-KKS ferry service to commence on 29 April
Minister of Ports, Shipping and Aviation, Nimal Siripala de Silva said the first ferry line, of the new ferry service, to be operated between Karaikal Port in Puducherry, India and Kankesanturai (KKS), is scheduled to call at the KKS Port on 29 April.
The Minister disclosed this information at a discussion, with the stakeholders of this new ferry service, held recently at the Ministry.
A passenger terminal was built at the KKS Port as part of infrastructure development for the new ferry service. The Sri Lanka Ports Authority (SLPA) has provided a financial facility of Rs 144 million for construction carried out by the Sri Lanka Navy.
The initial construction phase of the passenger terminal has already been initiated by the SL Navy and will be handed over to the SLPA by the second week of April, following completion.
The ferry service owners at the discussion revealed that USD 50 will be charged from a passenger for a one-way trip and a baggage allowance of 100 kg will be permitted.
A ferry will carry 150 passengers at a time and will take around 4 hours to reach KKS from Karaikkal Port. Ferry service owners emphasised that only day time services will be operated initially. The Minister said as the ferry service has been launched, any entrepreneur from Sri Lanka or India is welcome to invest.
The Minister also said besides the launch of the new ferry service, the expansion activities of the KKS Port will be expedited.
“As the credit line from India for this construction is insufficient, an additional credit facility of USD 16 million has been requested from the Indian Exim Bank,” the Minister said.
Karaikal-KKS ferry service to commence on 29 April
Sri Lanka is in an interval in hell: Dr. Shanuka Senarath
If SL does not strengthen its finances, it may default on IMF loan
Govt. needs to control inflation as gateway to economic recovery
After Premadasa’s time, SL has never had a proper economic policy
Population of 20 million in this country, but only 500,000 pay tax
Sri Lanka is currently in what he would term an ‘interval in hell,’ says Economist, Attorney-at-Law, and University of Colombo Department of Economics Senior Lecturer Dr. Shanuka Senarath. “This is just the tip of the iceberg; all the problems are still under the carpet,” he asserted, in an interview with The Sunday Morning.
Commenting on the anticipated International Monetary Fund (IMF) bailout, he asserted that the $ 2.9 billion assistance package was hardly any financial gain, but noted that working with the IMF would put Sri Lanka on a better global footing. However, he warned that if Sri Lanka did not strengthen its finances, there was a possibility of it defaulting on the IMF loan too.
In the course of the interview, Dr. Senarath also spoke on areas the Government should prioritise in moving towards recovery, the tax regime, the latest power tariff hike, the Samurdhi poverty alleviation programme, the lack of a focused national economic policy, and the complete disinterest in tackling corruption.
Following are excerpts:
How do you view Sri Lanka’s current economic status and what’s your outlook for the country in the months ahead, especially in the backdrop of positivity surrounding the IMF bailout package for Sri Lanka?
If you look at the current economic status of the country, Sri Lanka obviously is a bankrupt country. It has been declared bankrupt so we are not paying our debt obligations and we are also not importing things as we used to do.
On average we were paying around $ 600 million as interest and repayments of debt, which we are not paying now, so we are saving around $ 600 million a month. Also, due to import restrictions, we are saving around $ 1,000 million a month.
Given that we are bankrupt and we are not importing or paying our debt, we are in what I would call an interval in hell – a situation which may look quite calm but is not. This is just the tip of the iceberg; all the problems are still under the carpet. That is how I would explain the nature of our economy in brief.
If I come up with a shorter example, if we have a hire purchase vehicle and stop making our repayments, no one will suddenly come and take our vehicle. There is a time gap between default and legal enforcement. We are in that time gap at the moment.
We have defaulted, we have to restructure our debt, and we have to pay back our debt; we are in an interval and we have to face real economic hardship in future.
Will this be the case even if the IMF bailout comes through?
The IMF bailout is $ 2.9 billion, which will be given to us over four years’ time. That is hardly any financial gain or loan because it is a minimal amount.
The good part about the IMF is, when Sri Lanka’s debts are restructured in light of the IMF funding, it gives a signal to the rest of the world that we are with the IMF. As a result, we will be able to do things like issue sovereign bonds or go for bilateral debt agreements. Other than that, the IMF won’t give any monetary strength to the country. However, it’s a good thing that the IMF has given a greenlight.
With the IMF, we can expect a slight recovery in the economy, but that doesn’t guarantee anything. Greece defaulted on its IMF loan; that is also a possibility. If we do not really strengthen our finances, there is a possibility that we may default on the IMF loan as well.
What should the Government’s priorities be in order to speed up recovery?
If we have a disease, we have to control our growing temperature. Our economy is facing huge inflation. Over the last 12 months, inflation has been over 100% and prices have doubled.
First, the Government needs to control inflation, for many reasons. One is, when we have this sort of inflation, it affects people’s purchasing power. People are becoming poorer. It also affects our domestic economy and our industries, which is why the economy is shrinking. Inflation also results in exports becoming harder to market in foreign markets. Local inflation is higher and so is the cost of production.
The Government should control inflation as the first step, as a gateway to economic recovery.
While revenue generation is important, negative impacts on people’s purchasing power is in turn negatively impacting the overall economy. How can these factors be balanced and managed favourably?
People’s purchasing power has gone down by more than 50%. In a rough estimate, the real value of Rs. 100 would be around Rs. 33 by now; purchasing power has declined by around 66%. That is something severe, with no increase in income. This is simply due to inflation, which the Government should control.
I will give you one good suggestion of what the Government should do. Oil or fuel is the lifeblood of the economy given that electricity and diesel are the main components of power generation in the economy.
If you look at the process of supplying fuel to the Ceylon Electricity Board (CEB) and the Ceylon Petroleum Corporation (CPC), the Government imposes a tax of almost 100% on fuel. The price of a litre of petrol when it arrives in Sri Lanka is well below Rs. 200. A litre of diesel costs around Rs. 250. Then the Treasury imposes a tax, which makes a litre of petrol Rs. 400 and a litre of diesel more than that.
Fuel is given to the CEB at these prices, due to which the price of electricity has gone up. Transportation uses fuel at this price, so the cost of transportation has gone up. The entire economy is facing inflation because transportation and power are the main sources of production. As a result, all prices are going up, from bread to whatever else.
If the Government can provide fuel to the CEB at CIF [Cost, Insurance, and Freight] price, that will control inflation. This is just one example I can suggest to policymakers. There are many ways of controlling inflation; this is how we can enhance people’s purchasing power and at least try to control the situation.
What are your thoughts on the current tax regime, especially in the backdrop of protests by trade unions?
Taxes are quite usual in any economy. The biggest argument from the Government side is that in other countries, taxes are quite high. I agree. Say for example in Australia, after a certain point taxes are around 33% of income.
However, the issue here is, given our purchasing power, we have been facing so much inflation over the last two years and our prices have doubled or more, while there has been no increase in income over the last 12 months.
On the other hand, there are so many indirect taxes in the Sri Lankan economy – for example, the tax on fuel and various other things like Value-Added Tax (VAT), which are indirect taxes that have also caused prices to go up. There are also other means of revenue generation from the Government side, fees and so on, which have gone up as well.
