Category: News

Having hit a roadblock with international bondholders, uncertainty looms over the economy of crisis-hit Sri Lanka and an upcoming review by the International Monetary Fund (IMF), experts warn.

The South Asian island country announced on Tuesday that it has failed to strike an agreement with international bondholders on restructuring more than $12 billion in debt, a mandatory requirement set out by the IMF.

Colombo-based economist Talal Rafi explained that with Sri Lanka still in default status and facing uncertainty regarding credit ratings and foreign investment, the economic fallout could be significant. “The larger impact is the uncertainty as no one knows what the deal will be for them to plan anything,” he said.

In March last year, the IMF’s board approved a $2.9 billion bailout package under a 48-month arrangement under the Extended Fund Facility (EFF) to support Sri Lanka’s economic policies and reforms. Sri Lanka is currently on its second review and is awaiting board approval for a staff-level agreement reached in March this year. Since 1965 to 2016, Sri Lanka has had a total of 16 programs with the IMF and the current program with IMF is the seventeenth.

The delay in reaching an agreement could also affect Sri Lanka’s upcoming IMF review, which is scheduled for June, Rafi said. “As debt restructuring is a key condition for the IMF, it would have an impact on the time taken for board approval.”

The program specifically supports Sri Lanka’s efforts to restore macroeconomic stability and debt sustainability, safeguard financial stability, and enhance growth-oriented structural reforms. In April 2022, the country defaulted on its foreign debt for the first time, triggering the worst economic crisis in its history. According to official data, Sri Lanka’s gross official foreign currency reserves inched up to $4.5 billion million in February.

Moreover, the nation’s impending presidential election piles pressure on the government to accelerate the negotiation process, raising concerns about the sustainability of any deal struck hastily under such circumstances. “In a rushed environment, there is a chance an unfavorable deal may be struck, where the debt repayments agreed may be unsustainable for Sri Lanka to pay in the coming years which could lead to a second default,” Rafi noted.

Sri Lanka is expected to hold its presidential election between September and October. In 2019, Gotabaya Rajapaksa was elected as president, but he was forced to resign due to mismanagement in 2022, which led to Ranil Wickremesinghe taking over. Presidential elections take place every 5 years.

Despite the stumbling block, Sagala Ratnayaka, Sri Lanka’s national security adviser and chief of staff to the president, said “there is no snag, but the discussions will continue.”

He explained that the government couldn’t come to a “settlement” specifically in two areas of the counter-proposals submitted to the government by bondholders. However, Rathnayaka emphasized the government’s commitment to continuing discussions and involving all stakeholders, including bond advisers and representatives from the IMF.

Shehan Semasinghe, Sri Lanka’s finance minister, said in a statement on Wednesday, “The next steps would entail further consultation with the IMF staff regarding assessments of the compatibility of the latest proposals with program parameters.” He added, “We hope to continue discussions with the bondholders with a view to reaching common ground ahead of the IMF board consideration of the second review of Sri Lanka’s EFF program.”

However, Sergi Lanau, director of global emerging markets strategy at Oxford Economics, said that debt restructuring is progressing slowly everywhere. Ghana, for example, defaulted in December 2022 and is still negotiating, he said. “I don’t think there are widespread expectations of a quick agreement in Sri Lanka.”

Reflecting on the lack of trust and transparency that has characterized the negotiations from the outset, W.A. Wijewardena, a former central bank deputy governor, said, “The outcome involving the failure to reach agreement is not unanticipated because neither party had any intention of reaching out to the other.”

According to Wijewardena, the trust necessary for a fair negotiation was absent. “Now it seems both parties are asking for the pound of flesh which isn’t available for delivery to the other party.”

Source: Nikkei Asia

Sajith Premadasa and the SJB are likely to perform better in an early parliament election. The Tamil and Muslim parties as well as other MPs who are likely to cross over to Ranil if and when a Presidential election is announced would not do so.

Despite all his endeavours, there was nothing for Basil to crow about as foxy Ranil stayed put. Wickremesinghe’s critics especially Tamil politicians and journalists often describe him as a man with “Narithanthiram”(foxy cunning).

