CBSL Chief says Indian tourists to Sri Lanka can pay in INR
Central Bank Governor Dr. Nandalal Weerasinghe yesterday said that Indian tourists to Sri Lanka pay in their currency Indian Rupee (INR).
He reiterated that making INR a designated currency by the Central Bank of Sri Lanka enables not only trade settlement between the two countries in INR but also Indian tourists coming to Sri Lanka can use INR for transactions.
Dr. Weerasinghe also expressed support for the linking digital payment interfaces between the two countries during his keynote at the webinar on ‘Economic Scenario of Sri Lanka: Current Status and Way Ahead’, organised by the Federation of Indian Chambers of Commerce and Industry (FICCI).
During the first 23 days of April India topped the tourist inflow reflecting 17% or 13,839 whilst year to date Indians accounted for second highest 14% or 60,271 arrivals.
Remarks by the CBSL Governor come a day after Prime Minister Dinesh Gunawardena launched a Special Cover commemorating Sita Temple (Seetha Eliya) in Nuwara Eliya. The Temple is believed to mark the place of Ashok Vatika in the epic Ramayana and is a great hit with Indian tourists, as part of Ramayana circle which the Sri Lankan Government is seeking to promote. Tourists from India traditionally constitute the largest segment of international tourists coming to Sri Lanka.
Delivering a special address the Indian High Commissioner Gopal Baglay highlighted the areas of prospective economic cooperation between India and Sri Lanka. He particularly focused on connectivity, IT, renewable energy and tourism.
https://www.ft.lk/front-page/CBSL-Chief-says-Indian-tourists-to-Sri-Lanka-can-pay-in-INR/44-747699
EU and FAO launch 4 m Euro initiative to improve efficiency, sustainability of paddy farming
- Program targets 71,000 smallholder paddy farmers and 1,200 paddy seed farmers across 7 districts
The Food and Agriculture Organisation of the United Nations (FAO) together with the European Union (EU) on Saturday launched a new program to strengthen food security in Sri Lanka by boosting the productivity and sustainability of the paddy cultivation sector.
The 4 million Euro (approximately Rs. 1.5 billion) initiative funded by the EU was initiated at an event held at the Bataatha Agro Technology Park in Hambanthota.
Implemented by FAO with the support of the Ministry of Agriculture and the Mahaweli Authority, the program targets 71,000 smallholder paddy farmers and 1,200 paddy seed farmers across seven districts including Polonnaruwa, Badulla, Ampara, Matale, Puttalam, Kurunegala and Hambantota districts who were severely impacted by the recent economic crisis.
Speaking at the event, which saw the official start of the farmer field schools EU Ambassador to Sri Lanka Denis Chaibi said: “With this new action, we want to help farmers not only to grow more, but most importantly to grow better so that they can increase their production and incomes, but also protect the environment around them. We hope that together with FAO and the Government of Sri Lanka we can gradually promote a transition towards greener and climate-smart agriculture. Transition that produces sufficient amount of food, while protecting the planet and its people.”
The recipient farmers will receive material and technical support to transition from traditional cultivation methods into climate-smart, modern farming techniques. The eligible paddy farmers cultivating up to 0.5 ha of land will receive 50 kg urea fertiliser and necessary tools to enhance efficiency of fertiliser use. 3,820 tonnes of urea fertiliser procured by the program were already handed over to the Ministry of Agriculture to be distributed among selected smallholder paddy farmers and paddy seed farmers.
Paddy seed farmers supported through the program will also receive locally produced, high quality paddy seeds alongside material support such as parachute trays to improve efficiency and profitability of cultivation methods. Furthermore, all recipients will be enrolled in farmer-field schools to improve knowledge sharing on modern techniques such as the Integrated Plant Nutrient Management (IPNM) strategy to boost efficiency and reduce dependency on the use of chemical fertiliser.