As a result, people are experiencing or gaining very little real income. The amount you can spend is very little as all these indirect taxes, fees, and everything else has gone up. On top of that, once we have these tax rates, it will be devastating. That is why the trade unions are working on this.
Some people have found out that they are gaining negative salaries; once they have paid their loans and the tax is imposed, they have to pay something to the institute for which they work. This is the nature of the situation.
There is an issue in Sri Lankan tax rates. The tax curve should be something that increases gradually. For lower-income brackets, the tax should be very low. For example, Rs. 200,000 is a very low amount of income in Sri Lanka at the moment. Even for Rs. 100,000, there is a tax. I do agree that even for a Rs. 50,000 income there should be a tax, but that should be at an absolute minimum – it should be nominal, say 0.5% or something. When it goes up, the tax rate should go up accordingly.
One of the biggest issues with the current tax rate is that taxes are higher at middle-income levels and comparatively lower at higher-income levels. I believe the tax threshold should go up at least to Rs. 200,000 and from there onwards tax should increase gradually.
There is another problem as well. We have a population of 20 million in this country, but only 500,000 people pay tax. Our tax base is quite weak because a lot of people are not paying taxes and the tax system is not developed. That is something the Government should focus on rather than forcing the entire burden on these 500,000 taxpayers.
How do you view the latest power tariff hike and its impact on people and industries?
If you look at the formulas and the rates of tariff on power, the increase is mainly for those who consume less power. For a person consuming less than 90 units per month, the hike is more than 250%, which is quite high.
The other issue is that our economy is already shrinking. Estimates are that it has gone down by 20%. The World Bank estimates that our economy will shrink another 4% by the end of this year, but that is for the formal economy. In a country like Sri Lanka, with such a wide informal economy, the actual drop will be more than 4% because most economic activities are not recorded. As a result, my estimate as an economist would be another 10% or 20% for this year as well.
Our industries are closing down – mainly local industries do not have the capacity to export; they don’t have any other market. Local demand is confined to essentials. People are mostly buying only food items and essentials like medicines; they have cut out most of the items we consider as luxury items in our current state. On top of that, we have this huge increase in electricity bills, which definitely impacts people’s purchasing power. It’s another indirect tax.
Industries also cannot cope with these prices and when they add their prices to the products, no one will buy them. Even export prices will go up tremendously in line with the electricity prices, which will result in a problem for Sri Lankan exporters in foreign markets.
Now we have a sudden appreciation of the rupee, which we have incorporated with all the good hopes, but look at what happens to the exporters – the amount of rupees they are getting for exports has suddenly dropped. The increases in cost of production, electricity, and all other factors along with the sudden appreciation of the rupee all work as obstacles for economic recovery.
The IMF has called for an increase in welfare programmes, even as some of the revenue generation steps are pushing people into economic hardship. How can the wellbeing of the lesser-privileged sections of society be ensured?
That is a very crucial point when it comes to a crisis. In an economic crisis, poverty increases. Our poverty over the last 10 years was around 5% of the population and it has risen to 10% now. It’s a challenging task for any government to address poverty in a crisis. One good thing the Government can do is minimise inflation and also strengthen its poverty alleviation programmes like Samurdhi.
If you look at Samurdhi, one of the biggest issues is that about 7% of recipients are from among the highest income earners in this country. Another 5% of actual poor people who should get the allowance are not getting it.
The Government was talking about a project where it would give the Samurdhi based on electricity consumption; this was discussed some time ago. People consuming less than 90 units a month are considered to be poor. There are issues with the measurement of considering people who use less power as poor, but all these impacts of power hikes are again on those who should receive Samurdhi.
The Samurdhi allowance, for example, is given to political henchmen rather than those who really need it. The Government should look into these factors and strengthen its poverty alleviation programme.
Addressing poverty amid a crisis is a hard thing, but it is something that should be done. If this situation continues, the impacts of malnutrition and the collapse in education will be seen in another 10 years’ time.
Does Sri Lanka actually have a focused economic policy or is it just flailing about in the dark in a reactionary manner?
To be honest, the sad truth is that we don’t have one. If we look at the economic history of this country, after President R. Premadasa’s time, we have never had a proper economic policy.
When we were kids, we had some sort of an industrial policy for this country, where they started garment factories and were starting to move towards semi-industrialisation of the country, which was quite good for the time. If you look at some of Sri Lanka’s export giants, those organisations came during the time of those industrialisation policies, especially in the garment industry.
After that, we never had a proper policy or a framework to address the needs of this country. What the Government has always done is depend on the revenue of those who are working in the Middle East. India has now banned sending housemaids to the Middle East given the higher social costs of such employment, but it is sad to see that Sri Lanka is solely depending on the monies of those working in the Middle East.
If you look at India, it is generating more dollars by selling IT services to the world compared to the revenue generated by Saudi Arabia by exporting oil. Imagine how much India is earning by strengthening its IT sector? What have we done? We were talking about monorails and technology villages, but we have never implemented anything. We have made some concrete investments in harbours, airports, and towers, which have no impact on the economy.
To be honest, as an economist, I have not seen any strong policy or any considerable policy on our economy over the last two decades.
While people undergo tremendous hardship, no politicians and State officials have been held accountable for the economic crisis. How can faith in the system be restored and people’s buy-in ensured in getting Sri Lanka back on track?
That is one of the key points I would like to emphasise on. If you look at the history of this, if I go back two years when Fitch Ratings was downgrading Sri Lanka, some of our key people who are responsible for economic management were talking about this downgrade as a conspiracy against the country because we had finished the war – the usual gallery political discussion.
At the time, we as economists said, ‘do not utter these words; they may burn the trust we have among the international community’. We have lost reputation and recognition in international communities over the last five years due to many factors.
Corruption, bribery – there was a time we were talking about a 10% commission on all investments coming into Sri Lanka – mismanagement and nationalist ideology have ruined the reputation of this country internationally. Locally, if you talk to an average Sri Lankan, no one believes in politicians because of corruption.
One good thing – and I don’t think this will ever happen – that can be done is carrying out proper investigations into what happened, into the corruption that has taken place. The report on illicit finance states that $ 20 billion has been looted from Sri Lanka over the last 10 years. That $ 20 billion amounts to almost half of our debt obligations.
For example, Israel is considering building a canal from the Red Sea to the Mediterranean, which would cost $ 15 billion; $ 20 billion is more than that. $ 20 billion is enough for Sri Lanka to survive for five years without doing anything. That is the amount we have lost thanks to corruption.
The IMF is talking about corruption control but nobody here is talking about it. The IMF is talking about tax increases and the Government is very happy about it. The IMF is talking about revenue generation through taxes, that is fine and politicians are happy, but nobody is talking about corruption control.
One good thing whoever comes into power in the future can do is have a proper investigation like in Malaysia and Singapore. We talk about becoming Singapore, but we are not talking about controlling corruption. That is something that should be done, it is an urgent need, but we cannot expect it from the current regime or current politicians.
