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The Palmyrah Profile

admin — Fri, 21 Mar 2025 06:30:34 +0000

The Palmyrah Profile

The first dominant sign of Jaffna peninsula is immune to change. In fact, such a transformation is simply unthinkable. Those towering trees stretch across the landscape. Just as the slender trunks and sweeping fronds of the coconut define the South, the Palmyrah stands tall in the North, with its fan-shaped leaves and rugged, column-like trunks. The Palmyrah are far more than just scenery. They are part and parcel of the northern region’s economy, culture, and daily life.

The latest data reveal that total exports from the Palmyrah sector soared from approximately Rs. 22 million in January and February 2024 to nearly Rs. 93 million in the same period of 2025. This 322% growth demonstrates the recent initiatives aimed at expanding production and market reach. The revenue increase also indicates a rise in demand as well as the sector’s capacity to compete in global markets.

It is against this backdrop that the Daily News steps into the Palmyrah Development Board (PDB), located along Kandy Road in Jaffna to meet its chairperson, Vinayagamoorthy Sakathevan.

All was not well when Sakathevan took office in October 2024. A new government was in power, and change was in the air. Yet, not everyone was ready to embrace it. Certain segments were hesitant, seeking to sideline the new chairperson. But Sakathevan’s decade-long experience proved invaluable. He earned trust and support through his expertise and approachable leadership.

Vinayagamoorthy Sakathevan is a researcher, community development consultant, and entrepreneur with over 32 years of experience in research and development. With expertise in biotechnology and specialisation in tissue culture, he has played a key role in modernising farming, aquaculture, and environmental conservation. His contributions include the planting of over 10,000 bamboo and other trees across Kilinochchi, Mullaitivu, and Mannar within a month. He has also participated in agricultural and aquaculture research and development across Singapore, Malaysia, Thailand, Indonesia, Vietnam, and Cambodia.

Community Upliftment

The PDB has been established to oversee the cultivation, processing, and commercialisation of Palmyrah-based products. Initially instituted by leftist stalwart NM Perera, the sector was created to empower the lower communities in Jaffna through the Jaffna Palm Development Co-Operative Society. Upper-class participation was minimal due to prevailing caste-based social structures. Making this initiative, therefore,was a critical factor for community upliftment.

The PDB was originally placed under the Ministry of Plantations, as per the amendment to the Sri Lanka Coconut Development Act in 1978. However, in 2024, it was brought under the Ministry of Plantation and Community Infrastructure to sharpen its focus on economic and industrial expansion. Its activities include the restoration of Palmyrah plantations, renovation of existing farms, handicraft training program, product development, research, and national and international product promotion through sales outlets like Katpaham.

“Palmyrah remains one of the most underutilised resources, with an estimated 15 million trees, half of which are mature and suitable for tapping. Each Palmyrah tree can generate an annual seasonal income of approximately Rs. 120,000.If fully utilised, local revenue from Palmyrah-based products could reach Rs. 900 billion annually.If exported, the industry has the potential to generate $24 billion annually,” Sakathevan explains.

He adds: “The global alcoholic beverage market is expected to reach $2036 billion by 2030. If Sri Lanka manages to capture at least 1% of this market through Palmyrah-based beverages, the sector could generate significant foreign exchange.”

Value-Added Products

Palmyrah offers a wide range of both alcoholic and non-alcoholic products, with over 1,000 reported value-added products. These include alcoholic products such astoddy, arrack, wine and brandy. The non-alcoholic products includesweet toddy, jaggery, treacle, tuber, fiber, pulp, handicrafts, panaddu, timber, sugar candy. Value-added products include biscuits, sauces, cakes, yogurt, ice-cream, hand wash, shoe polish, Palmate, and more.

The industry is supported by a network of stakeholders: the Palmyrah Development Board, the Palmyrah Research Institute, 38 Palm Product Development Co-operative Societies with 7,000 members, 50 Women’s Production Groups involving 3,000 women, over 50 exporters, and various Government and non-government institutions.

Despite its economic potential, the Palmyrah sector has faced numerous challenges, including political interference, war, and the privatisation of key distilleries. Under Sakathevan’s leadership, however, efforts are underway to regain control of these assets for community-driven economic development.

Sakathevan has also developed a strategic framework to tackle industry barriers. In just three months, he has streamlined tree-cutting regulations, eased export restrictions, and revamped branding strategies. His efforts have already led to a notable revenue boost: the PDB has generated Rs. 300 million in a short period.

“We’ve set a long-term five-year plan in motion to maximise the industry’s potential, particularly in Jaffna. The peninsula is home to around 115 million Palmyrah trees.If executed without political interference, this industry could generate up to $25 billion in revenue and become a major contributor to the country’s economy,” Sakathevan notes.

Modern Technology

Jaffna’s Palmyrah industry also has the potential to address unemployment and integrate modern technology into production processes. Sakathevan has taken significant steps transform the sector into a key economic driver.

“Our major focus has been the modernisation of jaggery and toddy production. We have introduced advanced processing techniques that minimise waste while enhancing efficiency. Sustainable resource management has also taken centrestage. We have taken strict measures to curb the destruction of Palmyrah trees. These measures ensure that this valuable resource continues to benefit future generations,” Sakathevan emphasises.

“Palmyrah is not only an economic asset but also a natural ally in carbon sequestration and biodiversity conservation,” he adds.

Efforts are underway to expand Palmyrah-based industries beyond Jaffna, across the country. Traditionally confined to the Northern Province, these products are now being positioned for creating new opportunities for investment and employment.

“The people in the South have yet to fully embrace Palmyrah beyond its traditional uses. The tree’s economic impact extends far beyond the Northwith over 800 unique products. The Government is also engaging the Tamil diaspora to support investment and export expansion,” Sakathevan explains.

For the first time, international orders are now being managed directly from Jaffna, rather than being routed through Colombo as in the past.

https://www.dailynews.lk/2025/03/20/featured/745508/the-palmyrah-profile/

The post The Palmyrah Profile appeared first on Lanka Focus.

Concessions and credibility

admin — Tue, 18 Mar 2025 08:38:51 +0000

Concessions and credibility

Last week, the Minister of Foreign Affairs announced that a delegation of European Union (EU) representatives is scheduled to visit Sri Lanka next week to assess the EU’s Generalised Scheme of Preferences Plus (GSP+) tax concessions granted to the country. The EU is Sri Lanka’s second-largest trading partner. It goes without saying that for dollar-strapped Sri Lanka, the GSP+ concessions scheme is a vital economic lifeline.

According to the Institute of Policy Studies, in 2023, Sri Lanka exported goods worth $ 3.63 billion to the EU and the United Kingdom (UK) representing 30% of total exports of Sri Lanka for that year. The 1,301 products exported by Sri Lanka under the six-digit Harmonized System (HS) codes, concentrate on key sectors such as wearing apparel, rubber, seafood, and tea. Notably, the EU and the UK are major export destinations for wearing apparel accounting for over half (54.9%) of Sri Lanka’s total wearing apparel exports. As such, the importance of maintaining GSP+ while Sri Lanka struggles to reach economic stability and recommences debt repayment in the coming years should be evident to all parties concerned. GSP+ preference offers Sri Lanka zero tariffs on many goods, granting relative price competitiveness in the EU market. Without GSP+, tariffs would revert to the EU’s Most Favoured Nation (MFN) rates. The preference margin – the difference between MFN and GSP+ – is more than 10 percentage points for high-value export sectors like wearing apparel.

However, Sri Lanka has a long-standing issue with credibility which can negatively impact the island nations’ prospects of holding on to this valuable set of concessions. Consecutive governments since 2010, have made promises to the EU which were conditional for the GSP+ to be extended, but have failed to deliver. Such failures, despite their domestic implications, paint Sri Lanka as a nation that has weak credibility in the international arena. Despite undertakings to repeal the much-criticised Prevention of terrorism act (PTA) undelivered, and strengthening domestic mechanisms for justice and reconciliation remaining at a standstill, Sri Lanka has little to show in the way of progress other than two peaceful transitions of government and Presidency, sound exercise of democracy and elections without violence, and credible numbers which point to adherence to the IMF bailout programme.