Agriculture Minister Mahinda Amaraweera expressed his appreciation to the FAO and the EU for the implementation of a holistic program aimed at improving the sustainability of Sri Lanka’s paddy sector. “Our paddy farmers underwent significant challenges over the past few years. This support we received from FAO and the EU is a testament to their perseverance during the tough times, for which we are thankful. These inputs and knowledge sharing will no doubt elevate the quality of rice production and the livelihoods of Sri Lankan paddy farmers.”
FAO Representative in Sri Lanka Vimlendra Sharan said: “This program marks an important milestone in FAO’s work in Sri Lanka over the past year – the shift back into development from the emergency response. We are grateful for the support we have received from the EU to implement this program, which aims to address some of the longstanding concerns in the local paddy sector, to reach better production, leading to better nutrition, a better environment and improve food security for all Sri Lankans.”
EU and FAO said they will continue to work closely with the Government of Sri Lanka and key partners to support the recovery of the agriculture sector while building resilience and sustainability into the sector to increase yield and profit for smallholder farmers as the sector recovers.
Japan, UNDP launch fresh programs to boost socio-economic recovery
- $ 3.8 m initiative via home-based agriculture and energy security interventions
- 58,000 women and youth will directly benefit from these projects, while indirectly impacting over 132,000 vulnerable community members from the North-Central, North-Western and Eastern provinces
The Government of Japan and the United Nations Development Program (UNDP) yesterday launched a new initiative to strengthen socio-economic recovery via home-based agriculture and energy security measures.
The $ 3.8 million (Rs. 1.17 billion) initiative supports improvement of women’s economic wellbeing for smallholder farmer families in Sri Lanka. It was launched in the presence of Prime Minister Dinesh Gunawardena, Japanese Ambassador Mizukoshi Hideaki, UNDP Resident Representative Azusa Kubota, JICA Chief Representative Tetsuya Yamada, Agriculture Minister Mahinda Amaraweera, Power and Energy Minister Kanchana Wijesekera, senior government officials and development partners.
The ongoing socio-economic crisis has had serious impacts on the agricultural sector in Sri Lanka. The rising energy costs and evolving climate change impacts have further exacerbated due to the situation. The initiative launched yesterday aims at addressing these issues.
It will support vulnerable smallholder farming families in the dry zone districts, namely North-Central, North-Western and Eastern provinces, with a focus on women’s economic empowerment and adoption of green agricultural technologies.
Funded by the Japanese Supplementary Budget (JSB) and working together with the Government of Sri Lanka and relevant stakeholders, the intervention aims to achieve its objectives through two projects; the first focusing on diversifying livelihoods and introducing entrepreneurship programs, targeting women-led MSMEs. The second aims to strengthen energy and food security, through the revival of the rural agricultural economy by providing access to innovative markets, value and supply chain improvements along with the adoption of modern, green agricultural technologies which will increase productivity and efficiency.
A total of 58,000 women and youth will directly benefit from these projects, while indirectly impacting over 132,000 vulnerable community members from the North-Central, North-Western and Eastern provinces of Sri Lanka.
Prime Minister Gunawardena said: “Government of Sri Lanka appreciates the continuous support extended by the Government of Japan and the United Nations Development Program towards the country’s efforts to recover from the socioeconomic crisis. We believe this is a significant step towards creating a food and energy secure Sri Lanka, both vital sectors to the fabric of the country’s economy.”
Highlighting Japan’s commitment to the people of Sri Lanka in crisis recovery efforts, Ambassador Mizukoshi said: “Japan has been working together with the Government of Sri Lanka and relevant UN agencies for economic and social empowerment of women in Sri Lanka, including the formulation of National Action Plan for Women, Peace and Security. These new projects will provide practical means to uplift the lives of vulnerable communities. Especially, we recognise the special needs of women-headed households in conflict-affected areas. It is a great opportunity to create positive synergy with UNDP’s expertise and JICA’s technical assistance for supporting livelihood and vulnerable communities.”