Indo-Sri Lanka fisheries conflict: Restorative solutions the panacea
- CEA Environmental Impact Assessor recommends coral/mangrove restoration, fish population restoration via implantation of artificial reefs/structures, establishing mutually acceptable ‘no catch zone’ along the IMBL or maritime protected area, permitting licensed Indian fishermen with a levy, declaring cap values, only banning fishing during breeding, educating/sensitising fishermen on cross border issues through awareness creation
In the context of the conflict over the overexploitation of fisheries resources beyond the Indo-Sri Lankan coastal borders, restorative solutions such as coral and mangrove restoration, the restoration of the fish population via the implantation of artificial reefs or similar structures, establishing a bilateral and mutually acceptable “no catch zone” along the International Maritime Boundary Line (IMBL) or maritime protected area (MPA), the latter though uncertain in terms of political feasibility, can be recommended.
Other green solutions to the issue include permitting licensed Indian fishermen in Sri Lankan waters with a levy, declaring cap values, only banning fishing during breeding seasons, and educating or sensitising fishermen on cross border issues by creating awareness.
These recommendations were proposed by S. Sivaramanan (attached to the Central Environmental Authority [CEA]’s Environmental Management and Assessment Division’s Environmental Impact Assessment Unit) in an article on “Potential solutions to the environmental conflict on the exploitation of fish stocks in the Palk Strait among the fishermen of India and Sri Lanka” which was published in the Sri Lanka Journal of Aquatic Sciences (28)1, this month.
According to the United Nations (UN) Environment Programme, as mentioned in D. Schwartz and A. Singh’s “Environmental conditions, resources, and conflicts: An introductory overview and data collection”, environmental conflicts occur for three main purposes, namely, the overuse of renewable resources, pollution or an unfavourable change in the environment, and the impoverishment of the space for living. Direct environmental conflicts occur when there is international competition for renewable resources such as water, crude oil, crop land, fish, and forests. Nations may even tend to justify it by military action in the name of economic preservation and national security, and this can even occur between States. Indirect environmental conflicts occur where factors such as soil erosion, agricultural contamination, and water pollution create or elevate other social issues such as poverty, famine, ethnic cleavages, mass migration, and the uneven distribution of resources, desertification, deforestation, and overfishing.
Indian and Sri Lankan fisheries in the Palk Strait region have a long history, even before the British colonial period, where fishermen of both the countries had highly intimate relationships. This is still visible, as some fishing families have relations in other nations and often exchange their resources among families. However, increased population and competition for coastal resources, the invasion of trawlers and machinery fishing, the overexploitation and destruction of non-targeted environmental resources, the use of prohibited fishing methods such as bottom trawling, the previous internal war in Sri Lanka, the smuggling of narcotics and jewels across borders, and illegal trade have all led to both countries tightening their maritime legislation and rules. Even though these were not sufficient to control the situation, they have worsened the conflicts among the fishing communities of both the nations and the situation has now emerged as a direct environmental conflict. In addition, the overexploitation of natural resources is a keystone environmental problem.
V. Suryanarayan’s “The India-Sri Lanka fisheries dispute: Creating a win-win in the Palk Bay” observes that the Governments of both the countries have affirmed their commitment to finding a permanent solution to the dispute. He pointed out three factors such as “the issue of the territorial rights of Kachchatheevu, the frequent poaching by Indian fishermen in Sri Lankan waters, and the damaging economic and environmental impacts of trawling”, and he therefore, proposed regaining the island of Kachchatheevu on lease in perpetuity, and permitting licensed Indian fishermen to fish within a designated area of the Sri Lankan waters and vice versa. However, both of these solutions ignore the environmental problem of the overexploitation of the marine resources in the Sri Lankan territorial waters; thus, bottom trawling in the Palk Strait region may further fuel environmental deterioration and the loss of biodiversity.
J. Scholtens’s “The elusive quest for access and collective action: Northern Sri Lankan fishers’ thwarted struggles against a foreign trawler fleet” proposed solutions based on a nation’s right to use its power to protect its resources, and institutional resource stewardship based on marginalising access mechanisms. These solutions prioritise resource sharing over resource sustainability and protection.
In contrast, J. Stephen, A. Menon. J. Scholtens and M. Bavinck’s “Transboundary dialogues and the ‘politics of scale’ in Palk Bay fisheries: Brothers at sea?” suggested solving the issue more through dialogue and expounded on the 2004 and 2010 agreements (the latter restricted Indian fishermen from conducting unlawful fishing operations in Sri Lankan waters, such as purse seining and pair trawling, and prevented the presence of Indian fishing vessels too close to Sri Lankan shores; however, the implementation failed due to a lack of monitoring mechanisms to observe the Indian fishing activities in Sri Lankan waters, and the increased export demand for shrimp caught in the region which pushed Indian fishermen to further violate the agreement) between the fishing communities of both the nations with the mediation of a non-Governmental organisation.
According to O. Amarasinghe’s “Fisheries conflicts in the Palk Bay: Is there a way out? From a Sri Lankan viewpoint”, conflict resolution talks were held at three levels, namely, at the level of fishermen, between the fishermen and their respective Governments, and at the Governmental level with Ministerial talks between India and Sri Lanka. He further stated that a bilateral meeting of both Sri Lankan and Indian Government representatives held in April, 2005, in India, led to the establishment of a bilateral joint working group. As mentioned in J. Scholtens’s “Limits to the governability of transboundary fisheries: Implications for small scale fishers in Northern Sri Lanka and beyond”, as a result, the meetings in 2008, 2011, and 2012 prevented Indian fishing vessels from entering the identified sensitive areas.
R. Stirrat’s “The Palk Bay fishing dispute revisited” put forward views on how the dispute was approached in terms of legal pluralism, and these resonate with those of the political economy, where resource utilisation and the drivers should be well understood.
Other proposed long-term solutions to the tragedy include the retrieval of Kachchatheevu and the restoration of the traditional rights of Tamil Nadu fishermen in Kachchatheevu, both of which seem biased toward the Indian counterpart, and the joint governance and management of the Palk Bay.
K. Deepananda, N. Abeykoon and K. Amaralal’s “Indo-Sri Lanka fishing conflict in the Palk Bay and its implications for fisheries” claims that the influential factors in the conflict were the establishment of the IMBL, the introduction of trawlers by Indian fisheries in the 1960s with the expansion of shrimp exports, the implementation of the fishing ban by the Government of Sri Lanka during the internal war (1983-2009), the resumption of distant water fisheries by Sri Lanka after the end of the internal war, and the damage to artisanal fishers’ fishing craft and gear, and proposed therefore that both Governments should seek an amicable, long-lasting, sustainable solution.
It has also been suggested that vital solutions can be found through continuous dialogue between the fishermen of both the nations such as the 2004 and 2010 fisher-to-fisher dialogues.
B. Majumder and A. Malhotra’s “The fishing wars maritime border conflict between India and Sri Lanka” questioned as to why both India and Sri Lanka do not seek international litigation for the conflict under the UN Convention on the Law of the Seas and highlighted that for the sake of environmental benefits, international attention should be brought to the issue by abiding by the International Tribunal for the Law of the Sea.
