Author: TELO Admin

Sri Lanka’s newly elected President Anura Kumara Dissanayake has successfully concluded his first state visit to India from December 15 to 17. The optics of the three day visit to New Delhi has been hailed positively. President Dissanayake known popularly as AKD is the leader of the Janatha Vimukthi Peramuna as well as the JVP-led National People’s Power (NPP).

The successful passage to India has brought into focus the “mismatch” between JVP’s past and present. The Janatha Vimukthi Peramuna’s hard line regarding India in the past and its current soft line towards our big neighbour are being compared and contrasted. The successful state visit seems to indicate that the JVP’s relationship with India has taken a positive “U” turn.

The JVP from its inception has been rooted in anti-Indianism. In simplistic terms the JVP was perceived as an Anti-Indian, pro-China, political entity. The JVP opposed the India-Sri Lanka accord of July 29, 1987 and conducted a violent anti-Indian campaign for three years from 1987 to 1989.

As stated in last week’s article, the Indo-Lanka accord was signed by former Indian Prime Minister Rajiv Gandhi and ex-Sri Lankan President J.R.Jayewardene on July 29, 1987. The accord was signed with the laudable objective of bringing peace to Sri Lanka by ending the war between the Sri Lankan armed forces and armed Tamil militant groups including the Liberation Tigers of Tamil Eelam (LTTE).

A ceasefire was declared and Indian army personnel with the nomenclature of Indian Peace Keeping Force (IPKF) were stationed in the Northern and Eastern Provinces of the island to maintain peace. Instead of ushering in a durable peace as expected, the Indo-Lanka Accord paved the way for more violence and bloodshed. The LTTE led by its supremo Veluppillai Prabhakaran refused to accept the accord and went back to war. Soon, a full-fledged guerrilla war was waged by the LTTE against the IPKF in the North and East.

Meanwhile the JVP led by Rohana Wijeweera also opposed the Indo-Lanka Accord and engaged in armed resistance in the predominantly Sinhala areas. The JVP had in 1971 launched an armed insurrection when the United Front Government of Prime Minister Sirimavo Bandaranaike was in power. It was cruelly and brutally crushed with the aid of several countries. This is commonly referred to as the first JVP insurgency.

Second JVP Insurgency

The second JVP insurgency was against the United National Party (UNP) Governments of President J.R. Jayewardene and his successor President Ranasinghe Premadasa. It began in 1987 when JR was President and ended in 1989/90 under President Premadasa’s rule.

When the JVP launched its second insurgency in 1987, it had very little membership in the pre-dominantly Tamil and Muslim regions of the Northern and Eastern Provinces. As such most of its armed activity was in the seven provinces with a Sinhala majority.

The JVP’s anti-Indian military wing was named “Deshapremi Janatha Vyaparaya” (DJV) or “Patriotic People’s Movement”. The emphasis on patriotism or love of the country was to mobilise people’s support on those lines. A sense of history was invoked by the nom de guerre adopted by the DJV commander. It was Keerthi Wijebahu.
It was Prince Keerthi who fought against the Chozha Monarchs, Raja Rajan and Rajendran in the 10th Century. The Ruhuna Prince eventually succeeded in evicting the Chola conquerors from Polonnaruwa and crowned himself as Wijebahu. The DJV Commander Keerthi Wijebahu was Saman Piyasiri Fernando. This native of Lunawa in Moratuwa was a Kelaniya University graduate.

The second JVP insurgency lasting for more than three years resulted in thousands of people being brutally killed by both the JVP as well as the counter insurgency forces comprising Police, para-military and security personnel. Tens of thousands of Sinhala youth were massacred by agents of the State. While no reliable estimates are available of the number of killings done by security personnel and other agents of the State, official figures of the killings done by the JVP have been released by the state.

It is noteworthy that many of the frontline leaders of the JVP including Anura Kumara Dissanayake joined the movement while the anti-Indian campaign was in progress. They were motivated by the twin passions of love for the motherland and hatred towards India perceived as alien invaders. The Indo-Lanka accord and its off-spring – the 13th Constitutional Amendment were regarded as impositions thrust upon Sri Lanka by India and were bitterly opposed. Ironically, Tamil hawks too opposed the accord and 13 A.