UNDP Resident Representative Kubota said: “These are times when multiple-solutions through multiple-partnerships are required because we are faced with compounding and complex challenges. I am grateful for the commitments demonstrated by a wide range of actors present today. We must join hands to address the needs of the most vulnerable and affected segments of the society – particularly women-headed households. And investing in them will have visible, long-term benefits for the families and communities.”
Sri Lanka expects to tap tourism niche, trade with India ferry service
ECONOMYNEXT – Sri Lanka is expecting widen tourism and trade links with the start of a ferry service between the two countries from April 29, which is cheaper than air travel and has a higher baggage allowance officials said.
Sri Lanka’s Ports Ministry has started to build a passenger terminal in Kankasanthurai (KKS) port in the northern Jaffna peninsula with the help of the Sri Lanka Navy at a cost of 144 million rupees to support the ferry service.
The ferry service will operate between KKS and Karaikal Port in Pondicherry, India.
“There are private ferry owners who operate the services, and at the moment, there only three ferry operators,” Viraj Abeysinghe, the Media Secretary of the Ministry of Ports, Shipping, and Aviation, told Economy Next.
“However, we, as a ministry, provide infrastructure facilities only. A ferry will carry 150 passengers at a time and will take around a 4-hour journey from Karaikal Port to KKS Port.”
The charges will start from 50 US dollars per passenger for a one-way trip, which is roughly around 16,075 rupees, and a baggage allowance of 100 kilos will be permitted.
The charges will start from 50 US dollars per passenger for a one-way trip, which is roughly around 16,075 rupees, and a baggage allowance of 100 kilos will be permitted.
“The ferry service will cater to a different sector of the market because it is going to be cheaper than traveling by air,” Priyantha Fernando, Chairman of Sri Lanka Tourism Development Authority, told Economy Next.
“So we are opening up to a different segment of the market, and it will definitely make a positive contribution.
“This will definitely help tourism, and it will also help commercial activity because the baggage allowance is much greater, and there will be trade taking place between India and Sri Lanka.”
Entrepreneurs from Sri Lanka and India are encouraged to join this opportunity.
The service will also open up the way for export and imports for cheaper prices, which can indirectly benefit the country, he said. (Colombo/Apr21/2023)
Sri Lanka expects to tap tourism niche, trade with India ferry service
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
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.
India-Lanka ferry service is still on rocky seas
The chances of having a ferry service between India and Sri Lanka by the end of this year seem likely provided both India and Sri Lanka are clear about the details
Replying to the demands for grants for the departments concerned in the Tamil Nadu Assembly early this month, Highways and Minor Ports Minister E V Velusaid that efforts are underway to launch a short ferry service between Rameswaram and Sri Lanka in a few months’ time. The idea is to link Rameswaram and Talaimannar first, covering a distance of 50 kilometres. This will be followed by another ferry service, linking Rameswaram and Kankesanthurai (KKS),a distance of 100 km.
Accordingly, the Tamil Nadu Maritime Board has sent a detailed project report to the Union government for approval, the minister said.“The Rameswaram minor port does not have facilities. The State has been in touch with the Union Government, which is keen on starting the project and is ready to fund the development of the port, costing INR10-15 crores, to launch the ferry service,”news reports have since quoted Tamil Nadu officials. Accordingly, the Ministry of External Affairs (MEA) and the Union Ministry of Shipping and Waterways have agreed to the project, the report claimed. “The ferry can go at a speed of 30 knots between Rameswaram and Talaimannar,” the Times of India report said. “With a 150-passenger seating capacity, the travel time will be one and two hours to Talaimannar and Kankesanthurai, respectively. The sheltered waters of Palk Bay would aid the project”, the report added.
The Union and State governments in India, and also Sri Lanka are on the same page as regards launching ferry service,” an official told the newspaper.