M. Mayilvaganan’s “Fishing conflicts in the Palk Bay: Are the Indian fishermen ‘carefully careless’?” suggested that both the Governments should take measures to educate and sensitise the fishermen on transboundary crossings, conduct regular meetings between both the parties, ban trawling, purse seines, and minnow seines, decongest Rameswaram fishing trawlers, and break the nexus between politicians, businessmen, and fishermen. These suggestions broadly consider most of the socio-economic and political factors, but they hardly consider the environmental factors and the restoration of the natural resources in the Palk region.
In 1974, Kachchatheevu, which is an island found at the coastal borders of both the countries, was given to Sri Lanka by India as a symbol of friendship. In addition, India has a strong influence in Sri Lanka’s politics. However, the Sri Lankan internal war had a significant effect on the fishing communities of both the nations at the Palk Strait. Several shooting incidents against fishermen had also been reported while the Liberation Tigers of Tamil Eelam (LTTE) was smuggling arms during the clashes between the Sri Lankan security forces and the LTTE. In addition, the illegal taxation of the fishermen by the LTTE, the restricted time limits given by the Government to fish, the passing system and security checks, and displacements due to the war all affected the livelihood of the fishing community in Sri Lanka. However, after the end of the war, the invasion of Indian fishing vessels increased in the Sri Lankan waters. It has been noticed that a flotilla of boats trespasses the IMBL on alternate nights and usually over-exploits the Sri Lankan coastal resources non-selectively (both non-targeted species and juvenile forms of fish).
It has been expressed that Indian fishermen are using illegal methods of fishing, which are banned in Sri Lanka as well as internationally (e.g. bottom trawling), because the Palk Strait is shallow and contains highly valuable coral reef structures, thus making deep sea trawlers not appropriate for use. As noted in C. Gupta’s “Blurred borders: Coastal fish flock and environmental conflicts between India and Sri Lanka”, under the West Bengal Marine Fishing Regulation Act of India (1993), trawlers are only permitted beyond three nautical miles from the shores, but they often violate the Act due to the high catch in the region. Moreover, unlike Sri Lankan vessels, such Indian trawlers are provided with Global Positioning System (GPS) tracking systems, and they clearly know their location in the sea, and as to whether they are beyond the border or not.
Trawler fishing is an unselective way of fishing and it destroys the coral reefs, which are vital for the biodiversity of the region, and it also catches juvenile forms of fish and non-targeted organisms such as endangered sea turtles. Sri Lankan fishermen have multi-day boats, and they are not as destructive as trawler fisheries.
These massive invasions and the unselective overexploitation of the fishing resources result in resource depletion or even species extinction in the long run. Sri Lanka has an unavoidable responsibility to protect her natural fisheries resources and the livelihood of Northern fishermen. Further, it is a violation of the fundamental rights of the Sri Lankan fishermen, and this may in turn cause a loss of public trust and have a great impact on the governance of natural resources in the territorial sea. In this case, even shooting incidents by Naval security forces were complained about on several occasions. The South Indian political network has condemned the Sri Lankan political leadership for recently mentioning that Indian fishermen have no rights to the Sri Lankan territorial waters in the North. However, this does not affect the visiting of Indian fishing families during the festival at the St. Antony’s Shrine in Kachchatheevu and drying their fishing nets there (as per Article 5 of the 1974 Kachchatheevu agreement and the 1976 agreement). Sri Lankan fishermen also illegally invade Indian coastal waters and are found guilty under the Maritime Zones of India Act (1981).
Why Sri Lanka could be the IMF’s most spectacular failure
(Following is the excerpts of Dyan Jeyathilake’s article in the Sri Lanka Finacial Times of 16th March 2023)
Much of the discussion in and on Sri Lanka has either been a shrieking chorus of ‘Go to the IMF yesterday!’ coming mainly from the rightwing economists of the main Opposition, the SJB, or a no less shrill chorus of ‘beware the IMF!’ from the Oppositional left. My own ‘third position’ is different. It stands on two legs: ‘beware Ranil plus the IMF’ being one and ‘IMF beware of Ranil’ being the other.
The first leg – ‘beware Ranil plus the IMF’ – is because the IMF recipe in and of itself is much less dangerous than the extreme economic ideas of Sri Lanka’s antiquarian Reaganite-Thatcherite rightwing economists. Those ideas inform the economic agenda of Ranil Wickremesinghe as manifested in his policy agenda in 2001-2003 and 2015-2019. These ideas were so repellent to the public that he was electorally rejected on both occasions, most dramatically in 2020. An earlier model of this rightwing policy package was one of the causes of a massive insurrection in the late 1980s and had to be completely re-programmed and reformatted by President Premadasa so that democracy and the market economy could survive.
Ranil Wickremesinghe as President is seeking to implement his voodoo economics ‘Big Bang’ on the back of an agreement with the IMF in a classic example of what Naomi Kline has called ‘the shock doctrine’.
The second leg of my argument is that just as Sri Lanka has to beware the IMF reform agenda, the IMF has to beware Sri Lanka which can go from quagmire to volcano and back within a year thanks to President Ranil Wickremesinghe.
The IMF has cleaned up its act somewhat. It hasn’t undergone quite the shift that the World Bank did when Robert McNamara took over after his Pauline conversion to the upliftment of the poor having failed to defeat the Communist-led Vietnamese liberation fighters. But the IMF is considerably better than it was, and this has been pointed out by no less a critic than Prof. Joseph Stiglitz in his positive evaluation of the agreement with Argentina.
The problem arising out of an agreement with the IMF could have been mitigated had Sri Lanka presented its own national plan drafted by its best minds in the relevant field. This has not been done so far, though Yanis Varoufakis and Nishan de Mel have been saying just this independently of each other for a while. Neither the Government nor any political party of right, left or centre has a national plan or anything remotely like the best national team that Sri Lanka can deploy. My litmus-test would be whether Howard Nicholas, Nishan de Mel and Ravi Ranan-Eliya are on it.
Sad as this is, it isn’t the worst thing about the current situation. What is most dangerous is that President Ranil Wickremesinghe is openly invoking the IMF in openly sabotaging the holding of the local authorities election and going on to leave the electoral calendar open-ended, avoiding a commitment to any election stipulated by the Constitution. By doing so, President Wickremesinghe is using the IMF as human shield in his agenda of remaining in office without elections.
Link EFF to elections
Sri Lanka is Asia’s oldest democracy. In fact, it is also Afro-Asia’s oldest democracy. It is over 90 years old. Ranil Wickremesinghe is using the IMF excuse to end Sri Lanka’s democratic character by blocking overdue local authorities’ elections and making no commitment to the inflexibly embedded presidential and parliamentary elections of 2024 and 2025. Instead, he enunciates a doctrine that makes democratic elections entirely dependent on his subjective perception of economic stability.