Indo-Lanka Accord

The Indo-Lanka Accord was not perfect. It did not rectify all problems concerning Tamils. But it provided a good and great beginning to a healing process. The Indo-Lanka Accord recognised Sri Lanka as a multi-ethnic, multi-religious nation. Thus, both the mono-ethnic claims of Sinhala supremacists and the two-nation theory of Tamil separatists were negated.

It recognised the Northern and Eastern Provinces as historic areas of habitation of the Tamil and Muslim people where they lived with other ethnicities. Thus, the Tamils’ and Muslims’ right to historic habitation was recognised but there were no exclusive rights. The north-eastern region belonged to all ethnicities.
Moreover the opportunity to create a single Tamil linguistic province was made available at that time. Both provinces were temporarily merged with the proviso that a referendum should be held in the Eastern province to either approve or reject the merger.

A scheme providing devolution of powers on a provincial basis was brought in. Provincial Councils with powers allocated on provincial, concurrent and reserved basis were set up. Tamil was elevated to Official Language status. All those convicted of “terrorist” offences were given official pardon. All militants who took to arms were given a general amnesty.

It appeared then that the basic grievances and legitimate aspirations of the Sri Lankan Tamils could be redressed and accommodated if and when the Indo-Lanka Accord was gradually implemented. Besides India was there to underwrite the accord and guarantee its implementation in general and the 13th amendment in particular.

13th Constitutional Amendment

The 13th Constitutional Amendment was drafted in Colombo. An Indian Constitutional lawyer was consulted in an advisory capacity. Given the opposition mounted by the SLFP and JVP at that time, it was feared that any Constitutional amendment requiring an island-wide referendum would not be ratified if the Supreme Court decreed so.
Thus the powers and composition of the envisaged Provincial Councils through the 13th Amendment were somewhat restricted. The Supreme Court allowed the passage of 13 A without a referendum because of this. Even then the nine-Judge bench was divided five to four.

New Delhi however extracted a promise in writing from JR on 7 November 1987 that he would devolve more powers to the PCs within a specific timeframe. But events took a different turn and this promise was never adhered to by JR or successive regimes. The LTTE fight against the Indian Army escalated. This transformed the situation.
When the accord was signed and Indian soldiers arrived in the Island as “peacekeepers” the predominantly Sinhala “south” protested vehemently. But the Tamils of the north-east welcomed the “jawans” wholeheartedly. Within months the situation reversed when the Tigers took on the Indian Army.

In the words of JR “the referee was now fighting in the ring”. The image of the IPKF underwent a change from that of “Indian Peace Keeping Force” to “Innocent People Killing Force”. When the Indian Army left Lankan shores in 1990, there were very few who mourned its departure.

Convergence of Interests

Primarily, India was acting in its own interest when it intervened benignly. There was no “identity” of interests between India and the Tamils but there was certainly a “convergence” of interests between both. But this congruence had its limits.

Using the armed struggle for separatism as a pressuring device or bargaining tool was acceptable. But prolonging the struggle for a separate state in defiance of New Delhi was unacceptable. India was all for autonomy within a united Sri Lanka but opposed to Tamil Eelam.

India’s Responsibility

Moreover the accord among other things bestowed upon India the responsibility (shared with Sri Lanka) of ensuring and protecting the security and safety of all communities living in the Northern and Eastern Provinces of Sri Lanka. Clause 2.16(e) says: “The Governments of Sri Lanka and India will cooperate in ensuring the physical security and safety of all communities inhabiting the Northern and Eastern Provinces.” While the Sri Lankan Government agreed to implement the proposals outlined in the accord, clause 2.14 stated: “The Government of India will underwrite and guarantee the resolutions, and co-operate in the implementation of these proposals.”
The Indo-Lanka Accord provided India a permanent “say” in the affairs of Sri Lanka as it had to underwrite the resolutions and guarantee their implementation. Also, it was – in theory at least – responsible for the safety and security of all people living in the north and east.