This followed a recent video conference involving officials of the Sri Lankan High Commission in New Delhi, the MEA and India’s Ministry of Port, Shipping and Waterways, and also the Tamil Nadu Government, according to the news report. The Union Government will accordingly float ‘Expression of Interest’ to identify operators to operate from Rameswaram, it added. “The state government is interested in readying the entire project in six months. The construction of the Rameswaram jetty is the only bottle-neck. The Union and State governments in India, and also Sri Lanka are on the same page as regards launching ferry service,” an official told the newspaper.
Inherent contradiction
However, an inherent contradiction is discernible in the official positions of the Tamil Nadu government and that of its Sri Lankan counterpart. It relates not only to the chosen route but also the timing of the ferrylaunch.
According to NimalSiripala de Silva, Sri Lanka’s Minister of Shipping, Ports and Aviation, the ferry service would be launched not on the routes mentioned by the Tamil Nadu minister, but on the Kankesanthurai-Karaikal route, the latter being an enclave of the Union Territory of Puducherry. It will be launched as early as 29 April this year, a Sri Lankan Shipping Ministry statement said further.
As discussed between the Minister De Silva and India’s MEA on 26 March, two immigration and emigration offices, one each in Kankesanthurai and Karaikal, would be set up for this purpose, and preliminary measures have already commenced in this regard. The immigration office at the KKS jetty and the port are fully operational and ready to start, Minister De Silva said. The minister also clarified that neither government would provide the ferry to operate the service. Instead, India’s MEA will float tenders for operators with boats having a carrying-capacity of 150 passengers to operate the service. Considering that traders from Tamil Nadu and Sri Lanka’s North and East are the targeted segment, the baggage allowance, put at 100 kgper passenger, will be an attraction. The one-way ticket charge is also proposed at an affordable US$ 50 per passenger, though it would be for the selected ferry operator to fix the ticket-cost.
Restoring ‘Boat Mail’
Earlier, at a meeting with MEA’s Joint Secretary (IOR) Puneet Agrawalin Colombo in December last year, Minister De Silva requested early commencement of the ferry service.At the meeting, Sri Lanka sought increasing the quantum of India’s concessional loan for developing the Kankesanthurai Port, attributing the higher cost to fluctuation in the price of construction material. It was over and above the US$ 45.27-million Indian assistance granted in 2018 for upgrading the KKS Harbour into a commercial port and for strengthening the country’s efforts to become a regional maritime hub.Public sector Dredging Corporation of India has already deepened the KKS Harbour. India has also funded the dredging of the approach channel, with the larger cargo ferries in the future in mind.
The one-way ticket charge is also proposed at an affordable US$ 50 per passenger, though it would be for the selected ferry operator to fix the ticket-cost.
At the time, the choice of destination on the Indian side had shifted from Karaikal to Puducherry, after it was found that the private port at the former site was facing bankruptcy proceedings. Ferry operators also reportedly indicated that the longer trip to Puducherry could cause sea-sickness among passengers unused to sea-travel. Hence, the decision was to run the ferry service reportedly between Kankesanthurai and Nagapattinam in Tamil Nadu, not far away from Karaikal.
However, the bankruptcy proceedings seems to be in the concluding phase, with one private operator, Adani Group, likely to take over from another, Marg, in the none-too-distant future. This could then entail the possibility of the Sri Lankan minister’s announcement coming true, though not by the month-end. Whichever the Indian destination that New Delhi finalises, as long as the clearances and works are completed in time, the chances are bright for the ferry service commencing operations at the end of the north-east monsoon cyclone season by the year-end.
The Sri Lankan statement of December also quoted Indian official Agarwal as underlining the appropriateness of reviving the long-forgotten passenger ferry service between Dhanushkodi in Sri Lanka and the temple-town of Rameswaram in Tamil Nadu. Minister De Silva agreed to the proposal and also emphasised that the Sri Lanka railway service can also be connected with the passenger ferry service, and thus revive the pre-Independence, Colombo-Chennai train travel by the ‘Boat Mail’, with an intervening ferry trip from Danushkodi / Rameswaram to Talaimannar in Sri Lanka.
