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*Talks have been ongoing for some months and some members and parties have already expressed keenness

* It is yet to be decided who will head this platform as a common candidate

The opposition steered by the Samagi Jana Balawegaya (SJB) is presently in talks with several political parties including those in the government to form a common political platform this year to contest the future polls, the Daily Mirror learns.

According to political sources, talks have been ongoing for some months and some members and parties who are part of the government have already expressed keenness in joining this platform to break away from the Rajapaksa regime. The government, it is learnt, is already split into groups, with some remaining in positions but working against government policies.

In recent months, this split has been evident with the critical remarks issued by some government members voicing their opposition to ruling decisions and policies in the media. Already the Yugadanavi Power Deal which received cabinet nod is now before court after a case was filed by three cabinet ministers. The Daily Mirror learns that a campaign is also underway within the government to discredit the leaders in order to lose the popularity which they came in with, in the 2019 and 2020 presidential and general elections.

President Gotabaya Rajapaksa in a recent cabinet meeting has already questioned his cabinet if it is ethical of ministers, deputy ministers and officials to speak publicly against the government while being part of it. In recent days President Rajapaksa has already sacked one of his state ministers for his critical remarks against the government policies. The Daily Mirror learns that the formation of the common platform is being formulated by the SJB and they have already held successful talks with several parties. However, who will head this platform as a common candidate is yet to be decided and revealed.

Political sources said that this common political platform will be finalised this year so it can be ready to contest future polls. In the meantime, the President and Prime Minister have already announced that this year several new investments and FDIs will enter Sri Lanka, thereby easing the economic crises and which will put Sri Lanka back on track. It is learnt that all ministries and departments have been told to bring in results this year in order to fully implement the government policies which were stalled by the COVID-19 pandemic and bring in tangible results to ease the burden off the public.

The fiscal relief package recently introduced in Sri Lanka reduces the scope for fiscal and debt consolidation at a time when fiscal flexibility is already severely limited by the large share of interest payments in government revenue, Moody’s said in a recent analysis.

According to Moody’s, this funding package with reallocations from the budget in part reflects the limited fiscal space, which constrains the government’s ability to use fiscal policy to mitigate the impact of economic shocks.

Full Statement

On 3 January, Sri Lanka’s (Caa2 stable) government announced a fiscal relief package worth LKR229 billion ($1 billion, 1.6% of our 2022 GDP forecast) to support the economy and alleviate the impact of higher consumer prices on low-income households. While the size of the package is moderate and will be fully funded via reallocations from the budget (6% of budget expenditure in 2022), it reduces the scope for fiscal and debt consolidation at a time when fiscal flexibility is already severely limited by the large share of interest payments in government revenue (60-70%).

Funding the package with reallocations from the budget in part reflects this limited fiscal space, which constrains the government’s ability to use fiscal policy to mitigate the impact of economic shocks. Furthermore, the risk of fiscal slippage has increased with the emergence of the omicron variant of the coronavirus. Some countries have tightened activity and travel restrictions, and any reintroduction of measures domestically or a delay in the recovery of Sri Lanka’s tourism sector would intensify fiscal and external pressures.

Key features of the relief package include cash handouts of LKR1,000 to citizens receiving income support, agricultural subsidies, the removal of certain taxes on food and medicine and an increase in public-sector salaries (LKR5,000 a month from January). Such measures would support domestic demand and the economic recovery as surging prices – particularly for food – stemming from global supply chain-related disruptions and some import restrictions over 2020-21 reduce the purchasing power of households. Consumer price inflation rose to 8.3% year-over-year in October 2021 and accelerated to more than 11% in November, with food prices surging
by 17%.

We expect inflation-adjusted real GDP growth to pick up to around 5% in 2022 from around 4-5% in 2021, in part because of a lower base and because domestic economic activity has largely normalised, with international borders open to vaccinated tourists since October 2021. However, risks remain as the new omicron variant of the coronavirus could delay such a recovery, and several countries have reversed their easing of travel restrictions. Should such risks materialise, the recovery in government revenue would likely be delayed beyond our assumptions, with fiscal and debt metrics remaining very weak for longer.

We forecast that the fiscal deficit will narrow only slightly to around 9-10% of GDP in 2022 from around 11% in 2021, mainly reflecting our expectation for lower revenue growth than the budget envisages. Wide deficits will keep the government’s debt burden at higher levels for some time; we estimate that the debt burden will rise to around 108% of GDP by the end of 2022 from around 101% at the end of 2020 and 87% at the end of 2019, before stabilising at the elevated 2022 level thereafter, mainly reflecting the recovery in nominal GDP growth. Such levels are significantly above the Caa median and much higher than the government’s medium-term target
of around 75% in 2025.