The Indo-Lanka treaty has been “forgotten” for many years but nevertheless it remains valid. Provisions of the accord could be activated if and when necessary. Until and unless both countries jointly repudiate it, the Indo-Lanka Agreement will continue to be there. It cannot be unilaterally abrogated by one country.

Joint Letter to Indian PM

In a significant political move a few years ago, seven political parties mainly representing the Sri Lankan Tamils of the Northern and Eastern provinces wrote a joint letter to Indian Prime Minister Narendra Modi, seeking his help to fully implement the provisions of the 13th Amendment to the Constitution. The letter draft finalised on December 29, 2020 was approved by the 7 parties concerned on January 6, 2022. The seven party signatories to the letter were the TNA, ITAK, TELO, PLOTE, EPRLF, TMP and TNP. The letter along with an annexure outlining key problems facing the Tamil speaking people of Sri Lanka was reportedly sent to PM Modi through the good offices of the Indian High Commission in Colombo.

Matters of urgent serious concern to the Tamil speaking people in Sri Lanka were included in the annexure under seven categories.

They were –
Thirteenth Amendment and Provincial Councils

To bring back all provisions relating to Law and Order, Finance, Land, Education, Agrarian Services etc. derogated so far from the original provisions agreed upon under the Thirteenth Amendment consequent to the Indo Lanka Pact. This would include Presidential undertakings given by Sri Lanka.

As per assurances given by the Sri Lankan Government to the Parliamentary Select Committee on Electoral Reforms, to call upon the Government of Sri Lanka to pave the way for the Election Commission to hold the Provincial Council elections.

Language Rights –Sixteenth Amendment

The provisions of the Sixteenth Amendment to the Constitution passed by the Parliament on December 17, 1988 soon after the enactment of the Thirteenth Amendment must be implemented in word and spirit.

The use of Sinhala and Tamil as languages of Governmental use and recognition of both languages as National languages and English as the Link language in the Thirteenth and Sixteenth amendments must be given full effect to, in word and spirit.

The provisions of Chapter-iv of the Constitution containing Articles 18 to 25 A dealing with National languages, their implementation in administration, legislation, Judiciary and as medium of instruction in schools as per the constitution of Sri Lanka shall be fully implemented in word, form and substance.

Demography, Land Grabbing and De Limitation or Gerrymandering

A. All attempts to systematically change the demographic pattern of the North and East, acting contrary to the provisions and spirit of the Banda-Chelva Pact (1957), Dudley-Chelva Pact (1965) and the Indo-Lanka Accord (1987) shall stop forthwith.

B. All activities and attempts by the Archaeological Department, Mahaweli Authority, Forest Department, Wildlife Department, Tourist Board and the Defence/Internal Security Ministry to destroy and pervert evidences that confirm the Historical Habitation of North and East as the traditional Homelands of the Tamils must immediately cease.

C.The Archaeological Department must recognise the antiquity of the Tamils from pre Buddhist times, accept that it was the Tamils who received Buddhism (Tamil Buddhists) into Sri Lanka and act accordingly instead of perverting and prevaricating history.

D.Tamil villages in the border areas between Northern and Eastern Provinces are altered by either attaching them to Sinhala areas or bringing Sinhalese villagers into Tamil areas thereby altering ethnic composition to make Tamils a minority group in their own areas. This will prevent Tamil people from obtaining political representation in Local Councils, Provincial Councils and in Parliament. Such pernicious practices must be discontinued.

Citizenship and Equality

Purpose and spirit of the Nehru-Kotelawala (1954), Sirimavo-Shastri (1964) and Sirimavo-Indira (1974) Pacts between Government of Sri Lanka (GoSL) and Government of India (GoI), both of which pledged full-fledged citizenship that implied equal rights to Sri Lankan Tamil people of recent Indian Origin in the fields of right to land, right to housing, livelihood, education, health and political representation are being discriminatively violated and ignored. This denial of equal rights and discriminations shall change forthwith towards full-fledged equal citizenship.