In an October 2021 interview with The Sunday Morning, EU former Ambassador Denis Chaibi pointed out that the European Parliament passed a resolution on 10 June 2021 in which it expressed a number of concerns. “It was mainly about human rights and individual freedoms, with a particular focus on the Prevention of Terrorism Act (PTA) and the shrinking space for civil society to operate. On the Prevention of Terrorism Act (PTA), the resolution expressed grave concern about what is perceived as arbitrary arrest and detention under the PTA, without due process and access to justice. The emphasis is on due process. In other words, for many arrested under the PTA, it would be useful to immediately give those detained a fair trial on valid charges and, if there are no charges, to look at the possibility of releasing them. The resolution also deplores the continuing discrimination against religious and ethnic minorities such as Muslims, Hindus, Tamils, and Christians,” he said.

However, at present (2025), with all that transpired since 2022 to date, the EU’s main focus when it comes to the review seems to be unchanged, with how Sri Lanka deals with the fundamental freedoms of its citizenry, the Prevention of Terrorism Act (PTA), reconciliation process, the space provided for civil society. Meanwhile, improving anti-corruption measures, decriminalising same-sex relations, freedom of association and collective bargaining, and drug control in compliance with human rights commitments, and environmental conventions remain EU priorities.

As such, the Government, which has demonstrated a willingness to improve anti-corruption measures and strengthen the domestic mechanism for justice and reconciliation should move quickly to give confidence regarding their policies and expedite the repeal or replacement of the PTA during their talks with the visiting EU delegation to rebuild Sri Lanka’s credibility and sustain the concessions from the European collective, that the island desperately needs.

https://www.themorning.lk/articles/GpJsAfoEwB8bss9aMJ5R

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Constitutional Reform for a Stable Sri Lanka

admin — Sun, 16 Mar 2025 10:41:28 +0000

Constitutional Reform for a Stable Sri Lanka

Constitutional reform has been a consistent demand of the citizens of Sri Lanka, most of whom firmly oppose an all-powerful president who is free of the checks and balances imposed by a strong parliament. Successive presidents have pledged to abolish the executive presidency only to renege on that promise once they were elected to power. However, since the presidential system was introduced by J.R. Jayewardene in 1978, it has consistently failed to deliver the political stability, economic prosperity and stable peace that the it was supposedly designed to produce.

According to a 2024 survey on Democracy and Reconciliation by the Centre for Policy Alternatives (CPA), three quarters of Sri Lankans believe that democracy is preferable to any other form of government. They have a moderate awareness of the ongoing constitutional reform process (42.9 percent) while a majority (52.3 percent) preferred a new constitution. This figure increased considerably from 2016 to 2024.

The nail in the coffin of support for the presidential system came in 2022 after two years of the authoritarian and corrupt rule of President Gotabaya Rajapaksa that drove the country to its knees and reduced it to bankruptcy. With the aragalaya, people learnt that they had the power and agency to dispose of leaders who broke their social contract and ruled in opposition to their wishes.

During his 2024 election campaign, President Anura Kumara Dissanayake pledged to abolish the executive presidency and appoint a president without executive powers by the parliament and to introduce a new constitution that strengthens democracy and ensures equality of all citizens.

“This initiative will build on the constitutional reform process started in 2015 which remains incomplete. The proposed constitutional reforms will guarantee equality and democracy and the devolution of political and administrative power to every local government, district and province so that all people can be involved in governance within one country,” he said.

But four months after winning a two thirds majority in parliament, the government has made little progress on the road to constitutional reform. As part of its series on Assessing the Key Issues Facing the NPP Government, Groundviews spoke to CPA Researcher Shahane De Silva on where the process stands, the need for getting rid of the executive presidency and the CPA’s proposals for the new constitution.

Is there any progress with the NPP government on constitutional reform?

With regard to the NPP’s manifesto, there were a couple of promises that we haven’t seen progress on. First is the abolition of the executive presidency. There is also the promise of a new electoral system for parliament and a permanent bench of judges for streamlining cases of financial crimes and corruption. We haven’t seen any progress on those promises. In addition, with regard to national security, they did promise strengthening the National Security Council and also the establishment of a National Security Advisory Board. We haven’t seen any progress on that. The one promise that we have seen some progress on, or at least heard some progress of, is the establishment of an independent public prosecutor’s office.

The president, like his predecessors, promised in his election campaign to abolish the executive presidency. Do you believe he will do this?

In a majority of the presidential elections since the adoption of the 1978 constitution, the abolishing of the executive presidency has been a contested issue. It has been promised either by the winning candidate or by the winning candidate and the main losing candidate that usually represented close to half of the electorate. President Anura Kumara Dissanayake has been one of the most consistent promoters of the abolishing of the executive presidency so we can see that there is definitely a will to do so. However, generally successful constitutional reform processes will take place within the first six to nine months of the first sitting of parliament. Given the NPP’s parliamentary supermajority and the strong mandate they have for system change, it is possible for them to take a little longer. But if it gets too late and the government’s priorities have to turn towards things like the economy, particularly because Sri Lanka is in an IMF programme and debt payments resume in 2028, then the likelihood of them going through with these critical core constitutional reforms decreases dramatically. So it really depends on the timing and when they decide to really start on these constitutional reforms or when they start the constitutional reform process.

Why is abolishing the executive presidency the most important aspect of constitutional reform?

In 1978, when the executive presidency was adopted as the core feature of the new constitution, there were a few basic objectives that it had. One being communal harmony. The idea was that a president having to achieve 50 percent plus one vote of the presidential election in order to become president meant that they had to appeal to a cross-communal electorate in order to become the winning candidate. Now that has been decisively disproven. You can point to the 2010 and the 2019 presidential elections as very strong empirical cases disproving that where candidates have appealed to the largest ethnic communal majority in order to win the presidency and at the expense of the minorities. The other aspect and a narrative that’s still believed in portions of society is the idea that we need a strongman ruler for decisive economic action for rapid economic development. There’s a lot of cases disproving this idea as well. The lack of checks and balances on the presidency has resulted in a lot of incompetent and not really thought through policy decisions. If we take, for example, the economic crisis of 2022, some of the main catalysts were former president Gotabaya Rajapaksa’s decision to cut taxes in a big way in 2019. The chemical fertiliser ban was a massive impediment as well as was the very delayed stoppage of debt payments. These were all decisions that came from the presidency that were just not in keeping with what needed to be done at that time. No one could really stop it because there was no way to check the presidency so we need a new system where there is collaborative decision making and there are checks and balances on decision making in order to produce better thought out decisions.

Other than abolishing the executive presidency, what other constitutional reforms are necessary for a stable Sri Lanka?

The current composition of the Constitutional Council is that there are seven members of parliament and three persons of eminence from civil society, academia and other various sectors of society that are not politically affiliated. We need to de-politicise the Constitutional Council further, and that has a trickledown effect to the rest of the independent commissions in de-politicising them. We can, at the very least, go back to the composition it was in the 17th amendment where there were seven persons of eminence and only three members of parliament. We can actually do more to de-politicise it where the only member of the Constitutional Council that has some sort of political affiliation is the speaker of parliament and the rest are persons of eminence from across the other sectors of society. The other issue is the de-politicisation and the professionalisation of the public service for efficient public service delivery and also to reduce wastage, corruption and other negative traits that are associated with the public service. We also have the introduction of post-enactment judicial review that is incredibly important as well and of course a meaningful system of territorial devolution in order to convert it from this system of patronage, which is what currently is in practice, to one that actually is about empowering people at the provincial and local level and for their voices to be heard and to have government respond to their needs at those levels. Those are some of the broad reforms outside of the abolition of the executive presidency that we do need but there are a lot more.

Is the 13th amendment enough for meaningful devolution or should it be more extensive?

The current system of territorial devolution to the provinces has a lot of flaws. One of the biggest flaws is the provincial governor. The provincial governor is actually an agent of the president in that he or she is elected by the president and remains in the office at the pleasure of the president so can be dismissed at any time by the president. The provincial governor has vast powers over provincial administration. First he or she is the de facto provincial minister of finance. All provincial statutes that is the laws passed by the provincial council have to be assented to by the provincial governor and the provincial governor has powers over the provincial public service, meaning that the provincial public service isn’t independent. When you have an agent of the president who is the chief office at the central government level acting on the province through the provincial governor, that is antithetical to the principle of devolution and the vast majority of power isn’t actually held by the elected representatives of the province the people who have elected the provincial council and from there you have the provincial board of ministers, they are in a lot of ways hamstrung by the provincial governor.

