Category: News

A total of 26 train services including office and intercity trains which were scheduled to operate yesterday were cancelled following difficulties faced by the Station Masters (SMs) and junior staff in reporting for work due to the prevailing fuel crisis, the Sri Lanka Railways Station Masters’ Union (SLRSMU) said.

Accordingly, two train services between Colombo Fort-Wadduwa, Colombo Fort-Veyangoda, Colombo Fort-Ambepussa, Colombo Fort -Chilaw, Colombo Fort -Madampe, passenger and mail transport trains operated between Colombo Fort and Avissawella, and six train services between Colombo Fort-Panadura, Colombo Fort-Rambukkana were cancelled.

Meanwhile, intercity express trains scheduled to leave for Batticaloa and Kankesanthurai (KKS) from Colombo Fort were also cancelled.

The collapse of the railway service has begun now. However, the station masters and the junior staff are trying to overcome the situation as much as possible to make the service work.

The majority of the railway staff do not have official quarters. The lack of fuel can lead to problems in them reporting to work in the future. Therefore, delays in the operation of trains, inability to issue tickets, failure to deliver or delayed delivery to passengers’ needs may affect the railway transport service.

However, neither the department nor the government has taken steps to introduce a successful method of providing quick fuel to railway employees, which is the main mode of transport at this time.

The union emphasized that train cancellations in the future are more likely if this matter is not addressed promptly.

Britain on Monday said that, while Sri Lanka is a human rights priority country for the Foreign, Commonwealth and Development Office, its assessment was that a referral to the International Criminal Court (ICC) against those responsible for alleged human rights violations in Sri Lanka would not have the required support from members of the UN Security Council.

Vicky Ford, Parliamentary Under-Secretary (Foreign, Commonwealth and Development Office) was responding to a question raised in the British parliament by Labour MP Stephen Morgan, who asked whether her Department is taking steps to ensure that those responsible for human rights violations against the Tamil community in Sri Lanka are brought to justice in the International Criminal Court.

“It would not advance the cause of accountability for an ICC referral to fail to win Security Council support or to be vetoed,” Parliamentary Under-Secretary Vicky Ford stated in a written answer.

She further stated –

We, alongside our partners in the Core Group on Sri Lanka, have led international efforts over many years to promote accountability, reconciliation and human rights in Sri Lanka. On 23 March 2021 the UN Human Rights Council (UNHRC) adopted resolution 46/1, which provides a continued framework for international engagement on human rights. It calls on the government of Sri Lanka to make progress on human rights and stresses the importance of a comprehensive accountability process for all violations and abuses committed in Sri Lanka. The Minister of State for South Asia, Lord (Tariq) Ahmad of Wimbledon, visited Sri Lanka in January 2022. He travelled to the North and East as well as Colombo and met a range of civil society groups, including Tamil representatives, to discuss human rights. The Minister also urged the Government of Sri Lanka to take steps to deliver justice and accountability.

Sri Lanka Cabinet has given green light to a proposal submitted by the Prime Minister to obtain a grant from the United States of America, nearly two years after President Gotabaya Rajapaksa rejected a $480 million from the U.S.-based Millennium Challenge Corporation (MCC).

The $57 million comes through two agreements signed between the Governments of Sri Lanka and U.S. to supply funds to strengthen the cooperation for democratic good governance and social integrity’ and to create a sustainable and covered economic development’

The proposal by the Premier Ranil Wickramasinghe suggested signing a new agreement for implementation of a new programme for financing 57 million US dollars by the United States Agency for International Development (USAID).

The project has been named as ‘The Programme for a Democratic, Prosperous Sri Lanka with the Ability to Survive Amidst Disasters’ until the year 2026, paying the preliminary attention on the fields of productive democratic governance, growth based on a secure market and strengthening the resources required to sustain pressure and stress.

President Rajapaksa in November 2021 said that his government will never sign the MCC agreement proposed by the U.S soon after the then Secretary of State Mike Pompeo’s visit. However, the U.S. cancelled the MCC offer to Sri Lanka one month after Rajapaksa’s statement.

Velu Anna Lechchami, 49, from Ratnapura village, about 100km (62 miles) from Sri Lanka’s main city of Colombo, is thankful for the smallest job she gets.

If she or her husband find work to clean, cook, or pluck tea leaves, they will be able to put food on the table that day. But with a catastrophic economic crisis in Sri Lanka, work is scarce and if they find something to do, getting to work is another challenge.

Sri Lanka restricted the sale of fuel on Monday, providing it only for essential services till July 10. The desperate move was taken as the island nation has run short of foreign currency to buy fuel.