Prisoners under the Prevention of Terrorism Act

The PTA which is used mainly against the Tamils and Muslims must forthwith be repealed and all those held under the PTA should be released.

Electoral Reforms

With a view to get adequate representation to racial and political nationalities and minorities living scattered in the island whether Sinhala, Tamil, Muslim or any other minorities within the multi- party democratic framework prevalent in this Island, small political parties representing such interest groups must be enabled to enter Parliament or Provincial Councils.

Hence the Proportional Representation method must be continued electorally and the Government must be requested to accept that method into its Electoral system.

One Country One Law Concept

A. The Presidential Commission on “One Country One Law” has been appointed to eliminate or prevent existence of any other legislative bodies within the country other than the Central Government and prevent any meaningful devolution.

It will prevent Tamils and Muslims practicing their customary laws and preserving their culture, customs and practices. Such Commission must be done away with and the distinct identity and rights of all Nationalities in Sri Lanka must be recognised by the Sri Lankan Government.

No Positive Response

Three years have passed since this joint letter was sent to Indian Prime minister Narendra Modi at the time when Gotabaya Rajapaksa was in office as President. Much water has flowed under the bridge since then. There has been no positive response or forward movement regarding the letter by New Delhi so far. The Sri Lankan Tamil parties too have not displayed any sense of urgency on the matter. It must be noted that there has been very little improvement in the situation highlighted by the Tamil parties in the annexure.

It is against this backdrop that President Dissanayake has undertaken his state visit to India. As stated in last week’s article there was no mention of the thirteenth Constitutional amendment in the exhaustive joint statement issued. President Dissanayake ignored it in his media statement. Only Prime Minister Modi referred to a few points like “the aspirations of the Tamil people’ and the “commitment towards fully implementing the Constitution of Sri Lanka and conducting the Provincial Council Elections” in his media statement

What was conspicuous by its absence was an explicit reference to the 13th Constitutional amendment in the joint statement or in the individual media statements of the Sri Lankan president or Indian premier. Does this mean that the 13th amendment is destined for oblivion soon?

Writing on the Wall for 13 A?

JVP leaders have assured Tamil political leaders that the 13th Amendment will be in force until a new Constitution is in place. In short the writing is on the wall for the 13th Amendment. The important question is will the quantum of devolution provided for in the 13th amendment be incorporated in the new Constitution envisaged by the JVP/NPP Government or not?

D.B.S.Jeyaraj can be reached at dbsjeyaraj@yahoo.com

Sri Lanka’s state-run airport management firm has invited proposals from reputed companies to study the feasibility of expanding the Jaffna International Airport (JIA) but not from countries adjacent to Colombo’s Flight Information Region (FIR)—India, the Maldives, Indonesia, and Australia—citing a conflict of interest.

Separately, Airport and Aviation Services of Sri Lanka Ltd. (AASL) has extended till March 18, 2025, the deadline to receive bids from Japanese companies for

the construction and completion of the Bandaranaike International Airport (BIA) Development Project Phase II Stage 2-Package A1.

The Japan International Cooperation Agency (JICA)-funded project includes building and completing the

main terminal building, two new piers, and associated works such as an elevated roadway. The original deadline expired on Tuesday.

The deadline for the Jaffna International Airport project closes on January 29, 2025. Bids are called from airport consultancy firms or joint ventures that have carried out (on time) at least one feasibility study within the immediate past ten years for an international airport development project for which work has been completed or is ongoing.

The advertisement says the consultancy firm shall not be based in or be of origin of “countries that share adjacent to Colombo FIR in order to avoid a conflict of interest”.

Meanwhile, the BIA expansion project—with an anticipated construction period of 30 months—was beset by problems but is now back on track, particularly after Sri Lanka concluded debt restructuring agreements.

Under the original contract, won by Japan’s Taisei Corporation, work started in December 2020 and was scheduled to be completed by December 2023. But the project was terminated in December 2022 “due to economic conditions that prevailed in the country” that year, the AASL states. (JICA froze funding to all of its Sri Lankan projects).