The bankruptcy proceedings seems to be in the concluding phase, with one private operator, Adani Group, likely to take over from another, Marg, in the none-too-distant future.
The ‘Boat Mail’was diverted from original Danushkodi point to Rameswaram after a train full of passengers and also the railway station and the pier were all washed away in a cyclone in 1964. The Rameswaram-Talaimannar service also went on long hibernation in 1984, after sea-based Tamil militancy of the LTTE’s ‘Sea Tigers’ made those waters unsafe.
Trade and tourism
According to the recent Times of India report, there are also plans to include partial cargo service in the next phase of the Rameswaram-centred ferry service. Subsequently, cargo services will be allowed from Rameswaram to Sri Lanka with 300-500 tonne capacity. “The State Government has already sent a detailed proposal worth INR600 crore to have a bigger facility to the Union ministry of shipping and the discussion is going on,” the official said.
Sri Lanka is steadfast with Kankesanthurai as their entry port for the ferry service to Tamil Nadu. The Indian port-of-call is yet to be finalised by the Government of India and Tamil Nadu through consultations. Going by the Tamil Nadu minister’s statement in the State Assembly, some basic issues need to be sorted out and for good—and early—so that whatever the route finalised in consultations with Sri Lanka, it should become operational as early as possible.
Independent of all this, there is a huge scope for improving trade and tourism between the two countries, including religious tourism. As is known, ferry service works out cheaper than air travel, and there is also a limited adventure in sea-travel, especially with short cruise trips.Budget pilgrims from Tamil Nadu and the rest of Indiacan visit prominent Hindu places of worship, namely, the KeerimalaiNaguleswaram temple, and the Kathirgamam or Kataragama temple down South, which is of religious significance to both Hindus and Buddhists. That is also when budget tourist operators enter the scene.
Going by the Tamil Nadu minister’s statement in the State Assembly, some basic issues need to be sorted out and for good—and early—so that whatever the route finalised in consultations with Sri Lanka, it should become operational as early as possible.
Likewise, pilgrims from Sri Lanka will have easy access to Velankanni church, Nagore dargah, Tirunallar Saneeswaran temple and other places of religious importance in the Cauvery delta districts, which are dotted with other Hindu temples all across, with easy access to Madurai Meenakshi Amman temple and Palani Murugan temple. Budget pilgrims from Sri Lanka’s majority Buddhist community can also take the ferry service to travel all the way up to Bodh Gaya, Sarnath and other religious centres, and also Lumbini, the birth-place of Lord Buddha in Nepal.
Incidentally, Sri Lanka’s Sinhala-Buddhists are also ardent devotees of Lord Venkateswara in Tirupati. As may be recalled, Buddhist temples in Sri Lanka invariably have separate shrines for Lord Ganesha and Lord Vishnu. In turn, all these can then help the revival of the Boat Mail, with Indian railways considering the extension of it all the way to Bodh Gaya and Sarnath, apart from Buddhist pilgrim centres and other places of tourist interest, en route.
https://www.orfonline.org/expert-speak/india-lanka-ferry-service-is-still-on-rocky-seas/
Civil Society Collective calls on diplomatic missions to ensure LG polls are held
The Civil Society Collective for Protecting the Franchise has sought the support of Diplomatic Missions with regard to their call to hold the 2023 Local Government (LG) election on time, in a bid to protect democracy.
Issuing a statement in this regard, the collective highlighted that failing to hold the LG polls in a timely manner would have serious implications for democracy and governance.
“It would mean that the constitutional right to elect representatives at the local level would be compromised. It will set a dangerous precedent and impair the democratic process”, the statement read.
They further explained that not holding the election using a lack of finances as an excuse could ‘open the door for using such flimsy pretexts for postponing Parliamentary and Presidential elections’, highlighting that this practice , if allowed, will wrongly incentivize leaders who are inclined to not hold elections till it is beneficial for them.