For Lechchami, this means less work. There are days she just survives on a cup of plain tea with some sugar. On other days, she survives by boiling the jackfruit offered by her neighbour.

“There is no other option for us. We must work to buy food for the day. We are trying to survive. There is nothing else to do,” she told Al Jazeera.

Sri Lanka is facing its worst economic crisis in more than 70 years, with its economy shrinking by 1.6 percent in the first quarter of this year, according to official data.

The country has defaulted on its $51bn foreign debt and is now holding bailout talks with the International Monetary Fund (IMF).

Inflation hit a record 45.3 percent last month while the rupee depreciated more than 50 percent against the dollar this year. The shortage of foreign currency required to import fuel, fertiliser and other essentials has had a devastating effect on the country’s economy.

Prime Minister Ranil Wickremesinghe told parliament last week the country was facing a record recession.

Protesters have been demanding the resignation of President Gotabaya Rajapaksa over the government’s handling of the crisis for months. The other two powerful Rajapaksas – Prime Minister Mahinda Rajapaksa and Finance Minister Basil Rajapaksa – have resigned.

‘We are done for’

The economic crisis has forced people across the island to stay in queues for days to buy essential goods such as fuel and cooking gas.

Security officials have been deployed at fuel stations to control the crowds.

In a bid to end the fuel crisis, power and energy minister Kanchana Wijesekara on Tuesday tweeted the government will allow import and retail sale of fuel to companies from the oil-producing nations.

Authorities also introduced a token system this week to stop people from queueing at filling stations. However, it has caused more chaos.

Kadireshan Selvachandran, 35, an autorickshaw driver working in Colombo, has been in a line to buy fuel for three days. He spent the last two nights in his vehicle, hoping he would be able to buy enough fuel to last a day. He did not get the token.

“We are done for. Now they say only essential services will be given fuel for the next 13 days. We are doing essential services too, we feed our children,” he said.

Selvachandran is determined not to leave the queue till he gets fuel.

Experts say the talks with the IMF could result in some drastic and deep-reaching structural reforms.

Political analyst Dr Aruna Kulatunga told Al Jazeera some of these reforms may include removing the duopoly in the energy sector, ending import restrictions, increasing income and indirect taxation and privatisation or selling of unproductive “white elephant” state-owned enterprises.

A repealing of the Paddy Lands Act, which bars development and even other agricultural work in abandoned paddy lands, is also on the table along with the transfer of non-productive state-owned lands to farmers and former estate workers, he said.

“This is a double-edged sword. On one side one can assume serious job losses while on the other hand, deep-reaching social reforms like land redistribution and allowing productive use of abandoned paddy lands will increase the bottom lines for many of the marginally affected people,” Kulatunga told Al Jazeera.

For Lechchami from Ratnapura, however, it is a long wait while having three meals a day has “become a luxury” for her. Experts warn that one of the long-term effects of the economic crisis could be chronic malnutrition for generations to come.

The United Nations World Food Programme says 22 percent of Sri Lanka’s population is “food insecure and in need of assistance”. The country’s Medical Research Institute (MRI) has launched a survey to look into the malnutrition status of the people.

“Malnutrition in the pre-economic period was high. Now with the economic crisis, it will definitely go up,” Dr Renuka Jayatissa, a nutritionist at MRI, told Al Jazeera.

Lechchami says the cost of most food has tripled from what she paid last year. The longer the government takes to ease the crisis, the worse it will get for her family.

SOURCE: AL JAZEERA

As much as India has been supportive towards Sri Lanka and doing its best to help the nation, The Indian Government needs to also pressurize for a provincial council election to be held so that the opinion of the people is made known, says Samagi Jana Balawegaya (SJB) MP Mano Ganesan.

He made this statement while speaking to the media today (29).

“As much as an election must be pushed forward for, due to the lack of funds, the Indian government and other nations must support financially for an election to be held. The other nations of the world are reluctant to help Sri Lanka at the moment as the credibility has been lost by the Government of Sri Lanka. The international community has lost trust with the President of Sri Lanka as well. The might have not openly stated it, but this is the fact. Thus, right now an election is needed,” said MP Ganesan.

He further mentioned that despite the voices of the people being loud and clear, President Gotabaya Rajapaksa has refused to step down, thus an election was the only way forward so that the President can be ousted.

Due to the crisis situation in the country, the Registrar General’s Department has decided to restrict the services offered by all its regional and district offices to two days a week.

Accordingly, the issuance of birth, marriage and death certificates through the divisional secretariats and land registration services will be limited to Mondays and Wednesdays.