At the time of termination, progress was at just six percent. The re-advertised invitation is for the completion of the balance scope with materials and equipment already purchased by Taisei, also offered to the entity that wins the contract.

While Sri Lanka has an existing JICA loan to fund part of the cost of construction, the government has officially requested additional funding from the agency. This is under consideration by the Japanese government and JICA, AASL says.

Standard and Poor’s (S&P) said it was keeping Sri Lanka’s sovereign rating at selective default because a defaulted SriLankan Airlines bond has not yet been restructured, but has rated newly issued restructured bonds at CCC+.

The 175 million dollar SriLankan Airlines bond is guaranteed by the government and remains in default.

“We could raise our long-term foreign currency sovereign credit rating once Sri Lanka completes the restructuring of its remaining foreign currency-denominated commercial debt, including the government-guaranteed bond that SriLankan Airlines issued,” S&P Global Rating said in a statement.

“The rating would reflect Sri Lanka’s creditworthiness post-restructuring.”

However, the new bond given in exchange for defaulted sovereign bonds have have been rated CCC+.

Both Fitch and Moody’s upgraded the sovereign rating despite the outstanding SriLankan Airlines bond.

The local currency rating was also raised to CCC+

The full statement is reproduced below.

Sri Lanka ‘SD/SD’ Foreign Currency And ‘CCC+/C’ Local Currency Ratings Affirmed; New Issues Rated ‘CCC+’

Overview

• Sri Lanka has completed the exchange of most of its US$12.55 billion existing international sovereign bonds (ISB) for a combination of new notes.

• The government appears to be still working on restructuring a US$175 million bond issued by SriLankan Airlines that it guarantees, which remains in default.

• We affirmed our ‘SD/SD’ (selective default) foreign currency and ‘CCC+/C’ local currency sovereign credit ratings on Sri Lanka. At the same time, we assigned our ‘CCC+’ foreign currency issue ratings to some of the newly issued series of Sri Lanka’s sovereign bonds, including past due interest (PDI) bonds, governance-linked bonds, and U.S. dollar step-up bonds.

• The outlook on the ‘CCC+’ long-term local currency rating is stable.

Rating Action

On Dec. 27, 2024, S&P Global Ratings affirmed its ‘SD/SD’ (selective default) long- and short-term foreign currency and ‘CCC+/C’ long- and short-term local currency sovereign credit ratings on Sri Lanka. The outlook on the long-term local currency rating is stable.

We also revised upward our transfer and convertibility assessment on Sri Lanka to ‘CCC+’ from ‘CCC’ previously.

At the same time, we assigned our ‘CCC+’ issue ratings to three categories of Sri Lanka’s post-restructuring new notes:

• Amortizing Governance-linked bonds maturing in 2035;

• Amortizing U.S. dollar step-up bonds maturing in 2038; and

• Amortizing PDI bonds maturing in 2030.

Outlook

Our long-term foreign currency rating on Sri Lanka is ‘SD’. We do not assign outlooks to ‘SD’ ratings because they express a condition and not a forward-looking opinion of default probability.

The stable outlook on the long-term local currency rating reflects the balance of improvements to Sri Lanka’s debt profile achieved through its domestic and external restructuring exercises against continued risk to the government’s fiscal sustainability from ongoing economic, external, and fiscal pressures over the next 12 months.

Downside scenario

We could lower the long-term local currency rating on Sri Lanka if there are indications of a further restructuring of obligations denominated in the Sri Lankan rupee to commercial creditors.

Developments that could precede these indications include a rapid rise in inflation, a further rise in the government’s interest burden, or a significantly worse fiscal performance by the government leading to local currency funding pressures.

Upside scenario

We could raise the long-term local currency rating on Sri Lanka if we perceive that the sustainability of the government’s large local currency debt stock has improved further.

This could be the case if, for example, the government’s fiscal metrics and the performance of the economy improve much more quickly than we expect.

