Category: News

The Gazetted draft of the 22 nd. Amendment (22A) of the Sri Lankan constitution, which will be presented to parliament in the coming week, is a compromise between the interests of President Gotabaya Rajapaksa and Prime Minister Ranil Wickremesinghe. It is also designed to maintain the stability needed to tide over the current economic crisis and to avoid a referendum.

If passed by parliament, by the required two-thirds majority, the draft 22A will enter the constitution as the 21 st.,Amendment (21A).

Constitutional Council and Independent Commissions

In a significant change, the draft 22A re-establishes the independent Constitutional Council (CC) to replace the Parliamentary Council of the 20 th.Amendment (20A). The CC will, in turn, appoint the Chairmen and members of the various Independent Commissions (ICs) which would make key appointments and oversee the work of sectors assigned to each.

The Independent Commissions are: the Elections Commission, Public Service Commission, Police Commission, Judicial Commission, Finance Commission, Bribery and Corruption Commission, Delimitation Commission, Human Rights Commission, Audit Service Commission and National Procurement Commission.

The CC comprises the parliament Speaker (who will be its chairperson), the Prime Minister, the Leader of the Opposition, one Member of Parliament (MP) appointed by the President, 5 MPs comprising one ruling party MP, one MP from the party of the Leader of the Opposition, three non-MPs appointed by the Speaker in consultation with the Prime Minister and the Leader of the Opposition and approved by a majority of MPs in parliament, and one MP from a party other than the one represented by the Prime Minister and the Leader of the Opposition.

All appointments should reflect the pluralistic character of Sri Lankan society. Non-MPs should be persons of repute and integrity. CC members will serve for three years. Vacancies will have to be filled in 14 days.

It is the President who makes appointments to the CC. But the 22A enjoins the President to make the appointments within 14 days of receiving recommendations from the CC. If he fails to do that, the appointments will be deemed to have been made as recommended by the CC.

In case parliament is dissolved, the Speaker, the Prime Minister and the Leader of the Opposition will continue to be members of the CC till a new parliament is elected and a government assumes office.

The CC’s nominations are necessary for high offices such as Attorney General, the Governor of the Central Bank, the Auditor General, the Ombudsman, and the Secretary General of parliament. The CC shall meet at least twice in a month. The quorum is five. Its decisions should generally be by consensus or be approved at least by five members.

President’s Powers

Through the 22A, the Prime Minister gains authority over the President, but he will not be able to exercise the new provisions during the tenure of the current (the ninth) parliament. The new provisions will come into effect only from the next of 10 th. parliament. This is a major concession to President Gotabaya Rajapaksa and the votaries of a strong Executive Presidency, like the Sinhala nationalists including the present Justice Minister and the architect of the 22A, Wijesdasa Rajapakshe.

The 22A says that the President will take his decisions on appointments to the council of ministers and the distribution of portfolios among the ministers “on the advice of the Prime Minister” and not in “consultation with the Prime Minister, where he considers such consultation is necessary” as is the case now under the 20 th.Amendment.

But there is a condition attached to this. The above mentioned stipulation will not come into play during the life of the current parliament. During the life of the current parliament, the President may “consult” the Prime Minister only if, in his opinion, such a consultation is necessary. This provision constitutes a major concession by the Prime Minister Wickremesinghe to President Gotabaya.

The other concession made to the President is that he shall be entitled to hold the Defense portfolio. In the case of the absence or exist of a minister, the President can take over that ministry, but only for 14 days.

Prime Minister’s Term of Office

The draft 22A says that the Prime Minister shall stay in office throughout the period the cabinet is in office, unless he resigns or ceases to be a Member of Parliament. However, from the time the 22A is enacted till the dissolution of the ninth parliament, the President can remove the Prime Minister from his office, if in his opinion, the Prime Minister has lost the confidence of the parliament.

Ministerial Secretaries’ Tenure

At present, the Secretaries to the Ministries quit the moment the cabinet resigns or is dissolved. But under the proposed 22A, they would not be required to quit but await the appointment of a new cabinet.