Further emphasszing the adverse effects the postponement of the LG polls has had not only on the country’s democracy but also on its institutions, the Civil Society Collective for Protecting the Franchise called upon Sri Lanka’s international partners to closely monitor the situation, and to ensure that the election is held in a timely manner.
They also urged these international institutions to highlight the importance of an election for the country’s stability and economic recovery.
“It is critical to remain steadfast in advocating for the elections to be held on schedule, and to ensure that the government adheres to the established legal framework. This will serve to preserve the democratic principles upon which Sri Lankan society is founded and to safeguard the right to elect our representatives”, the collective said in this regard.
Below is the relevant statement issued by the Civil Society Collective for Protecting the Franchise;
Civil Society Collective – Joint Statement (English) by Adaderana Online on Scribd
CPA Statement on the Anti-Terrorism Bill – 2023
The Centre for Policy Alternatives (CPA) observes that the Government published an ‘Anti – Terrorism Bill’ in the Gazette, on the 22nd of March 2023. This Bill seeks to abolish the Prevention of Terrorism Act (PTA) and introduce an Anti-Terrorism Act. Such legal reforms must be studied in the context of the abuse of the PTA and Emergency Powers carried out by consecutive Presidential regimes, with the present draft providing broad powers to the executive with limited checks and balances. CPA notes that the present Bill requires serious attention, especially when authorities have used security laws to target minorities, critics and protesters, entrenching a culture of torture and impunity in Sri Lanka. CPA reiterates that law reform alone cannot achieve far reaching change in the absence of a genuine political will to change the culture of dehumanising treatment of persons under the guise of counter-terror. In this initial comment on the proposed Anti- Terrorism Bill, CPA observes that the Bill bears significant similarity to the Counter – Terrorism Bill (the 2018 CTA) that was Gazetted in 2018, but subsequently never passed by Parliament. However, the new Bill contains several offences that were not a part of the 2018 CTA, some of which raise serious concern for the freedom of expression, potentially giving the State an additional tool to crack down on dissent and criticism. One improvement in the Bill is that confessions made by suspects in detention to a Police officer are no longer admissible in evidence – a general principle in the ordinary law, for which an exception was made in the PTA. The admissibility of confessions made in custody created a culture of ‘forced confessions’ leading to systemic injustices.
A major concern that remains, however, is with Detention Orders. The Bill places the power to make Detention Orders in the hands of a Deputy Inspector General of Police (DIG), a power which under the PTA is held by the Minister of Defense. However, while the 2018 CTA allowed for the initial Detention Order by a DIG to extend up to 2 weeks,the Bill is more similar to the regime under the PTA, allowing the Detention Order to be made for up to 3 months. This is a major concern, which could lead to the suppression of the liberties of persons accused under this Bill, even if there is no substance to such allegations. Detention Orders can thereafter be extended beyond the initial 3 months, up to a year, but the extension must be approved by a Magistrate. Under the Bill, the President is also given the power to make ‘Proscription Orders’ against organisations. These orders are to be issued against organisations accused of an offence amounting to terrorism, but also when the President ‘has reasonable grounds’ to believe an organisation is acting in a manner ‘prejudicial to the national security of Sri Lanka, or any other country’. This wide power may be used to target legitimate dissent in the country, which, based on recent patterns of crackdown must be considered a very likely possibility.
Similar to the PTA, the President has wide powers to make regulations under the Bill. CPA has over the years raised concerns with and litigated regulations made under the PTA which have the potential to be used as a tool of suppression and abuse. This regulation-making power must be curtailed in order to protect the liberties of the citizenry. Especially concerning is the power granted to the President by the Bill to issue regulations to implement rehabilitation programmes for persons for whom the Attorney- General has recommended a deferment/suspension of criminal action, given the history of abuses and fundamental rights’ violations committed during such rehabilitation processes. In 2021, CPA filed a Fundamental Rights Application challenging a similar set of regulations under the PTA, and the Supreme Court stayed the operation of the regulations.