We could raise our long-term foreign currency sovereign credit rating once Sri Lanka completes the restructuring of its remaining foreign currency-denominated commercial debt, including the government-guaranteed bond that SriLankan Airlines issued. The rating would reflect Sri Lanka’s creditworthiness post-restructuring.

Our post-restructuring ratings tend to be in the ‘CCC’ or low ‘B’ categories, depending on the sovereign’s new debt structure and capacity to support its debt.

Rationale

We assigned our ‘CCC+’ foreign currency issue ratings to three of Sri Lanka’s categories of new notes following the completion of the government’s distressed debt exchange on its ISBs.

The exchange offer received the consent of holders of more than 97% of the outstanding ISBs, sufficiently exceeding the required thresholds set out in the exchange offer to complete the transaction.

The restructuring of Sri Lanka’s US$12.5 billion ISBs plus capitalized interest aims to ease external debt-service pressure and restore public debt sustainability as part of the country’s ongoing extended funding facility arrangement with the IMF.

Following the bond exchange, Sri Lanka will achieve under the baseline scenario approximately US$9.5 billion in debt service payment reduction over the four-year IMF program period, a 31% reduction in the coupon rate of its bonds, and an extension of the average maturity profile of more than five years, according to estimates from the Sri Lankan Treasury.

Bondholders representing 97.8% of the total ISB value outstanding agreed to the exchange offer, which grants them new notes in various structures under global or local options.

The global option includes: (1) a capitalized interest bond with a coupon of 4.0% (PDI bond), (2) macro-linked bonds with contingencies for nominal and real GDP performance (MLBs); and (3) a governance-linked bond (GLB) with a coupon that will step up in 2027 and again in 2032.

The GLBs are subject to two interest step-ups in 2027 and 2032. The application of a potential step-down margin in 2028 will hinge on two government key performance indicators, including the government’s 2026-2027 revenue performance and publication of a fiscal strategy statement in accordance with certain criteria.

If both are achieved, the coupon will be lowered by 75bps following timely certification of the government having met the relevant KPIs. We consider the KPIs to be related to improvements in Sri Lanka’s creditworthiness.

The local option includes a U.S. dollar step-up bond with a smaller nominal haircut of 10% and a lower coupon starting from 1.0%, in addition to two other bonds.

The coupon gradually rises over time to a terminal rate of 3.5% in 2036-2038. The bond contains an alternative currency event clause allowing Sri Lanka to make coupon and principal payments in the Sri Lankan rupee equivalent if it is unable or impracticable to make payment in the U.S. dollar.

As per our rating definitions, our ‘CCC+’ local currency rating suggests the creditworthiness of an issuer is vulnerable and dependent upon favorable financial and economic conditions, but the issuer does not face a near-term payment crisis (see “S&P Global Ratings Definitions,” published on RatingsDirect, Dec. 2, 2024).

We affirmed our long- term and short-term ‘SD’ foreign currency sovereign credit ratings because Sri Lanka’s government appears to be still in the early stages of restructuring a US$175 million bond issued by SriLankan Airlines that it guarantees.

The JVP-led NPP government has decided against granting service extensions to current commanders of the Army, Navy and Air Force, as well as any other officer scheduled to retire on 31 Dec., 2024, according to sources.

Army Commander Lt. Gen. Vikum Liyanage and Navy Commander Vice Admiral Priyantha Perera are on their second extensions, whereas Air Force Commander Air Marshal Udeni Rajapaksa is on his first service extension. There have never been a previous instance of the Army, Navy and Air Force Commanders retiring simultaneously.

Among other officers expected to retire at the end of this year is Maj. Gen. Ruwan Kulatunga, Chief of National Intelligence (CNI). Kulatunga received the appointment in the second week of June, 2019, in the wake of the Easter Sunday carnage. Kulatunga succeeded retired DIG Sisira Mendis, one of those faulted by the Supreme Court for the failure to thwart the National Thowheed Jamaat (NTJ) terror attacks.