Critique

The draft 22A has the support of those who favor the present order with Gotabaya Rajapaksa continuing as Executive President and Ranil Wickremesinghe continuing as Prime Minister. They feel that the existing system has to be upheld for the sake of stability considered necessary to get desperately-needed humanitarian and financial aid from other countries. They fear that an opposition divided ideologically and politically will not provide a stable government and successfully operate the government machinery without a strong Executive Presidency which is immune to the vagaries of party politics, characteristic of the Westminster system. They feel that to solve the tremendous and unprecedented economic crisis, Sri Lanka needs the undivided attention of a strong center represented by the Executive Presidency.

The critics of the 22A however say that it is a big let-down, in the context of the public demand for a democratic system to end the system of government based on concentration of power in the hands of one person or one family and its cronies. These critics expected the 22A to be a full resurrection of the 19A of 2015. But it is only a pale shadow of the 19A, says Constitutional expert, Dr.Jayampathy Wickramaratne.

In a short note issued on Thursday, the Center of Policy Alternatives (CPA) said: ““The Gazetted 22A does not curtail the powers of the President nor introduce checks and balances in any meaningful manner, contrary to the demands of the people of Sri Lanka. In the absence of any genuine attempt to address the inherent problems of governance, this attempt at reform will only worsen the existing political and economic crisis and destroy whatever little remaining faith citizens might have in constitutional governance.”

“CPA has carefully considered the contents of the Bill and notes that the Bill does not revert the Constitution to the structure of government that prevailed under the Nineteenth Amendment (2015-19).”

Dr.Wickramaratne regrets that the President will retain his powers for the duration of the present parliament, though he is allowed to hold only the Defense portfolio under the 22A. Any other ministry could beheld only for 14 days. The experts also regrets that there is no specific provision for the representation of the small parties in the CC and to ensure the pluralist nature of Sri Lankan society.

The main opposition Samagi Jana Balawegaya’s proposal for a 21A was a radical departure from the existing 20A and called a fundamental change in the constitution including the abolition of the Executive Presidency. But as expected, the Supreme Court said that the SJB’s 21A would need a two thirds majority in parliament and a referendum.

President Gotabaya and Prime Minister Wickremesinghe felt that the country could not afford a referendum under the present economic and financial conditions and got the Justice Minister Wijedasa Rajapakshe to draft an amendment which will not require a referendum.

Given the SJB’s opposition to the 22A draft, it is unlikely to vote for it in parliament. The National Peoples’ Power led by the Janatha Vimukthi Peramuna (JVP), and the Tamil National Alliance (TNA) would also oppose it. But the 11-party group is likely to support it as it wants a strong Executive Presidency.

The million dollar question is whether the 22A will get the two-thirds majority needed for a constitutional amendment..

Railway trade unions have called off their strike action.

A Senior Officer from Sri Lanka Railways told News 1st that a decision was made to release fuel from the Sri Lanka Railways reserves to employees, as they went on strike citing that they had NO fuel to report to work.

The officer said that fuel was provided to railway workers until 3 PM on Friday (1).

The sudden strike by railway workers severely inconvenienced many passengers on Friday (1) afternoon.

Sri Lanka Railways said that although the strike was called off, there will be a delay in operating trains this evening.

Japanese Embassy in a statement on their FaceBook page said that Japan is closely paying attention to the current difficult economic situation in Sri Lanka and the severe humanitarian situation accompanied.

“Considering such a situation, the Government of Japan has decided to provide Emergency Grant Aid of USD three (3) million through UNICEF and WFP in order to provide medicine and food in a manner that would directly benefit the Sri Lankan people. Japan sincerely hopes that this assistance will be of help to overcome the hardship faced by the people of Sri Lanka, Japan’s long-standing friends,” the Embassy said.

The statement added that the government of Japan would like to consider its further contribution to Sri Lanka in consultation with the Government of Sri Lanka and other developing partners, while giving attention to the situation of Sri Lanka and the negotiation progress between Sri Lanka and IMF.

Srilankan Airlines has warned about its capability to make a coupon payment on a Singapore-listed bond, citing the deterioration in Sri Lanka’s economy.