The legal position therefore is one of Ranil Wickremesinghe being backed and supported as President by the SLPP. Most members of his Govt both Cabinet and state ministers are from the SLPP

The encounter between the fox and crow is an ancient tale heard by most Sri Lankans in their childhood days. The crow has a vadai or kavun or piece of cheese in its beak. The crafty fox wants it and flatters the crow into thinking it is a harmonious singer with a sweet voice. The fox entreats the crow to sing. The foolishly vain crow opens its mouth to sing and drops the titbit it has in its beak. The smart fox runs off with it, leaving behind a dejected crow. This story has been made famous by singers like CT Fernando and AE Manoharan in their songs too.
A modern version of this fable is currently unfolding in Sri Lanka. In a reversal of the old story, the crow tries to deceive the fox now. A “Kaputa” (Crow) from the US meets with a “Nariya”(Fox) in Sri Lanka. The fox is planning to devour a feast, fit for a king sorry President. The crow wants to prevent it. So it resorts to many stratagems including a ‘blow hot blow cold” approach to compel the fox from partaking of the presidential feast. This crow is regarded by its followers as a brilliant bird with seven brains.
Despite the US crow’s persistent efforts, the Lankan fox does not budge. The wily animal knows that the prospective presidential feast is the best meal it can have in a long, long life of political disappointments. Reynard also knows that the crow is only a tactical ally and a strategic enemy. Hence the Fox gives the crow a patient hearing and then proceeds with preparations to devour the Presidential feast. In spite of racking its seven brains, the flummoxed crow does not know what to do except to get its minions “caw caw” in the media.

Basil’s Return

Basil Rajapaksa returned amid much political excitement a few weeks ago to Sri Lanka after a lengthy stay in Los Angeles. The politically astute Medamulana sibling has a fan club that hailed him once as a seven-brained wonder. Much of that sheen has worn off after the “Aragalaya”(Struggle) protests but there are still some “Basilistas” who think of him as a political genius capable of performing wonderful miracles.
The Sri Lanka Podujana Peramuna (SLPP) is the political party founded by Basil Rajapaksa. He nurtured the party to success as the SLPP National organizer. The SLPP within a few years of its existence won the majority of councils in the local authority elections of 2018. The SLPP candidate Gotabaya Rajapaksa won the 2019 presidential election polling 69 Lakhs of votes.
In 2020 the SLPP and its allies won 146 of the 225 seats in Parliament/ Basil was the master strategist who planned and coordinated the campaign. Basil also used the “carrot and stick” method to entice eight Opposition MPs to enable the SLPP Govt to command a two-thirds majority in the House.
A chain is as strong as its weakest link. The seemingly all-powerful SLPP regime was headed by autocratic strongman Gotabaya Rajapaksa. Appearances can be deceptive. Instead of being a strongman as projected by his party, Gotabaya proved to be a weak- coward when faced with a crisis of his own making. He went down in history as the first Sri Lankan president to flee from the country and submit his resignation from foreign soil.
The decline and downfall of the Rajapaksa regime is a well-known matter that need not be repeated here. Basil was forced to resign as finance minister. Subsequently he quit as a national list MP too.
The 21st Constitutional Amendment which debars dual citizens from contesting political positions, has effectively killed Basil’s chances of gaining a powerful De-jure Govt position again. Yet he retains de -facto political power as the livewire of the SLPP which is still the majority party in Parliament… Mahinda Rajapaksa is the leader of the SLPP but it is Basil who runs the party. Whether this state of affairs will change after Namal Rajapaksa replaced Basil as SLPP National organizer remains to be seen.