Thus, Ranil has pitted the IMF program against democracy, thereby identifying the IMF agenda as something that is so fragile that it has a zero-tolerance of competitive democracy. By so doing he also fosters an identification between the IMF agenda and frankly authoritarian rule, turning the clock back to the bad old days of the IMF as an objectively anti-democratic associate of Latin American dictatorship.
Prospects are even worse for the IMF in its current dealings with Sri Lanka. Any stabilisation package which lacks a democratically elected administration as its partner, lacks legitimacy. It is therefore highly probable that the agreement will draw discontent along two, not just one, vector: the socioeconomic and the political. Had the IMF agreement been with a country with an elected President – at least one elected to the legislature in the first place, before he was elected by the legislature—it would have been finetuned by someone who had a mass base; an organic mass connection.
Instead, you have an IMF agreement being used as a shield against the electoral process itself. This ensures that it is not only the standard socioeconomic backlash that the IMF agreement will generate but it will also run into the anti-autocracy/pro-democracy dynamic underway in Sri Lanka.
The combination of a stabilisation package overlaid by an autocratic political agenda will discredit the IMF agreement.
The confluence of a socioeconomic backlash and a political drive for democratic elections will blow the agreement out of the water, further discrediting the IMF.
Anyone who watched the massive popular protests named The Aragalaya (The Struggle) which swept away the local Bolsonaro figure, Gotabaya Rajapaksa would get my point that the Sri Lankans are unlikely to take the burial of elections and imposition of austerity measures lying down.
Of course, Ranil Wickremesinghe has proved capable of meeting protests with methods that have led to the loss of life, including of a war veteran serving as a private security guard at the University of Colombo. On the President’s watch both the faculty of Law and Royal College at which he studied, came under CS gas attack. Mysterious para-military type units, suspected to be contractors, have yet to be identified by the Sri Lankan military.
What this does not mean is that an Aragalaya is ruled out as an option. What it means is that an Aragalaya-2 is going to be costlier in terms of human lives.
When demonstrators carrying signs which name the IMF are clubbed and possibly killed, it isn’t going to make the IMF ‘brand’ look good.
The IMF should not underestimate our President. Sri Lanka had a robust two-party system. Those parties were the UNP and the SLFP. When Ranil Wickremesinghe took over the leadership of the UNP it had 94 seats. Now it doesn’t have a single elected member in the parliament. When the SLFP partnered with Ranil Wickremesinghe in 2015, it had been in office since 1994. During that partnership and due to it, the SLFP now has a pathetically few seats in parliament and is not the main Opposition. The backlash against the partnership with Ranil caused a huge split in the SLFP and the birth of the SLPP headed by the Rajapaksas. The SLPP is now partnered with Ranil having (s)elected him president through the legislature. It is now so weakened that it cannot hold an open-air public meeting.
Ranil Wickremesinghe is pure kryptonite. Now he’s going global, as BFF of the IMF.
So, what can the IMF do, given that it cannot interfere in politics? The states that are the mainstay of the IMF, such as the USA, can ensure that the local government elections are unblocked before the EFF is signed on March 20th, or it can keep the funds blocked until that happens even if it means going into the 2nd quarter of this year. Simply put, it should be ‘no elections, no EFF’.
If that doesn’t happen, the IMF will learn that though it is (barely) beyond the decades of ‘IMF riots’ it has entered on the arm of South Asia’s Mr. Kryptonite, the age of the ‘IMF Revolution’.
JVP-JJB’s Achilles Heel
The JVP has been in existence since 1965, and has tried many political projects, which have all failed to secure governmental and state power. Almost no revolutionary/left movement founded at the time the JVP was born has failed to win governmental power even episodically. Many movements founded after the JVP (e.g., El Salvador’s FPL, founded 1970) have had a stint or two in power.
The strategic concept of the united front is not an optional ‘app’ in serious Left theory and political practice. Originating with Lenin in 1921 at the 3rd Congress of the Communist International (‘Comintern’), it was developed by Trotsky, Gramsci, Stalin, Dimitrov, Ho Chi Minh and Mao. Mao named it one of ‘three magic wands’. It is in practice from Latin America to Nepal and Kerala.
Despite the JVP’s varied experience, one thing has remained constant. Their utter sectarianism; their allergy to a century-long Left strategy which dates from Lenin to Lula: that of the United Front. By any logic, that constant or constant absence – no united fronts- and the only other constant, the absence of success in gaining governmental and state power, are causally linked.
The question is why is the JVP-JJB which is today, closer to governmental power through popular consent than it has ever been, still clinging vehemently to its antipathy to a united front, when such a front or its absence could be the factor that puts it over the top?
The question is sharper still when one adds the present realities: the blockage of the electoral path by Ranil Wickremesinghe and the need to lever it open through mass struggle. Anywhere in the world, unity decisively helps such struggles and its absence foredooms them.
What the FSP lacks in quantity it makes up for in quality. A JVP-led Left Front would present a left platform, a left program, a left option in the economic crisis and the struggle for basic democracy.
(Link to the Full article)
https://www.ft.lk/columns/Why-Sri-Lanka-could-be-the-IMF-s-most-spectacular-failure/4-746362
Govt. agencies’ failure to hold the LG polls: SC grants leave to proceed with petition
Supreme Court today granted leave to proceed with a Fundamental Rights petition filed challenging the failure and refusal of several government departments to take the necessary steps to hold the Local Government Elections.
Supreme Court three-judge-bench comprising Justices Preethi Padman Surasena, Gamini Amerasekera and Janak De Silva granted leave to proceed with the petition under Articles 10, 12(1) and 14(1)(a) of the constitution.
The Centre for Policy Alternatives (CPA) and its Executive Director Dr. Paikiasothy Saravanamuttu filed this petition naming the Treasury Secretary, Government Printer, Inspector General of Police and several others as respondents.
The petitioners stated that the elections to elect persons as members of local authorities are required to be held every 04 years in terms of the relevant statutes. Elections were previously held in 2018, and the term of the Local Authorities that were due to expire in 2022 were ended for a year thereafter.
The petitioners stated that the conduct of the Government Printer and the Inspector General of Police is indicative of a coordinated campaign to procrastinate the holding of local Authority elections. The petitioners also stated that the President in the capacity as the Minister of Finance and the Secretary to the Treasury have not until the very last minute on the 23rd of February 2023 indicated that there is a challenging in the allocation of funds to conduct the elections.
The petitioners maintained that these actions are prejudicial to the fundamental rights of the petitioners and the citizens of Sri Lanka.
The petitioners are highlighting that the failure of the Government Printer, IGP, President Ranil Wickremesinghe (as Finance Minister) and the Election Commission failed to protect the fundamental rights of citizens, by failing to take proper steps as required by law to hold elections by 19th March as made compulsory in terms of the Municipal Councils Ordinance, Urban Councils Ordinance and Pradeshiya Sabhas Act.