In addition, a delay in the recovery of tourism receipts would weigh on Sri Lanka’s precarious external liquidity position. As of November 2021, the country had $1 billion in foreign-exchange reserves (which in our definition excludes gold and Special Drawing Rights), covering less than one month of imports. While the central bank indicated that reserves had risen as of the end of December with the disbursement of a $1.5 billion swap agreement with the People’s Bank of China, reserves adequacy remains very weak, with reserves at around $2-3 billion compared with $5-6 billion of foreign-currency obligations due annually through at least 2025.

A letter by seven political parties representing the Tamil-speaking people in the North and the East (N-E), to Indian Prime Minister Narendra Modi, requesting that the Indian Government urge the Government of Sri Lanka (GoSL) to fully implement the 13th Amendment (13A) to the Constitution, will most likely be sent today (11).

“The letter, signed by seven of the Tamil political parties, will most likely be sent to Modi today (11). Our main requests are that the 13th Amendment to the Constitution be fully implemented, and that the Provincial Council (PC) Elections be held,” Thamil Makkal Thesiya Kuttani (TMTK) Leader and Parliamentarian C.V. Wigneswaran told The Morning yesterday (10).

The letter, as seen by The Morning, notes that: “Since Sri Lanka gained independence in 1948, the Tamil-speaking people have been demanding meaningful power sharing from all the successive governments that came to power. The political leadership of the Tamil-speaking people wanted a solution in accordance with internationally accepted principles recognising their legitimate aspirations. Although many attempts were made to find a solution internally as well as with the assistance of the international community, the Tamil-speaking people’s national question remains unresolved to date. We remain committed to a political solution based on a federal structure that recognises our legitimate aspirations.

“The Tamil-speaking people have always been the majority in the North and East. The Indian Government offered its good offices in 1983, which was accepted by the GoSL and consequently the Indo-Lanka Accord was signed on 29 July 1987. Thereafter, the 13th Amendment to the Constitution was introduced, establishing a PC system that envisaged the devolution of powers to the provinces. But the Amendment was introduced into a unitary Constitution making the exercise one of decentralisation instead of devolution. It is against this backdrop that every effort made thereafter moved in the direction of surpassing the 13th Amendment to the Constitution towards a federal structure.”

In addition to the 13th Amendment to the Constitution, the letter has also highlighted that the 16th Amendment to the Constitution, pertaining to language rights, be implemented in “word and spirit”. Commenting on alleged land grabbing taking place in the North and East, the letter requested that “all attempts to systematically change the demographic pattern of the North and the East, acting contrary to the provisions and spirit of the Bandaranaike-Chelvanayakam Pact (1957), the Dudley-Chelvanayakam Pact (1965), and the Indo-Lanka Accord (1987) should stop forthwith”.

“All activities and attempts by the Archaeology Department, the Mahaweli Authority, the Forest Department, the Wildlife Conservation Department, the Tourist Board, and the Defence Ministry to destroy and pervert evidences that confirm the historical habitation of the North and the East as the traditional homelands of the Tamils must immediately cease. The Archaeology Department must recognise the antiquity of the Tamils from pre-Buddhistic times, accept that it was the Tamils who received Buddhism (Tamil Buddhists) into Sri Lanka, and act accordingly instead of perverting history and prevaricating on history. Tamil villages in the border areas between the Northern and Eastern Provinces are altered by either attaching them to Sinhala areas or bringing Sinhala villages into Tamil areas, thereby altering the ethnic composition to make Tamils minorities in their own areas. This will prevent Tamil people from obtaining political representation in the local government, PCs, and the Parliament. Such pernicious practices must be discontinued,” the letter mentions.

The party leaders have also requested that Sri Lankan Tamil people of Indian origin be given full citizenship, and that the Prevention of Terrorism (Temporary Provisions) Act No. 48 of 1979 (PTA) be immediately repealed. They have further requested that the “proportional representation (PR)” electoral system be implemented in the country and that the newly appointed “One Country, One Law” Presidential Task Force (PTF) be dissolved.

The letter has been signed by Wigneswaran, Tamil National Alliance (TNA) Leader and MP R. Sampanthan, Illankai Tamil Arasu Kachchi (ITAK) Leader Mavai Senathirajah, Tamil Eelam Liberation Organisation (TELO) Leader A. Adaikalanathan, Democratic People’s Liberation Front (DPLF) President Dharmalingam Sithadthan, Eelam People’s Revolutionary Liberation Front (EPRLF) President K. Premachandran, and Tamil National Party (TNP) Leader N. Srikantha.

The discussions relating to the aforementioned letter initially involved the Tamil Progressive Alliance (TPA) (representing mostly Tamils of Indian origin in the upcountry areas), the All Ceylon Makkal Congress (ACMC), and the Sri Lanka Muslim Congress (SLMC). However, Wigneswaran said that these three parties had decided not to sign the letter as the “problems of the Tamils from the North and the East are different to those of the upcountry Tamils and the Tamil speaking Muslims”.

He claimed that whilst the TPA had feared that the Sinhala-speaking population in the upcountry areas may get “upset” over the letter’s push for federalism, the two parties representing the Muslim population had been concerned over discussions to merge the North and the East which could potentially affect their electoral representation.