The payment relates to a $175 million bond with a 7% coupon listed in Singapore, according to a filing with the Singapore stock exchange. The bonds term is to complete in 2024.

The carrier missed a coupon payment due on 25 June, but still has a 30-day grace period. The bonds are backed by the Srilankan government, which holds 99.52% of the carrier.

“The economic situation in Sri Lanka has directly impacted the ongoing operations of the Company,” says Srilankan.

“In light of the current circumstances, the board considers it necessary to make use of the 30-day grace period to further determine the position of the company, both in respect of the upcoming coupon payment and its debt obligations more generally.”

The carrier adds that Sri Lanka’s economic conditions have deteriorated rapidly owing to a “very low level” of foreign exchange reserves, the coronavirus pandemic, and Russia’s invasion of Ukraine. As such, Sri Lanka is “seeking urgent financial assistance from the International Monetary Fund.”

“The board intends to establish a transparent process for discussions and communications with all bondholders, and to pursue an active dialogue with bondholders as soon as it is in a position to do so,” says Srilankan.

“The board will continue to keep bondholders informed as matters develop.”

In May, ratings agency Fitch affirmed its ratings for Srilankan bonds at ‘C’. It noted that Sri Lanka’s government has imposed a debt repayment moratorium, thus triggering “the commencement of a default-like process for [Srilankan].”

Cirium fleets data indicates that Srilankan has 22 in-service aircraft, comprising 11 Airbus A330s and 10 A320 family aircraft. All of its aircraft are leased. Lessors with exposure to the airline are AerCap, Air Lease Corporation, Aircastle, Avolon, Carlyle Aviation Partners, and one unconfirmed lessors.

The International Monetary Fund has ended talks with Sri Lanka, failing to conclude a deal for a bailout package for the near-bankrupt nation after 10 days.

Nevertheless, in a statement released around noon Sri Lanka time on Thursday, the IMF promised to keep up the talks, which began on June 20. “The discussions will continue virtually with a view to reaching a staff-level agreement on the extended fund facility or EFF arrangement,” it said.

The EFF was established to assist countries with “serious payment imbalances,” according to the IMF. In addition, it provides support for policies “needed to correct structural imbalances over an extended period.”

Sri Lanka, an island nation of 22 million people, is facing its worst financial crisis since independence in 1948, which has left it struggling to pay for fuel and forced it to default on some foreign debt.

Left with just enough fuel for about a week and fresh shipments at least two weeks away, Sri Lanka has imposed restrictions on supplies, limiting them for use for public services like trains and buses and those relating to the health sector, Reuters reported. The ban is scheduled to last two weeks.

Noting that public debt is assessed as unsustainable, the IMF said executive board approval of a package would require “adequate financing assurances from Sri Lanka’s creditors that debt sustainability will be restored.”

“In this context, discussions focused on designing a comprehensive economic program to correct the macroeconomic imbalances, restore public debt sustainability, and realize Sri Lanka’s growth potential,” the press release said.

‘Fragile state’

The lack of a bailout package defied the expectations of an expert CNBC spoke to earlier in the day.

Georgetown University professor Shanta Devarajan said Sri Lanka was close to reaching an agreement with the IMF.

″[Sri Lanka is] very close to reaching what is called a staff level agreement [with] the Fund [on] the set of policies and programs that Sri Lanka would undertake in order to bring down the fiscal deficit and make the fiscal debt sustainable,” Devarajan told CNBC’s “Squawk Box Asia” on Thursday.

He traced the genesis of the current problem to tax cuts three years ago. “We are in this mess at the moment…because in November 2019, the government cut taxes substantially. The value added tax rate went from 15% to 8%,” Devarajan said.

He added that the country is on the verge of becoming a “fragile state.”

“It has all the characteristics [of a fragile state] at the moment. It’s not just the protests in the streets, but … the queues for fuel,” he said, adding that there are now confrontations with the army and the police in various places.

“People have been killed; there have been some shootouts. So this is a very dangerous situation to be in,” Devarajan said.

Sri Lanka has closed schools in urban areas and officials have urged the country’s residents to work from home.