Senior Counsel Viran Corea with Luwie Ganeshathasan and Khyati Wikramanayake appeared for the petitioners. Senior Additional Solicitor General Priyantha Nawana appeared for the respondents.(Lakmal Sooriyagoda )
President writes open letter to bilateral creditors with appeals and assurances
- Letter with clarifications aimed at providing comfort to all and enable SL to progress swiftly to next stage of the debt treatment negotiations
- Reiterates he is committed to stay the course, and says SL relies on creditors to do the right thing
- Woos all to maintain and even enlarge and strengthen official bilateral creditor coordination
- Says new era starts with full implementation of IMF-supported program and resolution of debt situation
- Commits to transparency and assures SL will not make any side arrangements with any creditor aimed at reducing debt treatment impact on that creditor
- Assures not to resume debt service to any creditor unless that creditor agrees on a comprehensive debt treatment in line with IMF-supported program parameters and comparability of treatment principle
President Ranil Wickremesinghe yesterday wrote an open letter to all official bilateral creditors of Sri Lanka with multiple appeals and assurances ahead of next week’s Executive Board consideration and approval of $ 2.9 billion four year Extended Fund Facility (EFF).
The letter contains clarifications aimed at providing comfort to all and enable Sri Lanka’s to progress swiftly to the next stage of the debt treatment negotiations.
Following is the full text of President Wickremesinghe’s open letter.
It was with great satisfaction and sincere hope that I welcomed the announcement made last Tuesday by the Managing Director of the IMF, Kristalina Georgieva, that an IMF Executive Board meeting will be held on 20 March 2023 to consider and hopefully approve the Extended Fund Facility (EFF) arrangement we requested as part of our efforts to restore macroeconomic stability and debt sustainability.
I would like to praise your diligence and express my gratitude to the Paris Club creditors and Japan in particular, and to India and China for enabling the cooperation required to arrive at this point and explicitly delivering IMF compatible financing assurances as well as the other creditor countries which answered the Paris Club creditors’ call to join them. I would also like to thank the Paris Club Secretariat for supporting these efforts.
Since taking office last July, my Government and I have been engaging in good faith with all of you, providing all the necessary information to enable you to make a proper assessment of our debt situation, and the required efforts to close our funding gap and restore debt sustainability. My Government also deployed all efforts to demonstrate our commitment to the EFF program and relentlessly engage on the path to reforms. Our administration has already implemented major reforms by way of prior actions agreed with the IMF.
In the 75 years of Sri Lanka’s independence, there has never been a more critical period for our economic well-being and future development. That is why we have introduced a robust reform agenda aimed at achieving debt sustainability, strengthening governance, widening the social safety nets supporting the most vulnerable and ensuring we can grow an inclusive economy attractive to international business. This is how we will improve the lives of our people and ensure they are first in line to benefit from improvements in our economic conditions.
The IMF-supported program will be critical to achieving this vision for our country. Hence, this new era starts with the full implementation of the IMF-supported program and the resolution of our debt situation with you as long standing partners, as well as with our commercial creditors. There is still a lot of work to be done together. I encourage you to maintain and even enlarge and strengthen official bilateral creditor coordination in the context of our forthcoming engagement. It is the best way of achieving an efficient, transparent and equitable implementation of our debt treatment exercise. For that, I call on the Paris Club bilateral partners, in particular Japan, together with all our other official bilateral partners, including India and China, to garner and foster coordination as you best see fit.
We also understand and acknowledge that we must ensure that appropriate safeguards are in place to ensure equitable burden sharing and comparability of treatment. To alleviate any legitimate concern in that regard, there are commitments that we can make to those of you willing to take action ahead of the others.
The first of these commitments, probably the most important one, is transparency. We commit to communicate transparently with all of you on any debt treatment terms that are agreed with any creditor or group of creditors, before being formalised. In the same vein, we commit to report regularly on our indebtedness, ensuring no financial liabilities incurred by the country are undisclosed.
Second, we commit not to resume debt service to any creditor unless that creditor agrees on a comprehensive debt treatment in line with IMF-supported program parameters and the comparability of treatment principle.
Third, we reiterate our commitment to a comparable treatment of all our external creditors, with a view to ensuring all-round equitable burden sharing for all restructured debts. To that end, we will not conclude debt treatment agreements with any official bilateral creditor or any commercial creditor or any group of such creditors on terms more favourable than those agreed under any multilateral platform put forward by our official bilateral creditors. Offering a debt treatment outside of the perimeter set by the debt targets under the IMF program would risk making Sri Lanka’s debt unsustainable again. To this end, we also confirm that we have not and will not make any side arrangements with any creditor aimed at reducing the debt treatment impact on that creditor.
I sincerely hope that these clarifications will provide comfort to all of you and enable us to progress swiftly to the next stage of the debt treatment negotiations. This is paramount for our country. Just as my administration and I have committed to do, we rely on all of you to do the right thing.
IMF urged Anti-Corruption Bill gets Cabinet approval
(FT 15-03-2023)
After years of long pursuit, the Anti-Corruption Bill ‒ a landmark piece of legislation defining measures to reduce corruption and vulnerabilities by improving fiscal transparency and public financial management was finally approved by the Cabinet of Ministers Monday to proceed with the next steps.
The move is a result of negotiations with the International Monetary Fund (IMF) for a bailout package, amidst the ongoing economic crisis. Such a Bill was long overdue and should have ideally come as a result of domestic compulsions rather than an international compulsion.
“Clearance of the Attorney General has been granted for the draft bill prepared by the Legal Draftsman. The Cabinet-approved legislation will now be gazetted as a Bill and thereafter presented in Parliament,” Cabinet Co-Spokesman and Minister Bandula Gunawardena said at the post-Cabinet meeting media briefing yesterday.
He said the IMF has urged Sri Lanka to reduce corruption and vulnerabilities by improving fiscal transparency and public financial management, introducing a stronger anti-corruption legal framework and conducting in-depth governance diagnostic, whilst, in turn, the agency will provide an extended fund facility of $ 2.9 billion.
On 7 March, IMF announced that it’s Executive Board on 20 March (Monday) will consider the approval of the Staff Level Agreement reached with the Sri Lankan Government in September last year for a $ 2.9 billion four-year Extended Fund Facility (EFF) program.
“This will be a great opportunity to address the systemic corruption in Sri Lanka in a multitude of spheres and will also benefit to secure the IMF bailout. The Government must demonstrate its willingness for fiscal transparency and reduction in corruption to gain a degree of credibility with international financial partners. A strong anti-corruption legal framework would in this regard be an absolute necessity for debt restructuring efforts,” Gunawardena said.
On 8 February, President Ranil Wickremesinghe said the Anti-Corruption Bill will be introduced and the Government is taking steps to include the ‘Stolen Assets Recovery Initiative (StAR)’ in this Bill, together with the World Bank and the United Nations.
Analysts said the Anti-corruption Bill shouldn’t just be a checkbox exercise to get access to foreign aid. It must be a chance to confront the systemic corruption that has not only made it possible for the political elites to be corrupt but also encouraged it and given them impunity for their actions.
The proposal to this effect submitted by Justice, Prison Affairs and Constitutional Reform Minister Wijeyadasa Rajapakshe was approved by the Cabinet of Ministers at its meeting on Monday.
https://www.ft.lk/front-page/Anti-Corruption-Bill-gets-Cabinet-approval/44-746352
Local Government Elections and the Government’s attempt to prevent it.