CPA has already drawn up a draft constitution, can you outline the main proposals?

In broad brush strokes what we are proposing is the abolition of the executive presidency and we want to replace that system with a parliamentary form of democracy. The president becomes a ceremonial head of state but the prime minister is head of government and head of the cabinet of ministers and that cabinet of ministers is able to carry out their tasks as long as they maintain the confidence of parliament so that’s a check of the legislature on the executive throughout, which is not there currently. Parliament in our proposal is a bicameral legislature meaning that there are two houses; you have the lower house which is where all the elected representatives are composed of and you would also have a senate that is composed of expert representation. These are not politically affiliated individuals but people of eminence from different sectors of society. They are the expert representation over legislative bills and provincial representation coming from the provincial councils from all nine provinces. We would also have post enactment judicial review and we would have a three tier structure of government so we would have the national, provincial and local level constitutionally recognised. We would ensure that things that need to be dealt with at a certain level are dealt with by that level so local problems better dealt with at the local level by the local government and moving up until the national level. An enhanced Bill of Fundamental Rights. In broad brush strokes that is our proposal for constitutional reform.

Have you presented this version to the government?

No, we haven’t as of yet but we are more than happy to engage with the government provided they believe in carrying out constitutional reform the way we ought it should be done.

Constitutional Reform for a Stable Sri Lanka

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Petitioners seek SC intervention against Mannar Wind Power Project

admin — Fri, 21 Jun 2024 05:02:55 +0000

Petitioners seek SC intervention against Mannar Wind Power Project citing public interest

The Bishop of the Diocese of Mannar and three prominent environmentalists this week petitioned the Supreme Court in the public interest against the proposed 250 MW Mannar Wind Power Project by Adani Green Energy.

Rev. Dr. Fidelis Lionel Emmanuel Fernando along with Rohan Pethiyagoda, Prof. Nimal Gunatilleke and Prof. Sarath Kotagama have challenged the procurement process and proposed construction of the project by Adani Green Energy PTE Ltd and/or Adani Green Energy S L Limited.

The case names 67 respondents including the Cabinet of Ministers, the Sri Lanka Sustainable Energy Authority (SLSEA), the Central Environmental Authority (CEA), the Board of Investment, the Ceylon Electricity Board, the Public Utilities Commission Sri Lanka and the Attorney General, among others.

It raises concerns regarding the credibility of the project’s environmental impact assessment (EIA) and the role played by the SLSEA. It flags certain procedural issues in the awarding of the purported contract and questions the characterisation of the project as a government-to-government deal.

It questions the basis for the negotiated tariff to be fixed at USD 8.26 cents per kilowatt-hour for a period of 20 years when the EIA conducts its assessment based on a cost of USD 4.6 cents, potentially causing considerable financial loss to the country and a burden on consumers.

The petition also states that, notwithstanding the intensely public nature of the project, its vital importance to the general public and public resources, including the natural environment, as well as the paramountcy of transparency and openness in good governance, “there is a paucity of available data and information”.

It requests Court to compel the release of the entire files and records including the call for bids for (if any) and responses to both the Mannar and proposed 234MW Pooneryn plants; records of deliberations and negotiations; Cabinet memoranda and decisions; unit price discussions including formulae related to the computation of the price per kilowatt hour; the criteria and benchmarks or any other basis for assessments of the project; and other relevant information.

The petition holds that the EIA commissioned by the SLSEA “appears to be a formality, conducted with a premeditated intention/decision to award the construction and operation of the project to predetermined contractors”.

Despite the CEA being the designated body, it appears from publicly disseminated information that the Power and Energy Minister was de facto acting in the capacity of the project approving authority, it states.

There is no transparency surrounding the purported leasing of 202 hectares acquired on Mannar Island for the project; and no information on compensation payable to affected landowners, the cost of which should be recovered from the investor.

The EIA has also not adequately evaluated alternative sites—Ambewela, the South East coast, Kalpitiya and Jaffna—or expressed “any acceptable rationale” for why Mannar Island was chosen.

“The promotion of Mannar when compared to other sites is made even more confounding given that it is the focal point of the Central Asian Flyway for over five million [5,000,000] migratory birds travelling to, and through, Mannar island on an annual basis, making it a crucial area for conservation and tourism which aspects are not as markedly evident in the other sites considered,” the petition states.

In seeking their relief, the petitioners pray that the Supreme Court declares a violation of their fundamental rights and that of the citizenry at large and the decisions made to award the project to Adani as wrongful; and calls for any consequential actions undertaken to be declared illegal.

The petition states that the case has been filed to further the national interest, to preserve and protect public property, including the environment, flora and fauna, public finances and to safeguard the rights and freedoms of the general public of Sri Lanka and its future generations.

https://www.sundaytimes.lk/240616/news/petitioners-seek-sc-intervention-against-mannar-wind-power-project-citing-public-interest-560422.html

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Australian company’s multibillion sandmining project in Mannar

admin — Fri, 21 Jun 2024 04:45:12 +0000

Australian company’s multibillion sandmining project mired in Mannar protests

Protests hinder progress towards mining licence
Residents allege large-scale land robberies involving brokers working for company
Environmentalists fear existential threats such as soil losing fertility and contamination of water sources
Company representative downplays impacts of the project on people’s livelihood

By Mimi Alphonsus and S. Rubatheesan

For over a decade, an Australian company has tried to secure mining licences to extract heavy mineral sands from the ecologically rich region of Mannar Island—the fourth largest ilmenite deposit in the world—with little success.

Renewed attempts to push the project further were met with protests by locals over land usage and severe existential concerns about the environmental consequences.

Renewed attempts to push the project further were met with protests by locals. Pic by Joseph Nayan

The Australian company, Titanium Sands Limited (TSL), along with their local subsidiaries, have engaged in exploration activities covering vast swathes of Mannar Island. Its preliminary scientific studies found key minerals such as ilmenite, rutile, zircon and garnet. According to data from the Geological Survey and Mines Bureau (GSMB), Mannar Island has 53 million metric tonnes of mineral soil.

The company has secured land access agreements for mining on 296 acres, according to the company’s responses to the “Basic Information Questionnaire” (BIQ) submitted to the Central Environmental Authority (CEA). The Sunday Times obtained a copy through a Right to Information (RTI) request.

TSL is currently in discussions with GSMB to secure a mining licence with a pending environmental impact assessment (EIA), which is yet to be finalised due to protests by local communities.

Environmental concerns

The CEA’s Environmental Assessment and Management Division Deputy Director General, N.S. Gamage, told the Sunday Times that they were unable to conduct the required preliminary scoping study before beginning the EIA since residents vehemently opposed the project.

“The project proponent then approached the Presidential Secretariat, which requested a meeting to share information with the public at the Mannar District Secretariat,” said Mr. Gamage.

On May 13, a multi-stakeholder meeting was held at the Mannar District Secretariat to “brief” the local communities, fishermen unions, and civil society groups. There were heated exchanges between company representatives and local communities, who argued that if mining at a depth of 2 to 10 metres is allowed on low-lying land like Mannar Island, it would lead to saltwater contamination and flooding and ruin the fertile soil.

One concerned local among the audience was heard saying, “Don’t try to hoodwink our people with your lies. This is our land. We won’t accept any report you bring forward. If you pay enough, they will write any number of lies in it.”

Mannar District Secretary K. Kanakeshwaran also acknowledged receiving multiple complaints and petitions from local communities opposing the multibillion-dollar project.

During the meeting, the mining company representatives downplayed the short- and long-term impacts of the project.

Sivanesan Somanathar, an environmental consultant commissioned by TSL, said that an EIA would be necessary to assess all environmental risks and that many concerns could be mitigated.

In his presentation, he said there would be “no dewatering” and “no saltwater intrusion” and assured replanting of whichever vegetation the landowner preferred after the project’s completion.

The project BIQ submitted by the company to CEA indicated short-term impacts on soils and land use, surface and groundwater quality, and drainage and hydrology, as well as medium-term impacts on the landscape and visual environment.