Sources said that Deputy Defence Minister Maj. Gen. (retd.) Aruna Jayasekera (NPP National List) had explained the government’s position with regard to service extensions to relevant officers. Unlike in the previous years, the newly retired officers were unlikely to be considered for diplomatic appointments, sources said. Ex-military chiefs who had been heading our diplomatic missions at the time of the change of government were recalled. Among the recalled were three former Navy Commanders, Admirals Jayanath Colombage (Indonesia), Ravi Wijegunaratne (Pakistan) and Nilantha Ulugetenne (Cuba). The NPP government also recalled Air Chief Marshal Sudarshana Pathirana from Nepal.

Within weeks after the general election held on 21 Nov., the NPP brought the State Intelligence Service (SIS) under DIG Dhammika Priyantha. The appointment brought the SIS under the police again. Following the 2019 presidential election, President Gotabaya Rajapaksa appointed Maj. Gen. Suresh Sallay as head of the SIS, in place of DIG Nilantha Jayawardena, also fined by the Supreme Court for failing to thwart the NTJ attacks. The government picked DIG Priyantha in spite of him not having served the intelligence services previously.

In spite of Jayawardena being accused of negligence, in early January 2023, on the recommendation of the then IGP Chandana Wickremaratne, he was promoted to the rank of Senior DIG and appointed Senior DIG Administration. However, in July, in the run up to the presidential election, the National Police Commission (NPC) sent Jayawardena on compulsory leave pending an internal disciplinary investigation into his part in the overall intelligence failure leading to the Easter Sunday attacks.

Near simultaneous attacks claimed the lives of 270 people. More than 400 others were wounded in the suicide blasts. Among the dead were approximately 40 foreigners.

In line with the NPP’s policy, the Office of Chief of Defence Staff (CDS) would be scrapped and the coordinating of the armed forces brought under direct control of the Defence Ministry, sources said. Hence incumbent CDS General Shavendra Silva, the wartime GoC of the celebrated 58 Division (formerly Task Force 1) would retire on 31 Dec., 2024.

The appointment of Brig. Deeptha Ariyasena as head of the Directorate of Military Intelligence (DMI) was among the key changes effected by the new government. Several senior officers of the DMI had been moved to the Regimental Centre while the government is contemplating what one source called total overhaul of the intelligence community.

Ariyasena, who had been with the mechanized infantry, served in the East as Brigadier General Staff when Maj. Gen. Aruna Jayasekera functioned as the Security Forces Commander, East, in the post-war period. Ariyasena hadn’t served the intelligence services before the new appointment. Jayasekera retired in Oct. 2019 after having served the Army for over 30 years.

Political and military sources said that the NPP government’s concerns over the security apparatus needed to be addressed soon. Sources pointed out that Defence Secretary Air Vice Marshal Sampath Tuiyakontha and Maj. Gen. Aruna Jayasekera played a significant role in the NPP political campaign in the run up to the presidential and parliamentary polls and were instrumental in overseeing the changes.

The United States District Court for the Southern District of New York has granted a motion to extend the stay of litigation between Hamilton Reserve Bank (HRB) and the Democratic Socialist Republic of Sri Lanka for the fourth time, pushing the suspension of proceedings to 15 January, 2025. This decision, issued by District Judge Denise Cote, underscores the complex interplay of legal, economic, and diplomatic factors shaping the resolution of Sri Lanka’s sovereign debt crisis.

Sri Lanka’s economic turmoil, precipitating by a sovereign default in May 2022, led to a protracted restructuring process to address its unsustainable debt obligations. The crisis, described as one of the worst in the nation’s history, prompted Sri Lanka to seek an Extended Fund Facility (EFF) from the International Monetary Fund (IMF) amounting to $ 2.9 billion, approved in March 2023. The facility’s terms mandated significant reforms and negotiations with sovereign and private creditors.