(The Morning 12-03-2023)
- Treasury Secy.’s absence at EC meeting criticised, EC asked for fresh date
- Secy. Siriwardana outlines four issues regarding attending EC’s meeting
- EC informed by Treasury Secy. that letter on funds passed on to Minister
- Dolawatte raises privileges issue against SC, Speaker requested to inquire
The Election Commission (EC) last week decided on 25 April as the new date to conduct the Local Government (LG) Polls, in keeping with the Supreme Court’s recent and related order following a meeting with Government Printer Gangani Liyanage, Inspector General of Police (IGP) Chandana D. Wickramaratne, and other relevant authorities, at which Secretary to the Treasury and Finance Ministry Mahinda Siriwardana was absent.
Election Commission Chairman Nimal G. Punchihewa has told the media last week: “We cannot wait until the Treasury releases funds. The Supreme Court order tells the Treasury to release funds. We have asked for funds and if they are not given, we can report it to the Supreme Court. Siriwardana didn’t attend last Tuesday (7). He has informed via a letter that he has to attend a security-related meeting. He has asked for another date to meet.”
He has further said that the new dates had been fixed in consideration of postal voting and the main voting which should be scheduled in a specific time period. The postal voting for the postponed Local Government Elections is likely to be held from 28-31 March. Punchihewa had said that steps were being taken to conduct the postal voting for the polls on the new date.
Opposition legislators had also met members of the Election Commission on Tuesday, during which they had emphasised holding the Local Government Polls as soon as possible.
Meanwhile, Opposition Leader Sajith Premadasa had alleged in Parliament on Tuesday that the Government had purposely prevented the meeting with the Finance Ministry Secretary and the Election Commission scheduled for that morning to discuss the financial matters concerning the holding of Local Government Elections.
According to Premadasa, the Government had prevented the scheduled meeting claiming that there was a National Security Council (NSC) meeting. The Opposition Leader had questioned how a NSC meeting had been held when the President, the Prime Minister, and the Defence Minister were in the Chamber.
Prime Minister Dinesh Gunawardena had however refuted the allegation by saying that the President had come to Parliament after the NSC meeting as he [the Prime Minister] had informed the President he would not attend the meeting.
The letter
Meanwhile, highly-placed sources disputed claims made in Parliament that the Finance Secretary did not attend a meeting with the Election Commission due to a NSC meeting.
Accordingly, it is learnt that a letter was sent to the Election Commission by the Secretary to the Ministry of Finance requesting a later date to meet. In the letter, the Treasury Secretary had highlighted four key points as to why he would be unable to attend the meeting.
1) The Treasury Secretary had not received the determination from the Supreme Court on Tuesday morning prior to the scheduled meeting.
2) Upon receiving the determination from the Supreme Court, the Secretary had stated that he would need to discuss the determination with the Attorney General.
3) Prior to attending the meeting, the Secretary to the Treasury had stated that he would have to discuss the matter with the Minister in Charge.
4) It was also mentioned that a previously scheduled Security Council meeting was to be held at the same time as the meeting called for by the Election Commission.
Therefore, it seems that the Finance/Treasury Secretary had outlined four issues regarding attending the meeting, and had requested a fresh date.
This issue had given way once again for concerns as to how the Election Commission hopes to hold the Local Government Elections on the new date without having first consulted the Treasury Secretary.
Meanwhile, Government Printer Gangani Liyanage stated that she had written to the Treasury on Wednesday (8) to release the remaining funds of more than Rs. 300 million to recommence the activities of ballot paper printing for the upcoming Local Government Polls and had forwarded a written request to IGP Wickramaratne requesting the provision of adequate security for the same.
Letter to RW
Finance/Treasury Secretary Siriwardana has also informed the Election Commission that the letter sent to him by the commission requesting the allocation of funds to hold the Local Government Elections has been forwarded to the Finance Minister.
Siriwardana has made this observation in a written response to the Election Commission following the letter sent by the commission to the Treasury Secretary last Tuesday. It is learnt that the Treasury Secretary has informed the Election Commission that his (Siriwardana’s) approval alone would not be sufficient to allocate funds for polls given the current situation in the country. Hence, the Election Commission’s letter seeking funds to hold the polls is now with President Wickremesinghe, who is also the Finance Minister.
Controversy over Judiciary
However, the drama over the holding of Local Government Elections last week resulted in a governing party legislator alleging that the Supreme Court had violated parliamentary privileges through a recent directive given in relation to a case on the holding of the much-discussed Local Government Elections.
SLPP MP Premnath C. Dolawatte had said that Parliament was empowered to act in instances of violation of its powers and privileges as per Article 4 (c) of the Constitution. He had told the House on Tuesday (7) that a point of privilege had arisen from the injunction SC (FC) No. 69/2023 issued on 3 March.
Quoting from the Constitution, Dolawatte had noted in detail that Parliament had financial control of the State. An injunction issued by a panel of Supreme Court judges had attempted to nullify the non-violable powers vested in Parliament and in breach of a principle of natural justice, the MP had noted.
According to Dolawatte, the matter of the Local Government Elections is an affair of Parliament with a proposal already in the agenda to form a select committee, and the judges have disregarded that despite it being noted by the Attorney General. He had further observed that the court had disregarded an affidavit submitted by the Finance Secretary about a lack of funding, which was a violation of traditions that would lead to anarchy of the Judiciary.
Dolawatte had said the Minister in Charge of the subject of Finance was responsible to Parliament, which controls public finance, and that the Interim Order by the Supreme Court attempted to prevent the implementation of these laws and made the control of public finance by Parliament a nullity.
He had also stated that the interim order sought to give effect to the Activity Budget Estimates for 2023, which was not a law nor a legal document, but a summary of the Appropriation Bill for 2023 to assist Parliament during the debate.
However, State Minister of Finance Shehan Semasinghe had also stated last week that the Speaker had agreed to an inquiry into the violation of parliamentary privileges due to the interim order issued by the Supreme Court pertaining to the Local Government Elections.
Semasinghe had said on Friday (10) that the matter had been accepted by the Speaker and had been presented to the Parliamentary Committee on Ethics and Privileges. “It is a serious offence to implement the interim order by the Supreme Court before hearing the said matter and taking a decision,” he had said.
The State Minister had further said that by tabling the letter by the Chairman of the National Election Commission on the matter, he had requested the Deputy Speaker to refer the matter to the Parliamentary Committee on Ethics and Privileges to conduct an inquiry. Semasinghe had also requested the Deputy Speaker to advise all relevant authorities not to take action on the said matter until the Parliamentary Committee on Ethics and Privileges concluded its inquiry on the said matter.
A heated argument had then broken out between the ruling party MPs and the Opposition over Semasinghe’s statement.
Opposition Leader Premadasa had also accused the Government of attempting to postpone the Local Government Elections by pressurising the Judiciary, which had given a clear verdict to conduct the election.