GSMB’s Senior Director of Geology Starin Fernando dismissed claims that exploration drilling below the water table is harmful. “However, at the mining stage, if it goes below the water table, there will be saltwater intrusion,” he said. However, he said GSMB does not deal with this problem, and the National Water Supply and Drainage Board should provide tentative solutions.

Environmentalists and conservators raised serious concerns about the long-term impact of the project on a rich biodiverse region like Mannar Island, which is home to 874 hectares of mangrove plants and located in the global migratory path of some 400 bird species.

The 31,135-acre Mannar Island where the proposed project will be implemented is a highly populated area with 70,379 people residing there.

For Dr. Soosai Anandan, a retired Professor of Geography at the University of Jaffna, this project sounds the death knell for local habitats and communities who are still struggling to revive the rural economy after the end of the civil war in 2009.

“This project, if implemented, will not only change the landscape and terrain of the island as a whole but further accelerate the existing livelihood issues such as access to safe drinking water, farming and fishing,” Prof. Anandan said.

“The island is already below sea level. When they drill and mine in this sensitive region, the seawater will seep through the land, posing a threat to farming and drinking water,” he said.

Land Issues

Another point of contention has been land access for the project. “My family had 35 acres of palmyrah land for generations,” said a resident of Olaithoduvai who sells palmyrah toddy, fronds and firewood for a living.

“It is our ancestral wealth, but we don’t have title deeds for it. When they brought in these private land ownership laws decades ago, our people did not know how to get this land registered,” he explained. “Suddenly, big landlords from other villages started to fence it up in recent years, and, shortly after, big machinery appeared. I can’t access the palmyrah forest on that land and earn my income.”

Other residents are fearful that their livestock will lose access to grazing lands due to landscape changes. According to the BIQ, 60% of the lands proposed for mining are forested areas, and the project will require the removal of topsoil and vegetation.

The Sunday Times inspected government survey maps and spoke to the Land Title Settlement Department to understand the land problem. In several areas where TSL claims that land access agreements have been procured, ownership is tagged as “claimant not known.”

Mannar has hundreds of acres of land with unclear ownership or disputed cases, partly due to delays in drawing up a “village plan” by the Land Title Settlement Department but also owing to decades of wartime displacement. As a result, communities that have lived and worked there for generations are vulnerable to land grabbing.

Local officials who requested anonymity told the Sunday Times that TSL and other companies have been procuring land on Mannar Island by signing agreements with individuals who have made a “declaration deed,” a legal document claiming ownership.

“The government will only register a property if they are 100% sure of its ownership, but a company need not adhere to the same standard and can make agreements with whoever claims the land and is willing to give it to them,” explained the official. “Once they make a declaration deed, they transfer it a few times so it has a history and becomes normalised.”

Although not illegal, the official believes the process is being abused.

Villagers whose lands were utilised for exploration activities allege that middlemen, who collected land details and approached them individually with false promises to secure land access, later handed these properties over to the mining company.

“This way, they can pay a small sum to the aggrieved family and get them not to claim the land.” Another resident said she and her family agreed to hand over their lands to a big landowner as they had no deeds to challenge his claim. “They promised to pay us money in return, but I haven’t received a cent,” she alleged.

Saliya Galagoda, TSL’s local representative, acknowledged that large landowners were fencing off properties in sand mining areas, but he said they were doing so of their own volition and solely to increase the price when mining companies try to access the land.

Mistrust in the project also stems from years of secretive practices adopted by various companies to secure access to the land. Residents said that for years, local companies and brokers approached them for exploration by saying they were “checking the water,” “researching sand,” and part of a “government project.”

Speaking on condition of anonymity, a former broker who worked for one such company said that they would use “politically big people” to ensure villagers didn’t question the project too much. “Because people knew who I was in the community, they let me enter and explore their lands,” he said. “I don’t feel good about it.”

TSL’s Galagoda, who took over the project in 2021, said that since he started working, things have been done “correctly.” “We paid Rs. 12,500 for every single hole that was drilled,” he added.

While the application for a mining licence at the moment covers a relatively modest area, TSL currently has over 17,000 acres—more than half of Mannar Island—under retention. According to the GSMB licensing process, TSL has one to two years to apply for and receive a mining licence before retention expires permanently.

TSL complains of delays in obtaining approval

Despite nearly two years passing since Titanium Sands Ltd. (TSL) completed exploration activities, the company is awaiting approvals to begin the environmental studies. It says this is “something that has continually been delayed by the political situation in Sri Lanka.”

In a written response to the questionnaire sent by the Sunday Times, TSL Director Jason Ferris claimed the company has so far invested Rs. 2 billion from foreign sources on the project, and another Rs. 24 billion will be invested once the mining licence is approved.

“Exploration was only completed in 2022, and the final resource report was presented to GSMB in September 2022, which was accepted and signed off by GSMB. Since this time, the company has been waiting on the government process for each of the next stages; so the official mining licence process has been ongoing for approx. 18 months, not 10 years,” Mr. Ferris said.

Responding to the cancellations of exploration licences for TSL-owned companies in 2021 and their subsequent renewal, the company said “under legal opinion, the structure of TSL was proven correct and new licences were issued.”

TSL denied receiving any benefits through tax holidays but indicated that “BOI discussions are ongoing along with the EIA discussions, which are constantly delayed by government departments not doing their jobs.”

https://www.sundaytimes.lk/240616/news/australian-companys-multibillion-sandmining-project-mired-in-mannar-protests-560380.html

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Will the approaching elections be free and fair?

admin — Sat, 11 May 2024 05:22:50 +0000

Will the approaching elections be free and fair?

What is the significance of the Election Commission’s (EC) announcement on Thursday that the next presidential election would be held between September 17 and October 16? It is a well-known fact to those who know the relevant Article of the Constitution. It would have only been relevant if the EC had announced the exact date for the election.

Goodies and freebies

Although President Ranil Wickremesinghe has not declared his candidature for the forthcoming Presidential election, it is clear he has commenced his election campaign through vote-catching activities in various sectors, providing the voters with various goodies and freebies.
If we are going by a recent communication by the election monitoring body, the People’s Action for Free and Fair Elections (PAFFREL) to the Elections Commission (EC), what is shameful in this exercise is the President’s party, the United National Party (UNP) using public funds for these activities, abusing the powers of the President’s office.
Apart from the Aswesuma project which apparently comes under the “social safety net” of the economic recovery programme sponsored by the International Monetary Fund (IMF), the government has initiated a plan to distribute 20 kg of rice to 2.7 million low-income families since last month. The ‘Urumaya’ programme initiated by President Ranil Wickremesinghe and already underway aims at providing freehold land rights to two million individuals. The President also announced last November that nearly 50,000 families will be granted ownership of their urban houses in 2024 and the programme was launched last month.
The government has allocated 14 billion rupees for people without homes in the plantation areas, out of which 10 billion rupees had been allocated for 89 Divisional Secretariat areas to construct 10,000 houses, according to Minister Jeevan Thondaman. The Cabinet last month also approved a proposal to provide sanitary napkins free annually to 800,000 poverty-stricken female students studying in the most remote and isolated schools. These may be some of the programmes that the PAFFREL had referred to as vote-buying initiatives.

Misusing state property

The poll monitoring body on May 3 had said that the government was misusing state property at a time when a crucial election is only a few months away. PAFFREL Executive Director, Rohana Hettiarachchi said that these initiatives are costing billions of rupees to the tax payer.
“The government has allocated 10 million rupees for each Divisional Secretariat area for development activities. The funds will be used at the discretion of the governor of the province. The governor is the representative of the President and it is obvious that this is an endeavour aimed at the election. The government spends billions of tax rupees as well as enormous physical and human resources of the state for its election propaganda activities,” he had accused.
The PAFFREL has urged the EC to address these government-run political promotion programmes disguised as development projects, occurring while the Local Government (LG) elections have been called and the Presidential Election is expected to be announced soon. In a letter addressed to EC Chairman R.M.A.L. Ratnayake, the PAFFREL Executive Director pointed out that even though the LG election has been postponed indefinitely, the election has not been cancelled, meaning that the pre-election laws are still in effect.
The EC that met on May 7 had observed the points raised by the PAFFREL and had written to the Secretary to the President, Saman Ekanayake, requesting him not to involve any politician in such development project implementations. However, the President and the leaders of the government are extremely unlikely to take the concerns of the EC into account, since these activities are carried out with the full knowledge of their unfair impact on the results of the forthcoming Presidential election.
However, this is a tricky issue for the Opposition parties. Despite the undue advantage that is to be possibly gained by the two ruling parties, the UNP and the Sri Lanka Podujana Peramuna (SLPP) through these so-called development and relief programmes being very clear, their opposition to the programmes would reflect badly on them. However, the impact of these programmes might not be so favourable to the ruling parties as happened before, given the realization of corrupt politics by the people through the discourse on the current crisis and the resultant public uprising witnessed in 2022.