Ranil Wickremesinghe

The SLPP was floundering in churning waters when the Aragalaya storm raged. The party got a lifeline when Ranil Wickremesinghe became Prime Minister and then President. In De Jure terms it was President Gotabaya who appointed Ranil as Premier and as acting president. It was the SLPP which voted in large numbers for Wickremesinghe to be elected as President in a Parliamentary vote. It is also the support provided by MPs of the SLPP that enables President Wickremesinghe to pass the Budget and other legislation in Parliament.
The legal position therefore is one of Ranil Wickremesinghe being backed and supported as President by the SLPP. Most members of his Govt both Cabinet and state ministers are from the SLPP. After all, Wickremesinghe has only a single MP from the UNP in Parliament. This situation has provided ammunition to Ranil’s detractors in the Opposition and the media who attack him as a puppet of the Rajapaksa-led SLPP.
This accusation however appears incorrect in factual terms. Though compelled at times by practical politics to engage in minor compromises with the Rajapaksa-led SLPP, Wickremesinghe has demonstrated through his presidential conduct that he is no lackey or stooge of the Rajapaksas. Ranil has proved time and again that he is an Independent person who cannot be cowed by the Rajapaksas or the SLPP. Wickremesinghe does not adopt a confrontational attitude with the Rajapaksas as he needs SLPP cooperation to run the Government but runs things in his own way. This is the DE-facto position.
Ranil has resisted repeated demands to appoint certain SLPP Parliamentarians as ministers. These disgruntled MPs and Basil’s mouthpiece Sagara Kariyawasam often boast pompously that Wickremesinghe was appointed by the SLPP and that he is their creature but the silent majority of SLPP members of the Government have only a healthy respect for Ranil. Having worked closely with him, they are impressed by his knowledge, ability, efficiency and long-term vision.
It is only Ranil Wickremesinghe who has a working plan to uplift Sri Lanka from the deep economic morass it has sunk into and lead Lanka on the road to economic recovery. He has been doing this effectively from the time he took over the reins of power. The country got breathing space. Today it is slowly and surely progressing though it will require at least five more years of Ranil steering the ship of state for Lanka to reach a satisfactory state of affairs economically.
Hence the reality is one where the SLPP has got a reprieve due to Wickremesinghe being at the helm. SLPP MPs who were cowering in fear are now moving about without trepidation. They are organizing public meetings where people like Namal Rajapaksa and “Ratharang” Rohitha can talk tough. All this would not have been possible but for Ranil. The SLPP owes a political debt to Wickremesinghe. A sizable number of SLPP ministers, state ministers, Government MPs and MPs in the Opposition realise this.

Presidential Election

A new Presidential election is due this year and the incumbent president intends contesting. While the bulk of SLPP parliamentarians are supportive of Ranil, there are others in the “Pohottuwa” camp who are not. It is against this backdrop that SLPP master-brain Basil Rajapaksa returned to Lanka. Thereafter he has engaged in a series of discussions with President Wickremesinghe. This process has been supplemented by several inspired leaks appearing in different sections of the media.
It appears that Basil Rajapaksa has tried in many ways to make Wickremesinghe alter his plans for the Presidential election. Basil and his acolytes within the SLPP want the Parliamentary election to be held first.

First Reason

There are two broad reasons. The first is that the SLPP is not in a position to contest and win the presidential poll. The Rajapaksas would always prefer one of the clan to contest. In this case, Namal seems to be the obvious choice. Fielding Namal is dicey. If the “rising son” fares miserably in the poll, that may affect his political future.
The other option is to field a non -Rajapaksa “outsider”. But the problem here for the Rajapaksas is tricky. If that candidate does badly it will dampen SLPP’s future electoral prospects. On the other hand, if the non -Rajapaksa candidate does well, the Rajapaksas would feel threatened. A SLPP Presidential candidate who garners a large number of votes will gain political strength and legitimacy and could become a potential aspirant for SLPP leadership. This could prove to be a challenge to Rajapaksa domination in the future. It may be recalled that when SLPP dissident MP Dullas Alahapperuma vied for the presidency, the jittery Rajapaksas opted for Ranil instead of the man from Matara.