CPA also notes that the definition of the ‘offence of terrorism’ in the Bill is overly-broad and contains vague undefined elements, such as acts ‘violating territorial integrity or infringement of sovereignty of Sri Lanka or any other sovereign country’. The use of such terms is concerning given Sri Lanka’s contentious history of repression and abuse of anti-terror laws. Moreover, this definition of the offence of terrorism, lacks precision, and adherence to the principles of necessity, proportionality, and legality. CPA is concerned with the secrecy surrounding and the timing of the publishing of the Bill that is deeply problematic and is indicative of the lack of interest to genuinely engage with the public on a critical issue. The preliminary issues raised here is in the hope of constructively engaging with authorities and lawmakers, and to create a dialogue on whether such a law is even needed in Sri Lanka. This will be followed by a more detailed commentary on the clauses of the Bill in due course. The present proposal must be viewed in light of Sri Lanka’s legacy of abuse, and the systems in place that have facilitated such abuse. At a time when Sri Lanka is pursuing a path of recovery and rebuilding, it is critical to ensure that genuine measures are taken to address recurring practices of abuse and impunity and uphold the rule of law and democracy in Sri Lanka. Lawmakers must understand that given the history of abuse there is a long way to go in building public trust, and the onus is on the State to recover that trust by putting all the necessary checks and balances in place.
CPA Statement on the Anti-Terrorism Bill – 2023
Tourist arrivals top 100,000 in March marking historic hat-trick post-2019
- First 26 days of March draw 105,714 tourists, pushing Q1 arrivals to 315,898
- Russia leads as top market with 22,038, followed by India, UK, Germany and US
- Tourism Minister Harin Fernando applauds industry stakeholders’ efforts for strong comeback in 2023
By Charumini de Silva
With arrivals surpassing the 100,000 mark in the first 26 days of March, Sri Lanka’s tourism industry has welcomed over 300,000 visitors in the first quarter, starting 2023 on a positive note.
This is also the first time Sri Lanka’s tourism industry recorded over 100,000 tourist arrivals in three consecutive months after 2019.
Led by Russian travellers, during the first 26 days of March, a total of 105,714 tourists arrived in the country, propelling the cumulative figure to 315,898 continuing the growth momentum and boosting hopes for a good year. The growth in the first quarter (with a few days remaining) of tourist arrival is over 10.7% compared to the same period last year, but still 55% lower than the first quarter of the benchmark year 2018.
Russia leads as the top source market, reflecting 21% or 22,038 of total arrivals during the first 26 days of March followed by India with 15% or 15,695, the United Kingdom with 8% or 8,555, Germany with 8% or 8,256, and the US with 5%, provisional data released by the Sri Lanka Tourism Development Authority yesterday noted.
“Sri Lanka’s tourism industry has made a strong comeback in 2023 after a series of major setbacks from 2019. The respect and tribute of it should go to all stakeholders of the industry for all their dynamic and steadfast commitment to overcoming the challenges. I salute their dedication and efforts,” Tourism Minister Harin Fernando told the Daily FT.
He also said that the National Tourism Policy blueprint will also be implemented soon to set out consistent policies and standards to boost Sri Lanka’s tourism industry to its next stage of growth in 2024.
“We are excited about 2023, as plans are underway to make Sri Lanka a year-round destination,” the Minister added.
Tourism accounts for close to 5% of Sri Lanka’s economy. The industry is hopeful of achieving 1.55 million visitors and an income of $ 2.88 billion in 2023.
With Sri Lanka Tourism not opting for a global communication blitz in 2023, however, it will focus on nine key markets identified as India, Russia, China, the UK, France, Germany, the Middle East, and Nordic countries. The MICE tourism segment is earmarked as a key segment Sri Lanka looks to explore this year to push the numbers and earnings.
Analysis opined that the continuous positive publicity at the global level was also a major factor for the boost in arrivals post-political instability just last year.