In a media notice, the Department said the aforementioned services are provided only on Mondays and Wednesdays between 8.30 a.m. and 4.00 p.m. over the next 10 days.

However, Registrar General’s Department head office at ‘Suhurupaya’ in Battaramulla and its branches located at the Immigration & Emigration Department’s regional offices in Kandy, Matara, and Kurunegala will function on weekdays as per usual.

Meanwhile, the Post Office announced that In view of the crisis situation in the country, all post offices will be open only three days a week until the 10th of next month or until further notice.

Post Master General Ranjith Ariyaratne has issued a circular stating that the minimum staff should be called for the duties of the Central Post Office and Post Offices on Monday.

According to the circular, all post offices and sub-post offices across the island will be open on Tuesdays, Wednesdays and Thursdays and will be closed on Mondays, Fridays and Saturdays.

1. Underlying causes for the economic collapse

a). Unsustainable fiscal deficit

Long years of allocation of money for unproductive expenditure (Eg: even long after the war was over, defense had the highest budget allocation), continually sustaining loss-making State-Owned Enterprises (Sri Lankan airlines), Capital expenditure which yielded no return (Eg: Mattala airport, Hambantota port, Nelum Pokuna tower and Convention Centre), lifelong subsidies for fuel, power, fertilizer.

b) Funding the above with Printed money

Fueling inflation and damaging the exchange rate by creating an excessive demand for dollars through cheap money

c) Decline in Revenue

Indiscriminate tax exemptions and lowering of tax rates resulted in Revenue which accounted for 20% of GDP in 1990’s and declined to 8% now, thereby resulting in unsustainable fiscal deficits.

d) Deficits in Balance of Payment (BOP).

Continual outpacing of Exports by the Imports, greatly facilitated by the low-cost supply of printed money, the Dollar continued to increase its value against the Rupee. This resulted in exports stagnating or falling due to the Rupee being pegged administratively to the Dollar, rather being allowed to find its own value in the international market. This amounted to an anti-export policy.

e) Indiscriminate foreign borrowings

Since access being given to Capital Market, ISB’s were purchased regularly for non-revenue generating projects.

2. Historical cause

One may raise the question that for 74 years since independence we have had a BOP deficit, but we never faced such a crisis, so why now? The reason lies in what happened in 2006, when Sri Lanka was granted the Middle-Income status. Prior to graduating to this status, we were the recipients of generous aid and concessionary loan packages at hardly an interest rate with very long repayment schedules. Even with long years of negative BOP, we had no debt sustainability problems because we were bailed out by the several IMF/World Bank/ ADB etc packages because countries with lower income status had no access to the Capital Market and the International Sovereign Bond (ISB). Our first ISB borrowing was in 2007 and that certainly was not the last and our Government debt soared from that point onwards funding projects which had no Return on Investment and no Pay Back period. Hence the result is the current debt unsustainability. Our entry into ISB made us come under the rating agencies which exposed our financial indiscipline.

3. Steps taken in the mismanagement of the problem

a) Fixation of the Rupee to the Dollar by using the scarce reserves to defend the Rupee.

b) Large amount of Revenue loss due to Tax exemption and reduction.

c) Placing a cap on Treasury Bill rates thereby creating an artificial interest rate. This resulted in the under subscription of the Treasury Bills leading to printing of more money to compensate for the under subscription.

d) Delay in seeking IMF support. We should have done this in December 2020 when our debt was still sustainable and debt restructuring would not have been a pre-condition to IMF assistance. IMF in the 19990’s was very prescriptive but today they adopt a far broader approach.

4. The way forward

We need to acknowledge some of the positive steps that have been taken during the last 2 months.

a) Sharp increase in interest rates to combat inflation and dampen demand both locally and for imports.

b) Removing the cap on Treasury bill rates thereby allowing the interest rates to be market based.

c) Restrictions on Open Account trading instilling financial discipline thereby discouraging the grey market.

d) Removing the fix on the exchange rate and once reached a stable level allowed fluctuation within a specified band without allowing it to be out of hand.

e) Tax increases and allowing price increase in fuel and gas.

f) Curb on government expenditure

The above are measures for the management of inflation, exchange rate and fiscal operations. What needs to be done now is:

a) Debt sustainable analysis and an IMF Staff level agreement. This will open the door to (b)

b) In view of the Reserves being virtually zero, bridging finance needs to be negotiated. The likely countries are India and Japan.

c) IMF funding.

The above should instill confidence and see more export conversions taking place, greater share of worker remittance coming into banking channels and inflows into the Stock exchange

Written by: Angelo Patrick