Second Reason

The second broad reason is about the future president. With the prospect of an SLPP president being ruled out, the Rajapaksas are concerned about who the next President would be. If the JVP’s Anura Kumara Dissanayake is elected, doomsday bells will start tolling for the Rajapaksas and the SLPP. In such a scenario the best bet is for the SLPP to back Wickremesinghe as the second best choice. However, the cussedness of the Rajapaksas and their penchant for “Karapincha” treatment stand in the way.
The Rajapaksa clan is split over Ranil’s presidential prospects. Some are neutral, some are for Ranil and some are against Ranil. There is apprehension that if Ranil contests and wins the presidency, his hand will be strengthened politically. The pro-Wickremesinghe alliance that elected him to office could contest Parliamentary elections and do well. This would diminish the SLPP and by extension the Rajapaksa clout.
Therefore, Basil wanted Ranil to conduct the Parliament poll first. He gave out some sanctimonious reasons for the request. Ranil may have been too polite not to howl with laughter at the sight of Basil’s philosophy about acquisition of too much power and its negative consequences.

Basil’s Calculation

Basil’s calculation is that the SLPP could win a bloc of seats if a Parliament poll is held first. It could also compel many SLPP MPs who are pro-Wickremesinghe to return to party folds. Above all, Wickremesinghe and his alliance are not likely to fare as well as they would in a Presidential election.
An early Parliamentary election could also reduce the JVP’s seat tally. If Anura Kumara polls a huge amount of votes at the presidential hustings, that could result in the party doing similarly well in the parliamentary poll. But if the Parliament elections are held first, the JVP could increase their MP tally but not to a very great extent. Sajith Premadasa and the SJB are likely to perform better in an early parliament election. The Tamil and Muslim parties as well as other MPs who are likely to cross over to Ranil if and when a Presidential election is announced would not do so.

Weaken Wickremesinghe

Thus a Parliamentary election being held first would weaken Wickremesinghe considerably. He would no longer hold the whip hand as he contests the presidential election. Meanwhile the SLPP may be able to strengthen their position by engineering break-aways and cross-overs from other parties. The SLPP could even sideline Wickremesinghe and finish him off politically. The party hierarchy has been helplessly tolerating Ranil’s impudent independence and would love to bring him down notwithstanding the fact that he earned the SLPP a reprieve. The Rajapaksa hallmark “Use and throw” can apply to Ranil too.

Foxy Cunning

Under these circumstances the SLPP’s master strategist Basil Rajapaksa tried to coax, cajole or coerce Ranil Wickremesinghe into opting for a Parliamentary election first. Despite all his endeavours, there was nothing for Basil to crow about as foxy Ranil stayed put. Wickremesinghe’s critics especially Tamil politicians and journalists often describe him as a man with “Narithanthiram”(foxy cunning).
So Wickremesinghe did not fall victim to Basil’s wily stratagems. He would not conduct Parliamentary elections first. Ranil knows that the best thing for him is to conduct the Presidential election first because he has a very good chance of winning it. He will go ahead with the presidential poll despite the SLPP’s antics.
Given Ranil Wickremesinghe’s firm stance, there is very little that Basil Rajapaksa could do. The party itself is confused about its future course of action. Should the SLPP field a presidential candidate of its own or should it lend support to Wickremesinghe’s candidacy? This is the party’s dilemma.

Pragmatic Mahinda

The responsibility of arriving at a decision has been given to party leader Mahinda Rajapaksa. It is believed that the pragmatic Mahinda would reach a decision that would benefit his party as well as Namal his eldest son and political heir.
D.B.S. Jeyaraj can be reached at dbsjeyaraj@yahoo.com

Net favourability rating of Sri Lanka opposition leader Sajith Premadasa increased in March but rival Anura Kumara Dissanayake continued to lead, though all potential candidates including them had negative ratings for the month.

The Institute for Health Policy (IHP) which carried out the survey found that Premadasa’s net favourability had increased by 30 points to -30 in March compared to the previous month while favourability ratings of National People’s Power (NPP) leader Dissanayake and President Ranil Wickremasinghe remained relatively unchanged at -24 (-2) and -78 (+1) respectively.

IHP said in a statement on Thursday April 18 that favourability estimates for each month are based on 100–400 interviews conducted during that month and during a few weeks before and afterward to ensure a minimum set of responses. The March 2024 estimates are based on 401 (Premadasa), 377 (Dissanayake), 406 (Wickremasinghe), and 145 (former president Gotabaya Rajapaksa) interviews.