Progress in restructuring was marked by key milestones in 2024: a memorandum of understanding with the Official Creditor Committee (OCC) in June, a debt restructuring agreement with the Export-Import Bank of China, and an agreement in principle with an ad hoc bondholder group of private commercial creditors in September. In November, Sri Lanka formally launched a debt exchange process, culminating on 12 December. Reports suggest that over 95% of bondholders, excluding HRB, participated in the exchange, marking a significant step toward economic stabilisation.

Hamilton Reserve Bank, the plaintiff in the case, holds over $ 240 million in principal amount of Sri Lanka’s sovereign bonds due in July 2022. Unlike most creditors, HRB has refrained from engaging in restructuring discussions, insisting on its legal claims for principal and accrued interest. Initially filed in June 2022, the case has seen successive extensions of stays to facilitate Sri Lanka’s negotiations with creditors. The latest motion to extend, filed on 26 November, 2024, sought a 45-day stay until 15 January, 2025. In her ruling, Judge Cote emphasised that the stay aligns with ongoing efforts to finalise the restructuring process, which is integral to Sri Lanka’s recovery plan under the IMF-supported program.

HRB’s submission on 11 December acknowledged Sri Lanka’s significant progress in restructuring but maintained that the litigation’s resolution remains unaffected by the broader process. Despite consenting to a brief extension until 12 December, HRB opposed further delays, arguing that the restructuring’s completion has minimal bearing on its specific claims.

Granting the motion nunc pro tunc, Judge Cote underscored the following considerations: progress toward restructuring, the restructuring’s near-finalisation marked by high participation in the debt exchange, supports continued judicial deference to facilitate resolution without disruption. Prejudice to the plaintiff, the judge noted HRB’s acknowledgment that the restructuring does not materially affect its claims. Any potential judgment in HRB’s favour would include pre-judgment interest, mitigating any delay-related prejudice. In a broader economic and diplomatic context, the court acknowledged the delicate balance between creditor claims and Sri Lanka’s efforts to restore economic stability. A premature resumption of litigation could jeopardise ongoing recovery efforts and deter other creditors from constructive engagement.

Until 15 January, 2025, the extension ensures Sri Lanka’s uninterrupted focus on concluding its restructuring program. By granting this stay, the court has effectively allowed the government additional time to implement the outcomes of the debt exchange and settle outstanding procedural matters. For HRB, the ruling underscores the challenges of litigating sovereign debt cases amid global economic crises. While HRB’s claims remain valid, the broader restructuring dynamics suggest that courts may prioritise systemic stability over individual creditor interests in such scenarios.

According to analysts, Sri Lanka will provide a status report by 6 January, 2025, outlining the restructuring’s completion. The settlement of the debt exchange, anticipated before or on 15 January, will mark a critical juncture in Sri Lanka’s recovery trajectory. Domestically, the successful resolution of the crisis is vital for stabilising public finances, creating fiscal space for growth, and restoring confidence among international stakeholders. However, allegations of inefficiency and corruption continue to cast shadows over the Government’s ability to deliver sustainable reforms.

From a global perspective, this case sets a significant precedent for handling sovereign debt disputes. The court’s deference to restructuring efforts highlights the growing recognition of the interconnectedness between legal judgments and broader economic imperatives. For policymakers, the outcome reinforces the importance of collaborative approaches to resolving debt crises, balancing creditor rights with the necessity of economic recovery.

The court’s decision to extend the stay reflects the complexities of resolving sovereign debt disputes in an interconnected global economy. As Sri Lanka navigates its path toward stability, the implications of this case will resonate across financial and legal domains, shaping the future of international debt restructuring frameworks. For HRB and other stakeholders, January 2025 will be decisive in determining the case’s trajectory and the broader lessons it imparts for managing sovereign defaults.

The Criminal Investigation Department (CID) has summoned Yoshitha Rajapaksa, the second son of former President Mahinda Rajapaksa, to record a statement regarding the ownership of a government-owned land in Kataragama.

This follows a statement recorded on December 27 from Major Neville Wanniarachchi, the former personal security officer of Mahinda Rajapaksa.

Accordingly, Yoshitha has been asked to appear before the CID on Friday, January 3, as part of the ongoing investigation into the matter.