Speaking to The Morning yesterday, TPA Leader and MP Mano Ganesan said that whilst the TPA still extends their support to the other parties representing the Tamil-speaking people, and joins the call for the implementation of the 13th Amendment to the Constitution and holding the PC Elections, the TPA has “other concerns”. “The discussion process began with the idea of requesting the Indian Government to assist in the GoSL implementing the 13th Amendment to the Constitution and the conduct of the PC Elections. However, other elements were brought into the drafted letter which was initially supposed to be only one-and-a-half pages long (the final letter stands at eight pages). The TPA and the parties representing the Muslim population are compiling a separate letter,” he added.

A Gazette notification has been issued extending the tenures of Municipal Councils, Urban Councils and Pradeshiya Sabhas until March 19, 2023.

The Gazette has been issued today (10) by the Minister of Public Services, Provincial Councils & Local Government Janaka Bandara Thennakoon exercising the powers vested in him by the Municipal Council Ordinance, Urban Council Ordinance and Pradeshiya Sabha Act.

Accordingly, the term of each member of all 24 Municipal Councils, 41 Urban Council and 275 Pradeshiya Sabhas have been extended until March 19, 2023.

Both Sri Lanka and China should do more in defence cooperation that would serve the stability and prosperity of the Indian Ocean region, Chinese Ambassador to Sri Lanka Qi Zhenhong said on Sunday (09) following an official visit by China’s foreign minister.

Zhenhong’s statement came soon after Chinese State Councilor and Foreign Minister Wang Yi left the island nation after a two-day visit that saw the signing of four memoranda of understanding between the two countries, excluding any defence pact.

“Defence progression and exchanges is a very important part in bilateral relations,” Zhenhong told a group of journalists late on Sunday.

“I think we (China and Sri Lanka) should and could do more in this field.”

“I believe cooperation in this field, we not only serve the common interests of China and Sri Lanka on sovereignty, security, and stability, but also you will have this region to keep stability and prosperity (sp).”

The statement is likely to make the regional power India nervous along with the United States which has been monitoring China’s activities in the Indian Ocean under Beijing’s One Belt One Road initiative, defence analysts say.

Already India has raised concerns over China’s increasing presence in its backyard of Sri Lanka.

Sri Lanka has already handed over the 1.4 billion US dollar Chinese funded and built Hambantota port in the deep south of the island as a part of a debt-to-equity deal in 2018. China is eying a 15,000-acre investment zone around the port.

China has also reclaimed a 269-acre land next to Sri Lanka’s main Colombo port where a state-owned Chinese firm is building the Port City. It has already invested 1.5 billion US dollars in the project.

India accounts for over 70 percent of the transhipment at the Colombo port where China also has a terminal on a 25-year lease basis. To counterbalance Chinese presence, President Gotabaya Rajapaksa’s administration has given a majority stake at the West Container Terminal (WCT) to India’s Adani group, a privately owned firm, for a 850 million dollar investment.

Sri Lanka is in the process of canceling power system installation projects in three islands off Sri Lanka’s northern city of Jaffna within 50 km from South Indian coast, which prompted China to say the move was due to “security concern of a third party”.

Defence analysts say Beijing’s activities in the South China Sea have been cited by countries that are raising concerns over increasing Chinese presence in Sri Lanka.

Officials from the current ruling Sri Lanka Podujana Peremuna (SLPP) have told the EconomyNext in the past that indirect backing of India and the United States helped oust the previous government of then President Mahinda Rajapaksa in 2015 after Sri Lanka gave permission to Chinese nuclear submarines to enter Colombo port premises in October 2014.

Officially both India and the US have denied their involvement in toppling Rajapaksa’s previous government.

China has said all its projects in Sri Lanka are commercial in nature and has denied any military involvement.

The Federation of National Organisations has asked President Gotabaya Rajapaksa to put an immediate halt to the ongoing process of entering into an agreement with India, purportedly to develop the Trincomalee Oil Tank Farm. It has called for a thorough investigation into the questionable deal.

A letter signed by FNO Convener Dr. Gunadasa Amarasekera addressed to the President says the then government of Ceylon took possession of 99 tanks at the farm paying Sterling Pounds 250,000 to the British Navy in 1964. That government did so, taking the national interests into serious consideration. The so-called agreement process contained serious technical flaws. Agreements made without following due process are null and void before the law. Therefore, the President should immediately stop this process and make a full revision of it. Any decision taken otherwise owing to the pressures of public protests or court decisions will pave the way for serious repercussions which would be detrimental to the image and sustenance of the government and Indo-Sri Lanka relations.

The FNO says that the government instead should pay attention to make a policy decision to ensure energy security of the country by retaining its hold on bunkering.

Informed public opinion in this country today is that the process of handing over 99 tanks to the LIOC is questionable. People do not trust this agreement and there will be public protests, the letter has said.