Brownie points

Meanwhile, the unending oft-repeated chest-thumping by the President and his party that it was only he who had dared to take over the country when it was facing an unprecedented economic crisis in 2022 and that he has been able to salvage the country economically are also aimed at earning brownie points ahead of the
Presidential election.
It was not a matter of courage or international connections as the President boasted in Parliament on Tuesday that prompted him to take over the premiership when Mahinda Rajapaksa was forced to resign as the Prime Minister on May 9, 2022. But it was the understanding that had been built then between President Gotabaya Rajapaksa and Wickremesinghe that emboldened the latter to grab the opportunity to gain what he failed to gain at the last General election and what he was not sure of gaining in the rest of his lifetime. On the other hand, Gotabaya Rajapaksa too preferred him over others, due to the dealings between Wickremesinghe and Rajapaksas since the beginning of the Yahapalana Government.
Sri Lanka had obtained IMF assistance 16 times before 2022 and for the 17th time President Gotabaya Rajapaksa had already initiated talks with the international lender when the Aragalaya broke out. With the experience in the previous IMF programmes, Wickremesinghe would have known that the country would be able to manage the crisis with the new IMF deal, until at least the next national elections. Thus, he took over.
It must be recalled that not only Wickremesinghe, but also Sajith Premadasa, though with a brief hesitation, did come forward to accept the premiership when Mahinda Rajapaksa humiliatingly bowed down to the countrywide agitations in May 2022, after the attack by his supporters on peaceful protesters in the GotaGoGama in the Galle Face Green. However, President Gotabaya Rajapaksa informed Premadasa that he was too late.

Open challenge

Similarly, NPP leader Anura Kumara Dissanayake in June 2022 threw down an open challenge to President Rajapaksa and Prime Minister Wickremesinghe to make way for his party which he said would run the government with the assistance of a 15-member Cabinet which would be appointed from the existing Parliament. It must also be recalled that Dullas Alahapperuma contested the Presidential election held in Parliament on July 20, 2022 amidst the crisis. Only the SLPP among the main political groups did not dare to take over, despite it having the majority power in Parliament.
The current economic respite where there are no queues for fuel and cooking gas is nothing but the direct result of the borrowings of foreign exchange from the IMF, International Financial Corporation (IFC) and the Asian Development Bank (ADB) after the IMF programme was put in place. Ironically, despite him having ruined the economy, it was Gotabaya Rajapaksa who brought the IMF into the scene this time in March 2022, two months before Wickremesinghe joined the government.
Rajapaksa also appointed overseas firms, Clifford Chance and Lazard as legal and financial advisors for the IMF programme in Sri Lanka. Besides, he appointed the Sri Lankan officials such as Central Bank Governor Dr. Nandalal Weerasinghe and Treasury Secretary Mahinda Siriwardena who are authorized to deal with IMF officials. In short, it was a machinery that was set up by Rajapaksa that is in
operation now.
However, we are not yet out of the woods. The IMF would only assist the country in managing the current financial crisis temporarily through its reforms and facilitation of obtaining foreign debts. It is up to the Sri Lankan leaders to find ways and means to create an export-oriented economy that would help reduce external borrowings and repay the existing and future loans, averting a future crisis. Nevertheless, only time will tell if the government’s propaganda machine can gradually take over the intelligence of the masses.

https://www.dailymirror.lk/opinion/Will-the-approaching-elections-be-free-and-fair/172-282337

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Sri Lanka’s democracy under siege

admin — Wed, 01 Nov 2023 07:57:01 +0000

Sri Lanka’s democracy under siege

lurking shadows of business-politics nexus

In a startling revelation, Sri Lanka’s businessman Dhammika Perera, who aspires to enter the presidential race, has made a striking statement that should raise alarm bells. According to a recent article by K. Sujeewa in “Anidda” newspaper, published on Sunday, October 29, Perera is willing to pay a significant price for votes, boldly stating, “If SLPP vote base ‘Pohottuwa’ rises to 30%, the remaining 20% will be bought over in cash.” This admission sheds light on a disturbing trend in the country’s politics and the potentially dangerous implications for democracy.

Business Tycoons Eyeing the Presidential Arena

Dhammika Perera is not alone in his quest for political power. Another prominent businessman, Dilith Jayaweera, is reportedly gearing up to join the presidential race. However, their affiliations and motives must be scrutinized. Both Perera and Jayaweera are widely seen as loyalists of the Rajapaksa clan, indicating an ongoing attempt by the Rajapaksas to consolidate their power base through unconventional means.
These business tycoons have amassed significant wealth, particularly since the Rajapaksas’ rise to power in 2005. As confirmed by the Auditor General, out of the 8 trillion project loans Sri Lanka received by 2015, only 2 trillion worth of assets can be accounted for. This alarming gap begs the question: what happened to the remaining 6 trillion, and how might it be connected to business figures? Entry of Perera and Jayaweera

Dhammika Perera found his way into Sri Lanka’s Parliament, albeit through unconventional means, using a legislative loophole. Dhammika Perera and Dilith Jayaweera’s role in previous elections and their financial investments in political campaigns cannot be ignored. The question arises: how much did these businessmen contribute to bringing political leaders like Gotabaya Rajapaksa to power?

Business Interests and Political Favours

The Rajapaksas have shown gratitude to businessmen like Dhammika Perera and Dilith Jayaweera by granting them various favours. For instance, Perera was allowed to run a casino business without impediments, and the recent discussion of a casino tax scandal raises concerns about their influence in government circles. Furthermore, Jayaweera’s pharmaceutical company was granted a lucrative monopoly during the COVID-19 pandemic to import antigen test kits, demonstrating the intertwining of business interests and political decisions.

The Call for Accountability

This collusion between businessmen and politicians raises questions about the integrity of Sri Lankan politics. It is imperative that these individuals are held accountable for their actions and that any ill-gotten assets are returned to the public. The need for transparency and justice is paramount.

The Commoditization of Votes

The blatant statement made by Dhammika Perera that he is willing to “buy 20% of the vote in cash” is not only a violation of the Election Law if an election had been declared but also a grave affront to the democratic process. Such remarks reduce the value of the vote to a mere commodity, casting doubt on the integrity of the election system and the politicians involved.

The Transformation of Sri Lankan Politics

The evolution of Sri Lankan politics is evident when comparing politicians from the post-independence era to those who emerged after the 1970s. The latter have relied heavily on financial backing from businessmen to fund their election campaigns. The consequences are far-reaching, as these politicians prioritize personal gain over the welfare of the nation.
Many individuals with questionable backgrounds and vested interests have found their way into Parliament, including those accused of murder and illicit activities. The intertwining of business interests and political power is a concerning trend that needs to be addressed, as it undermines the principles of democracy.

The Decision for Sri Lankan Voters

Sri Lankan voters now face a critical choice: whether to sell their votes to individuals like Dhammika Perera, who see their ballots as commodities or to reject the influence of corrupt businessmen and politicians who have profited at the expense of the nation.

The author is a former Senior Consultant, Sri Lanka Institute of Development Administration (SLIDA). He can be contacted at Shantha323@gmail.com

https://www.dailymirror.lk/opinion/Sri-Lankas-democracy-under-siege/172-270312

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Elections dates and election reforms

admin — Tue, 24 Oct 2023 06:51:18 +0000

Elections dates and election reforms:

Confusion confounded:

By Jehan Perera

President Wickremesinghe’s appointment of a commission of inquiry to investigate existing election laws and regulations and recommend changes has come without prior discussion or warning. It was a carefully kept secret until brought to the notice of the general public by the president’s appointment of the commission. The commission has been tasked with examining all existing election laws and regulations and making recommendations to suit current needs. According to its terms of reference the factors to which special consideration would be given include increased women and youth representation, introduction of electronic voting using modern technology instead of printed ballot papers and providing facilities for voting by Sri Lankans overseas. These are commendable. But it also includes unusual provisions for Sri Lanka such as to enable a person to contest two elections at two different levels of government and represent both councils at the same time if elected. And the timing gives cause for concern.