IHP’s Sri Lanka Opinion Tracker Survey (SLOTS) surveys a national sample of adults (ages 18 and over) reached by random digit dialling of mobile numbers, and others coming from a national panel of respondents who were previously recruited through random selection. SLOTS tracks favourability by asking respondents if they have a favourable or unfavourable opinion of a public figure or institution: net favourability being the average of the positive (+100) and negative (-100) responses. All estimates are weighted to match the national population with respect to age, sex, ethnicity, socioeconomic status, sector, province and past voting preference. Monthly estimates are based on samples of 100+ interviews pooled from interviews in each month and from weeks before and afterwards. As the March update uses a more recent data set than the previous update, there are small changes in estimates of favourability ratings for previous months.

“The SLOTS survey has previously been funded by the Neelan Tiruchelvam Trust, the UK National Institute for Health and Care Research (NIHR), The Asia Foundation in Sri Lanka, and others. Current field work is financed by the IHP Public Interest Research Fund and others. The sponsors play no role in the study design, analysis, or interpretation of findings. Furthermore, the survey findings do not necessarily reflect the views or positions of past and present funders,” IHP said.

Sri Lanka Freedom Party (SLFP) would not support an administration bent on selling national assets, Kegalle District MP Dushmantha Mithrapala, Acting General Secretary of the SLFP said, addressing an event to mark the 108th birth anniversary of Sirimavo Bandaranaike at the BMICH on Wednesday.

The ceremony was attended by both factions of the SLFP vying for the control of the party. Mithrapala represents the Maithripala Sirisena faction.

“Sirimavo Bandaranaike never betrayed the party for positions and privileges. During her tenure as prime minister, she strengthened the State. SLFP can’t tolerate the sale of state assets for a penny. When people elect a future President, they will take into consideration who has spoken against corruption and the sale of state assets. Sri Lankans will not vote for those who betrayed their trust,” he said.

Former president Maithripala Sirisena said that the SLFP was in crisis. However, that was nothing compared to the crisis which emerged after Sirimavo Bandaranaike was stripped of her civic rights, he said.

“Her children formed other parties. They abandoned her. We stood by her then. I want to ask SLFPers whether they can join other parties whose views are diametrically opposed to those of Sirimavo Bandaranaike?” he said.

The Colombo District Court has extended an enjoining order preventing former president Maithripala Sirisena from serving as chairman of the crisis-riddled Sri Lanka Freedom Party (SLFP).

Attorney-at-law Lakmal Wickramarachchi told reporters on Friday April 18 that objections will be filed on May 09.

“Proxies were filed on behalf of former president Maithripala Sirisena and the general secretary of the party. We obtained dates for filing objections to the enjoining order. We expect to file our objections on May 09 and present facts seeking the removal of the enjoining order,” he said.

The order, made by the court following a case filed by former president Chandrika Bandaranaike Kumaratunga, will be in effect till May 09.

Meanwhile, SLFP acting general secretary Dushmantha Mithrapala has filed objections at the National Election Commission to the new appointments made to the SLFP on April 08, media reports said Friday afternoon.

On Tuesday, Mithrapala accused party stalwarts of attempting to “betray” the party to its traditional rival the United National Party (UNP).

The SLFP last week appointed its incumbent vice president Nimal Siripala de Silva as the party’s acting chairman, amid much controversy. The appointment was made at a politburo meeting held April 08 morning after the the Colombo District Court issued an interim order the previous week preventing former President Maithripala Sirisena from serving as SLFP chairman.

Former President Kumaratunga, whose father S W R D Bandranaike founded the party in the 1950s, also hit out at Sirisena last week.

“When everyone asked me to run for president in 2015, I said no and brought in the SLFP general secretary, with great expectations. He ruined the country and the party too. That mistake was corrected today,” she said.

She added that the party constitution is a mess, which she attributed to Sirisena’s actions as SLFP chairman.

“I will never leave the SLFP,” she said.