Demanding polls
In the run-up to last week’s episode on pushing for Local Government Polls, Opposition parties – the Samagi Jana Balawegaya (SJB), National People’s Power (NPP), Tamil National Alliance (TNA), Sri Lanka Muslim Congress (SLMC), All Ceylon Makkal Congress (ACMC), Tamil Progressive Alliance (TPA), and breakaway factions of the Sri Lanka Podujana Peramuna (SLPP) – had jointly written to the Election Commission on Sunday (5), demanding that the Local Government Elections be held on or before 19 March, fulfilling the undertaking given to the Supreme Court by the Election Commission.
The letter sent by the Opposition parties addressed to Commission Chairman Punchihewa and its members stated: “Now that the SC has removed the only impediment to holding the election according to law, it is your imperative duty to conduct the said election on or before 19 March 2023. We do not see any reason why you should consult the Secretary to the Treasury or anyone else, now that they are bound to comply with the interim order issued by the SC as aforesaid. We, therefore, request you to re-fix the date of the LG Elections to a date before 20 March 2023 as required by law or the earliest possible date without any further delay. You should not prevaricate on the pretext of consultation with anyone.”
The letter further noted: “We write consequent to the order of the SC made on 3 March 2023, in SC FR 69/2023 restraining the Minister of Finance, the Secretary to the Treasury, and others from withholding necessary funds for the conduct of the LG Elections that was scheduled to be held on 9 March 2023. The court has also made a further order to the Government Printer with respect to the printing of ballot papers. You gave an undertaking in SC Writ 6/2023 and SC Writ 7/2023 that you will hold the said elections according to law. You are aware that according to law, the said elections should be held on or before 19 March 2023. When the Secretary to the Treasury and the Government Printer did not cooperate with you, you filed a motion in the aforesaid two cases seeking the court’s direction on them.”
The NPP meanwhile has requested the Election Commission to take necessary measures immediately with regard to the Local Government Elections based on the Supreme Court verdict and fix an early date for the election.
NPP Secretary Dr. Nihal Abeysinghe in a letter to the Election Commission has stated that the Supreme Court in its verdict has observed that conducting the LG Polls is a fundamental human right considering the importance of the said election.
RW Govt. gears up to finalise IMF deal
(The Morning 12-03-2023)
- China’s latest assurance on SL debt restructuring brings IMF deal closer
- Govt.-India in agreement to extend $ 1 b credit line by a few months
As Sri Lanka nears the one-year mark of last year’s Aragalaya people’s power protest campaign, the country’s economic revival seems to be finally on track with the appreciation of the Sri Lankan Rupee and economic activities showing positive signs following news of the proposed International Monetary Fund (IMF) deal likely to be finalised this month.
However, the public’s agitation over the ongoing hardships seem far from over, with Opposition parties, civil society, trade unions, and university students taking to the streets over a plethora of demands. It would therefore be correct to say that the challenges faced by the Ranil Wickremesinghe Government are far from over.
Nevertheless, there was some respite for the Government with the receipt of the latest letter by the China Export-Import Bank on Monday (6), expressing commitment to Sri Lanka’s debt restructuring programme. The letter by the Export-Import Bank of China was signed by the Bank’s Vice President, Zhang Wencai.
“We hereby express our firm support to Sri Lanka through a debt treatment. This would be in line with the goal/objective of restoring public debt sustainability consistent with the envisaged IMF-supported programme and delivered through financial operations negotiated between our two sides. In view of the time needed for Sri Lanka to complete the debt treatment negotiation, in order to end your default status as soon as possible, and pave the way for the country’s economic recovery and debt sustainability restoring, the bank is going to provide an extension on the debt service due in 2022 and 2023 as an immediate contingency measure based on your request, which means you will not have to repay the principal and interest due of the bank’s loans during the above-mentioned period, so as to help relieve your short-term debt repayment pressure.
“Meanwhile, we would like to expedite the negotiation process with your side regarding medium- and long-term debt treatment in this window period, with a view to finalising the specifics of a debt treatment in the coming months, based on the principle of active communication, friendly discussion, mutually-beneficial, and win-win cooperation. We will make our best efforts to contribute to the debt sustainability of Sri Lanka,” the letter has stated.
The letter has further stated: “The bank will support Sri Lanka in your application for the IMF Extended Fund Facility (EFF) to help relieve the liquidity strain. In the meantime, adequate contributions from all the creditors would be a critical condition for a speedy solution as desired by all the parties. We will continuously call on commercial creditors (including the international sovereign bondholders) to provide debt treatment in an equally comparable manner, and encourage multilateral creditors to do their utmost to make corresponding contributions, to help you better respond to the crisis and emerge from it.”
Following the latest assurance received by the Chinese, President Wickremesinghe informed Parliament that Sri Lanka was expecting IMF Board approval by the end of the month after its largest bilateral creditor gave written support for debt restructuring via the Export-Import Bank of China on Monday (6). He said the Government had received the letter of assurance from the Chinese Exim Bank the previous night and the letter of intent signed by the Central Bank Governor and the President had been sent to the IMF the same night.
Meanwhile, US Treasury Secretary Janet L. Yellen on Monday spoke with President Wickremesinghe and expressed support for Sri Lanka’s steps towards an IMF-supported programme to advance economic reform and achieve a strong and durable recovery.
According to the US State Department of Treasury, the Secretary welcomed Sri Lanka’s commitments to transparency and comparable treatment for all bilateral official and private creditors.
IMF Chief Kristalina Georgieva said on Twitter: “I welcome the progress made by Sri Lankan authorities in taking decisive policy actions and obtaining financing assurances from all their major creditors, incl. China, India and the Paris Club.” She added that she looked forward to presenting the IMF-supported programme to the Executive Board on 20 March.
“Sri Lanka has now received financing assurances from all major bilateral creditors. This paves the way for consideration by the IMF’s Board on 20 March the approval of the Staff-Level Agreement reached on 1 September 2022 for financing under an Extended Fund Facility. Approval by the board would also catalyse financing from other creditors, including the World Bank and the Asian Development Bank. The arrangement will support the authorities’ programme of ambitious reforms that they have already embarked upon, which will help Sri Lanka emerge from its current crisis and set it on a trajectory of strong and inclusive growth,” the IMF stated on Tuesday (7).
Sri Lanka is making good progress towards unlocking the IMF bailout package but its Restricted Default (RD) status will only come off after the debt restructuring process reaches completion, rating agency Fitch had stated on Friday (10). “Sri Lanka’s post-default ratings would depend upon our assessment of its credit profile. If the key parameters for returning to debt sustainability under the IMF programme allow for a moderate and extended debt reduction process, this could facilitate debt restructuring talks but may weigh on the sovereign’s post-default credit rating,” Fitch said in a statement.
Meanwhile, Reuters last week reported that Sri Lanka was negotiating with India to extend a $ 1 billion credit line by a few months. The news report, quoting sources, has stated that the credit line is due to expire on 17 March, with Sri Lanka having used only about two-thirds of it, mainly for medicines and food.
A source at the Sri Lankan Finance Ministry has also been quoted as saying that the Government wanted to extend the credit line by 6-12 months because there was about $ 300 million of it left unused. By Thursday (9), an agreement had been reached on the extension.