The changes proposed are major ones. With the commission given time till April to come up with its recommendations, it means elections are unlikely in the coming six month period. There would also be a time lag before which the changes can be given legal effect. The Commission’s recommendations would have to go before the cabinet of ministers. Upon their approval, it would have to be presented to parliament for its passage. There again, the contents are subject to challenge over their constitutionality before the supreme court ahead of the final passage of the recommendations. According to former Election Commissioner Mahinda Deshapriya, “It would be very difficult for the Commission to complete its task in just six months. There must be hours and hours, days and days of public discussion. This takes time. It could go on for even a year.” https://www.sundaytimes.lk/231022/columns/president-appoints-special-commission-to-drastically-change-election-laws-536547.html

The president’s sudden appointment of the Commission of Inquiry to investigate existing election laws and regulations and recommend changes becomes perplexing in the light on another surprise announcement by Minister of Justice Dr Wijayadasa Rajapaksha earlier last week that he had prepared a draft law on electoral reform that was all set to go. These reforms would see the election of 160 members to Parliament under the first-past-the-post system. The remaining 65 members in a 225-seat Parliament would be appointed from the National list and the District list depending on the number of voters under the proportional voting system.” Minister Wijayadasa’s proposals may fall within the remit of the newly appointed presidential commission. These two near simultaneous announcements would be recipes for confusion in the minds of the general public. When the time for elections falls constitutionally due, the electoral reforms and required electoral delimitation process could still be in process and constitute a volatile mix for political confrontation.

IMF SUPPORT

The speedy release of the IMF funds last week would be welcome news to the government as the need for both the money and the credibility that accompanies the IMF-led recovery process is of critical importance in an election period. It would help to impress the general population that the government continues to be in a position to access international resources on a large scale and better than its competitors in the political arena. It is indicative that the government has powerful backing within the international system of which the IMF is a part for which credit would accrue to the president. So far it seems that the government’s only concrete response to the IMF strictures and delay in granting the second tranche was to increase the price of electricity to add to its revenues in deference to the IMF requirement that the budget deficit should be made smaller. Government ministers have said this will enhance confidence in the economy and help to speed up the debt restructuring process with international creditors.

The IMF’s release of the second tranche of its loan to Sri Lanka came sooner than expected. It had informed the government that its revenue collection was inadequate to get the second installment of the IMF loan. The problem on the governance side seemed even more formidable. The IMF had recommended sixteen priority actions in its recently released Governance Diagnostic Assessment (GDA) on Sri Lanka to address systematic and severe governance weaknesses and deep-rooted corruption. The government’s performance has been less than impressive with regard to these prerequisites for development. The government’s track record of conforming to democratic norms and to the rule of law are not reassuring after it postponed the local government elections despite the Election Commission’s best efforts to hold them and failed to heed even a supreme court ruling that the money withheld from the Election Commission for the purposes of holding the elections should be released.

It is significant that the IMF release of the second tranche came shortly after the announcement by the Chinese government that it had reached preliminary agreement with Sri Lanka regarding debt relief that would be acceptable to other international creditors. It was also interesting that IMF personnel felt obliged to state that the agreement reached between the government and the Exim Bank of China did not have an impact on the IMF decision to reverse its original decision taken a little over a fortnight ago which was not to give Sri Lanka the second tranche for the time being. This would add to the stature of President Ranil Wickremesinghe as a worldly wise leader when it comes to negotiating with international power blocs. But within the country the challenge remains to win the trust of the general population. This requires winning the mandate of the people through free and fair elections in place of beefing up the security forces and security laws to suppress them.

POSTPONED ELECTIONS

Swift on the heels of receiving the IMF second tranche, President Wickremesinghe has moved to address the concern in sections of the population that the government is planning to stay on in power without conducting elections for the foreseeable future. This line of reasoning is being sincerely urged on society by some business leaders and economic planners, quite apart from political allies, as being necessary to consolidate the economic improvements they see as taking place. Although not the full story, the grim reality for the majority of people is that their living standards are deteriorating as evidenced by World Bank figures regarding the rise in poverty levels to 25 percent this year and 28 percent next year and World Health Organisation figures which show the rise in malnutrition. Public opinion polls which show the government getting less than 20 percent of the popular support consistently show the writing on the wall.

Different statements made over the last few weeks have given rise to the speculation that the government intends to postpone the forthcoming presidential and general elections or possibly not have them at all. Speaking from the heart as if it were UNP Chairman and Member of Parliament Wajira Abeywardana recently said that no one should contest the next presidential election for the sake of the nation. “The incumbent President can continue in office in such a scenario and see that the country moves forward. Also anyone who is contesting can submit an economic programme to the budget office which is instituted in the parliamentary complex. Budget office can go through the proposals and then state whether any proposal is realistic or not. No candidate can present to people any programme at any election when such a programme is rejected by the budget office. Besides it is also clear that there is no alternative in a situation where it is officially declared that Sri Lanka is bankrupt. In such a situation one could wonder whether it is wise to spend funds for a presidential election.” https://www.dailymirror.lk/print/front-page/No-one-should-contest-the-Presidential-election-for-the-sake-of-the-nation/238-269481

Addressing the UNP’s national convention as its party leader President Wickremesinghe sounded confident over his hold on power in the government when he reiterated the timeline for upcoming elections in line with the constitutional provisions. He said that the presidential election is scheduled for the following year, followed by parliamentary elections. However, his declaration that the local government elections are expected to take place only in the first half of 2025 needs to be reconsidered as those elections should have been held in March and not two years into the future. In addition, there are other statements regarding the abolition of the presidency, referendums and electoral reform that could singly, severally and jointly have the impact of negating elections. Arbitrary decisions with regard to elections should not be taken as those in power need to realise their power is temporary and they do not have a right to deny the people their right to vote and participate in the governance of the country for whatever reason.

https://island.lk/elections-dates-and-election-reforms/

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IMF facility only the beginning of a tough journey: Dr. Roshan Perera

admin — Tue, 18 Apr 2023 06:35:54 +0000

IMF facility only the beginning of a tough journey: Dr. Roshan Perera

Govt. needs to undertake several structural reforms within the year
Sri Lanka must also focus on structural reforms to unlock growth
Limited capacity and political space may affect speed of reforms
SL governments in particular have very short-term policy orientation
CB independence strengthens House oversight over public finances
With independence comes need for greater transparency, accountability
More independent central banks deliver and maintain lower inflation

The securing of the International Monetary Fund (IMF) facility is only the beginning of a long and tough journey to moving the country towards a more sustainable growth path, asserted public policy specialist and Advocata Institute Senior Research Fellow Dr. Roshan Perera, in an interview with The Sunday Morning.

“The focus of the IMF programme in the near term is on macroeconomic stability and debt sustainability. There are five main pillars of this programme and monitoring the progress of these objectives is based on strict quantitative targets. Apart from this, there are several structural reforms the Government needs to undertake within the year to ensure the programme stays on course,” she pointed out.

Furthermore, this programme, unlike the last 16 programmes, entails a debt restructuring exercise to ensure Sri Lanka’s debt is brought to a sustainable level, Dr. Perera noted, adding that this was a more onerous task as it required the cooperation of many stakeholders – both domestic and foreign.

“Achieving all this requires the Government to work simultaneously on multiple fronts. Limited capacity and political space may affect the speed at which reforms are undertaken. But the bottom line is unless these macroeconomic and structural reforms are carried out, Sri Lanka will likely be going back to the IMF for the 18th time,” she warned.

Commenting on the proposed Central Bank Act, Dr. Perera, who is a former Director of the Central Bank of Sri Lanka (CBSL), said: “I think we need to take a step back and understand the rationale for Central Bank independence. Unless the macroeconomic and structural reforms are pushed through, Sri Lanka will find itself in a similar situation in a few years.”

Following are excerpts of the interview:

Now that the IMF facility has been secured, what are the next steps the Government should take to ensure Sri Lanka’s economic recovery?

This is only the beginning of a long and tough journey to moving the country towards a more sustainable growth path.

The focus of the IMF programme in the near term is on macroeconomic stability and debt sustainability. There are five main pillars of this programme: advancing fiscal consolidation and strengthening institutions, restoring price stability and rebuilding external reserves buffers, public debt sustainability, ensuring financial stability, and reducing corruption vulnerabilities.

Monitoring the progress of these objectives is based on strict quantitative targets (performance criteria) on the Government’s primary fiscal balance, credit to the Government, and the net official international reserves, as well as indicative targets on Government tax revenue, social spending, costing of non-commercial obligations for fuel and electricity, and Treasury guarantees.

Apart from this, there are several structural reforms the Government needs to undertake within the year to ensure the programme stays on course.

To be completed by Q2 2023:

Parliamentary approval of welfare benefit payment scheme (enhanced social safety nets)
Cabinet approval of a comprehensive strategy to restructure the balance sheets of key State-Owned Enterprises (SOEs)
Parliamentary approval of new anti-corruption legislation
Parliamentary approval of the new Central Banking Act

To be completed by Q3 and Q4 2023:

Revamping the VAT system by removing almost all product specific VAT exemptions
Submitting the Public Financial Management (PFM) Law to Parliament
Parliamentary approval for the full revision of the Banking Act

But in addition, this programme (unlike the last 16 programmes) entails a debt restructuring exercise to ensure Sri Lanka’s debt is brought to a sustainable level. This is a more onerous task as it requires the cooperation of many stakeholders – both domestic and foreign.

While the IMF programme at this point focuses on macroeconomic stabilisation and debt sustainability, the country needs to focus in parallel on undertaking structural reforms to unlock growth. This includes improving the business environment and boosting productivity and fostering competition by removing bureaucratic barriers, trade reform, labour market reform, and land reform, among other structural reforms.

Achieving all this requires the Government to work simultaneously on multiple fronts. Limited capacity and political space may affect the speed at which reforms are undertaken. But the bottom line is unless these macroeconomic and structural reforms are carried out, Sri Lanka will likely be going back to the IMF for the 18th time.

Is the Government’s approach to the debt restructuring plan feasible in terms of meeting the April deadline set by the IMF?

The objectives of debt restructuring are to put Sri Lanka’s debt on a sustainable path and to restore market access for the country. The IMF programme hopes to achieve these overall objectives by:

Reducing public debt below 95% of GDP by 2032 (public debt was 128.1% at end 2022)
Reducing the Government’s annual Gross Financing Needs (GFN) to an average of 13% between 2027-2032 (the GFN of the Government was 34.5% in 2022)
Reducing the Government’s annual debt servicing in foreign currency to a maximum of 4.5% of GDP every year in 2027-’32 (the debt servicing in foreign currency was 9.6% of GDP in 2022).

In order to achieve these targets, the Government needs to engage both domestic and external creditors to modify the terms of the existing debt contracts in terms of coupon adjustments, maturity extensions, and haircuts on the principal.

The Government is expected to announce the coverage and parameters of both the external and domestic debt operations by end April 2023 and complete the Domestic Debt Optimisation (DDO) exercise by May 2023 and the external debt restructuring by September 2023.

This appears to be an ambitious timeline given the experience of other countries that have undertaken a similar exercise. For instance, Ghana took around two months to come to an agreement with 85% of its domestic creditors. This excluded pension funds.

In the case of banks, although it was a ‘voluntary’ exercise, they were ‘incentivised’ to participate in the Domestic Debt Exchange (DDE) by increasing the risk weight to 100% on old bonds as opposed to 0% on the newly-issued bonds and excluding non-participating banks from the Ghana Financial Stability Fund, which was set up to provide liquidity support.

In the case of Sri Lanka, the authorities announced that in the case of Treasury bills, of the Rs. 4.1 trillion outstanding, only Rs. 2.6 trillion ($ 7.1 billion) held by the Central Bank would be restructured. This accounts for more than 50% of the assets of the Central Bank, which will have implications for the liquidity and solvency of the Central Bank.

Of the total outstanding Treasury bonds of Rs. 8.7 trillion ($ 24 billion), superannuation funds hold around 43%. If they are excluded from DDO, the burden of restructuring will fall on banks that hold around 44.5% (Rs. 3.9 trillion) of the outstanding stock of Treasury bonds.

This will have implications for financial stability given that banks have already been affected by multiple shocks and the continuing contraction of the economy. This may require regulatory forbearance from the regulator on capital requirements, but is also an opportunity for consolidation within the financial sector.

Hence, the extent of the domestic debt restructuring would depend on the extent of recapitalisation it would entail as well as the impact on financial stability [i]. Who bears a greater share of the restructuring cost will depend on the economic and financial costs of the different options.

Will the proposed Central Bank Act yield the expected results? Shouldn’t the focus be on preventing political interference over ensuring independence?

I think we need to take a step back and understand the rationale for Central Bank independence.

At the beginning I said that unless macroeconomic and structural reforms are pushed through, Sri Lanka will find itself in a similar situation in a few years. Ensuring these reforms are undertaken requires political commitment but also an independent bureaucracy that is able to make the right decisions and carry them out. This requires a stronger institutional framework for policymaking.

Governments in general and in Sri Lanka in particular have very short-term policy orientation – they operate from one election cycle to the next. These policies may make the public happy in the short run, but they fail to deliver the long-term goals for the country. Adopting a rule-based policy framework as opposed to a discretionary policy framework is able to overcome this time inconsistency problem of policymaking.

In the case of a central bank, independence insulates monetary policy from short-term political considerations, which otherwise leads to boom-bust cycles and time-inconsistent policies.

Central Bank independence refers to instrument independence, not goal independence. That is, while the goal of monetary policy (inflation target) is set together with the Government, the conduct of monetary policy should be free from Government control. In other words, the Central Bank should be able to use its instrument (interest rate) to achieve the goal that has been set by the Government (inflation target).

However, since the Central Bank of Sri Lanka also undertakes agency functions for the Government such as debt management and managing the Employees’ Provident Fund (the largest provident fund in the country), there are likely to be conflicts with the primary objective of domestic price stability. Hence these functions need to be taken out of the CBSL if it is to focus on its primary mandate.

One of the main obstacles to the Central Bank achieving its primary objective has been the monetisation of the Government’s deficit through the purchases of Government securities. In the proposed Central Bank Act, purchase of Government securities from the primary market is prohibited (Section 86). This is an essential element for the independence of the CBSL.

Monetising the deficit allows governments free rein over the printing press without having to go to Parliament for approval. Giving the Central Bank independence in fact strengthens parliamentary oversight over public finances rather than diminishing it.

However, with independence comes the need for greater transparency and accountability. “…If you’re independent, it’s vital that people can understand what you are doing. If you are independent and you tell the general public ‘It’s none of your business,’ independence will be taken away from you, sooner or later” – former Governor of Swedish Riksbank Stefan Ingves.

Greater independence requires greater parliamentary oversight. Many countries require the governor of the central bank to explain to parliament or a parliamentary committee the rationale behind every monetary policy decision. It also entails better communication with the general public on the policies undertaken.

One of the main sources of independence is through the appointment of the governor and the members of the boards. Excluding the secretary of Finance from the Monetary Policy Board was to ensure monetary policy decisions were made independent of the Government. However, in the proposed bill, the minister in charge of Finance is responsible for a majority of appointments to the boards. This could dilute the independence of the institution.

The consequences of not achieving the set targets are not specified in the proposed bill other than requiring the Central Bank to explain to the minister in charge of Finance, and in some cases Parliament, the reasons for deviations from the target.

This was a major failure of the Fiscal Management Responsibility Act. Despite continuous breaches of fiscal targets, no one was held responsible because there was no accountability mechanism built into the act.

Finally, the CBSL cannot achieve its objectives and overall macroeconomic stability will not be possible without fiscal discipline. Sri Lanka enacted a Fiscal Management Responsibility Act No.3 of 2003 (amended in 2013, 2016, 2021) with several fiscal rules, but enforcement was weak. Fiscal rules need to be integrated into government budgets and medium-term fiscal frameworks [ii]. Some countries have included correction mechanisms which specify a path to return to the fiscal rule following a deviation. It also requires better oversight by Parliament.

The proposed Budget Office in Parliament can play the role of an independent nonpartisan entity that can provide fiscal oversight by assessing fiscal plans, evaluating budget forecasts, costing Government budget proposals, and monitoring adherence to fiscal rules. But this entity must be given operational independence, have the technical capacity, and have access to timely information to carry out an independent analysis.

For a rules-based framework to work, it requires political commitment. But the overall benefits to the citizens of the country in terms of improving overall welfare are considerable.

There is empirical evidence to support that more independent central banks deliver and maintain lower inflation compared to less independent central banks. Countries with less independent central banks tend to run higher budget deficits since monetary financing is easier politically compared to raising taxes and hence end up with higher public debt and economic crises.

Footnotes

[i] Grigorian, David A., 2023. ‘Restructuring Domestic Sovereign Debt: An Analytical Illustration,’ IMF Working Paper 23/24, Washington, DC.

[ii] Study in 2021, ‘Fiscal Rules and Fiscal Councils Recent Trends and Performance During the Covid-19 Pandemic’ prepared by Hamid R. Davoodi, Alexandra Fotiou, Paul Elger, Daniel Garcia-Macia, Xuehui Han, Andresa Lagerborg, W. Raphael Lam, and Paulo Medas (IMF Working Paper WP/22/11)

https://lankafocus.org/wp-admin/post.php?post=1887&action=elementor

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Peddling the Government’s Narratives

admin — Sat, 15 Apr 2023 07:05:09 +0000

Peddling the Government’s Narratives

As of now, Ranil Wickremesinghe has three points in his favour. First, there is the IMF deal, which his government is more or less using as a shield against criticism of the many austerity measures being enforced in its name. Second, there is the SJB-UNP nexus or the many not so subtle commonalities that have linked the main opposition with the president’s party. Third, there is the SJB-JVP-NPP divide that has only fragmented the opposition to the government’s benefit.

Contrary to what the neoliberal commentariat may believe, the IMF bailout is not a magic wand. Such bailouts come with strings and conditionalities attached; any government availing itself of these arrangements is bound to comply with those conditions. But such conditions, if complied with in full, are bound to provoke popular resistance be it from the middle classes or trade unions. This is the typical trajectory of IMF austerity. Once enforced in full, it tends to provoke unrest and instability and brings about an authoritarian backlash from the state. The state, for its part, finds itself in a conundrum. If it does not adhere to the conditions in these bailouts, the IMF can withdraw but if those conditions are followed and implemented in toto, the public can revolt against it.

The IMF bailout has brought the country’s main opposition, paradoxically, to a common platform with the government. The SJB’s economic establishment has already criticised political parties opposed to the IMF arrangement. Their question is not whether the bailout is in the public’s interest but whether there is an alternative to dealing with the IMF. And it’s not just at the level of economic theorising; even the government’s handling of trade unions has elicited their approval. To give the most glaring example, the government suspended 20 workers, including several attached to the Ceylon Petroleum Corporation, for participating in a strike. Over the next few days, SJB MPs S. M. Marikkar and Hirunika Premachandra publicly criticised not the government but the unions, advocating the regime’s proposals to dismantle and “liberate” the energy sector.

This is rather fascinating, if not perturbing, because both Marikkar and Premachandra have, through the media, promoted and depicted themselves as populists, indeed as the epitome of the vox populi. Premachandra, in particular, was at the forefront of last year’s protests against Ranil Wickremesinghe. Yet like Damitha Abeyrathne, once a heroine of the aragalaya and a self-avowed political neutralist, these politicians, essentially bourgeois if not petty bourgeois, have given way to their class interests. It is significant that the SJB’s leader, Sajith Premadasa, has been braver than any of his colleagues in criticising the IMF deal although in doing so he has earned the ire of Colombo’s neoliberal establishment. In fact, Premadasa’s remarks about the IMF, taken together with Premachandra’s, Marikkar’s and the SJB economic troika’s public statements, have only betrayed the rifts and divisions in the country’s main opposition – hardly a point in its favour.

What is even more intriguing about these developments is that, as far as the recent spate of strikes go, SJB-allied trade unions have played a respectably leading role. Among the leaders of the recent CPC strike was Ananda Palitha, formerly with the UNP but today with the SJB. When Palitha attacks the government and threatens strike action and when the economic brains trust of the party his union is linked to excoriates unions, one cannot be faulted for questioning the SJB’s stance on these workers’ struggles. The paradox here is not just between two ideological flanks in the party but, more disturbingly, between the party and its own advocacy groups. In that sense, Premachandra’s and Marikkar’s remarks don’t just spoil the SJB’s working class prospects but they also reinforce the new left’s critique of the party as just another bourgeois outfit.

For its part the government dealt its cards stealthily during the recent strike. It did not break the strike at once nor did it dismiss the strikers. Kanchana Wijesekera merely instructed the chairmen of the CPC and CPSTL to terminate their employment if they saw it fit. On the other hand, the government showed clearly that it was not above using the army to disrupt the strike. At the same time, even after breaking the strike, Wijesekera did not fire the workers but he ordered them to be sent on compulsory leave, resorting to an age old tactic of publishing their names and smearing them in the media. It’s a little hard to say whether the government got what it wanted but it seems as though, for the moment, it has. It has managed to convince the public of the need to privatise SOEs and the need to crack down on trade unions, which it depicts as an obstacle to ongoing reforms.

So deftly did the government handle this, in fact, that not a single news outlet saw it fit to assess certain companies that had expressed an interest in entering Sri Lanka’s fuel sector. While an investigation is yet to be carried out, certain media did, later on, note that these companies seemed dubious, some of them even lacking an online presence. Yet by then the queues and the shortages that had ensued because of the strike – queues which no doubt evoked memories of last year’s crisis – had pushed motorists to criticise unions rather than the government. This was the picture that the media painted earlier in the week; the motorists they talked to all seemed to favour privatisation and they blamed unions for sabotaging “necessary” reforms. Indeed, it goes without saying that media organisations that less than a year ago came out in support of activist and civil society groups are now peddling the state’s narrative on these groups and on the reforms.

Of course, this was only to be expected. The media – at least the traditional media – has always gone after exposure. It got this exposure last year from the aragalaya and to that end it spotlighted the protesters. Ranil Wickremesinghe’s appointment as prime minister and president pushed the media to abdicate from this role; from advocating the protesters’ cause, it became a mouthpiece for neoliberal reform, flagging the IMF deal as a need of the hour. In doing so it showed that it was not above marginalising the protesters it had promoted a few months back. Barring a few critical-progressive voices, the media eventually became an outlet for Colombo’s neoliberal commentariat whose function now seems to be that of an ideological ballast for the state. Not that this should surprise anyone. The media had always been a double-edged sword; it could stand for dissenting voices, as it initially did, but it could also peddle the regime’s diatribes against those voices as it later did.

There is certainly a critique to be made of trade unions, particularly the stronger, more powerful ones. The economic right, for years, has charged these unions of corruption and condemned them for holding the economy to ransom and for promoting their sectional interests over those of the country. The economic right has its own motives in perpetuating such narratives. But the unions themselves have done little to combat them. To give one example, when the CEB threatened to switch off the grid in 2017 over a pay anomaly, right wing news websites gleefully published the salary slips of CEB workers, pointing out that an average employee at a state institution was paid much more than his or her counterpart in the private sector. In effect, public sector salaries were stigmatised and public sector employees were excoriated for making demands supposedly in excess of their earnings.

Considering these developments, the left has to make an urgent stand. It cannot sit by idly and dabble or indulge in ideological polemics. The truth is that new left today has fallen far short of its potential, not merely because it lacks the proverbial fire in the belly, but more worryingly because it has let sectarian clashes dominate its politics. Presently, the JVP-NPP insists on depicting itself as a purist party while appealing to the middle classes; it hence excoriates the IMF even as, several months ago, its own leader accepted the absence of an alternative to the IMF and instead contended that an arrangement with the organisation requires an “exemplary” political group to implement it properly. The FSP, a more radical outfit, is hamstrung by its own contradictions although President Wickremesinghe himself has hinted that it represents a threat to him. If the new left is interested in pursuing its goals, it needs to up its game. The government has stolen a march on them. It is up to them to regain what they have lost to the enemy.

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