• DDR passed with a majority of 60; SJB, NPP, and SLPP dissidents oppose, SLFP dissidents support
• Debt restructuring talks with China continue; Finance Ministry Secretary to visit China this week
• CBSL Governor makes technical presentation on DDR to Cabinet, gets unanimous approval
• SLPP parliamentary group also briefed, MPs more concerned about opposition to Aswesuma
• RW stops argument between SLPP MPs by getting a cake and wishing Shasheendra for birthday
• Sumanthiran organises meeting for party leaders, President, and CBSL Governor for DDR talks
• EPF safe, say CBSL Governor, Monetary Board; EPF Superintendent unaware of DDR, calculations
• Suren, Nimal, Mahindananda object to Sajith’s attendance at COPF, vote taken on participation
• COPF votes on DDR and passes after two-day meet; five vote against, one abstains, three absent
• Heads of foreign missions in Colombo and spouses treated to a trip by President and First Lady
• No truth in Cabinet reshuffle talk, says Prez Office; SLPP says unaware of any new appointments

President Ranil Wickremesinghe and his Government yesterday (1) crossed what seemed like the first hurdle in moving forward with the country’s debt restructuring programme. Weeks of speculation over Domestic Debt Restructuring (DDR) and conflicting statements made by Government members came to an end yesterday with the programme being subjected to a day-long debate and a vote in Parliament.

The Government’s proposed DDR programme was passed in Parliament last night with a majority of 60 votes with 122 voting in favour and 62 voting against it.

At the outset of the Parliament debate, Committee on Public Finance (COPF) Chairman Dr. Harsha de Silva pointed out that the text of the proposal presented to the House on the DDR programme was different from the one that had been approved by the COPF by vote the previous day. However, the Government side explained that the proposal was the same and that the necessary changes could be made to the text. 

The main Opposition Samagi Jana Balawegaya (SJB) however maintained that it would vote against the proposed DDR programme due to the lack of transparency and equality and the impact on the Employees’ Provident Fund (EPF). This was announced by SJB and Opposition Leader Sajith Premadasa.

Premadasa claimed that the Government’s DDR programme had placed all the burdens on the working masses while the rich and wealthy had been exempted from the process. Referring to this as ‘crony capitalism,’ the Opposition Leader claimed that the SJB would renegotiate Sri Lanka’s agreement with the International Monetary Fund (IMF) under a future SJB government.

Tamil National Alliance (TNA) MP M.A. Sumanthiran made a startling revelation in the House yesterday when he said that the EPF Superintendent had said at the COPF that there was a lack of clarity on the DDR programme and the relevant calculations had not yet been done to determine the level of impact on the EPF.

Sumanthiran called on the members of the Monetary Board to ask themselves if they had been good custodians of the public fund. He further claimed that the DDR could not be called a voluntary measure since the members of the EPF – the working masses – were unaware and had no choice in the matter.

Be that as it may, restructuring domestic debt has been a continuous demand by the private creditors – International Sovereign Bond (ISB) holders – in order to move forward with the restructuring of private debt. This message was communicated to the Government during several online meetings organised by the Government with ISB holders to discuss the way forward in private credit restructuring.

The Cabinet that met under President Wickremesinghe’s patronage on Monday (26 June) decided to hold a special Cabinet meeting on Wednesday (28 June) to discuss and pass the proposed debt restructuring programme. The President told France 24 that following Cabinet approval, it would then be taken by the COPF before being debated in Parliament on 1 and 2 July.

He said that following the Parliament’s approval of the debt restructuring plan, the rest of the negotiations with the creditors would commence. “It’s a question of giving a longer period for repayment and we have also been looking at some form of a reduction in the amount due,” President Wickremesinghe said.

Moreover, he said China had participated in discussions with the Government of Sri Lanka on debt restructuring and was aware of all the information that was being shared, although China was not formally part of the common platform for Sri Lanka’s creditors. “We are confident of China coming along with others,” the President said.

By midweek, Wickremesinghe expressed confidence that Sri Lanka would overcome its bankruptcy status by September this year during a meeting with business leaders.

Meanwhile, the parliamentary party leaders’ meeting that was scheduled for Tuesday (27 June) was postponed by the Government and rescheduled for Friday (30 June).

However, Speaker of Parliament Mahinda Yapa Abeywardena on Tuesday (27 June) issued the gazette notification announcing the convening of Parliament for a special session on Saturday (1) at 9.30 a.m. Opposition parties expressed concerns at the move, while noting that Parliament was being convened at a time when the Opposition had urged the Government to first convene a meeting of party leaders to discuss and decide on holding a special weekend session of Parliament.

Finally, the party leaders decided to convene Parliament to debate the DDR programme yesterday (1) till 7.30 p.m. without having sessions on Sunday (2). However, Parliament sessions will not be held on Tuesday (4) and business scheduled for that day is to be taken up for debate on Friday (7). 

Allaying fears

Meanwhile, Central Bank of Sri Lanka (CBSL) Governor Dr. Nandalal Weerasinghe addressed the media last weekend to allay growing fears among the public following the Government’s decision to grant a long banking holiday. It was stated that the long bank holiday from Thursday (29 June) to Tuesday (4) obtained by declaring Friday (30 June) as a special bank holiday was to gain time for the Domestic Debt Restructuring process.

“Local depositors are assured of the safety of their deposits and that interests will not be affected,” Dr. Weerasinghe said.

The President had also assured that the restructuring of the local debt would not have any impact on the stability of the country’s banking system. According to the President’s Media Division (PMD), the President had noted that the restructuring of domestic debt would not affect the member balance of any superannuation funds, including the EPF, Employers’ Trust Fund (ETF), and the rate of return of superannuation funds that had been paid in the past.

A further assurance was given that it would also not affect the interest rates on bank deposits currently being paid.

Friday, 30 June, was declared a special bank holiday by a gazette issued by the Prime Minister’s Office, which made for a five-day bank holiday for the first time in Sri Lanka. According to media reports, analysts had moved for a five-day bank holiday to provide a suitable buffer for any potential market reactions to significant financial announcements.

Meeting the Chinese

Meanwhile, China has sent out positive messages in relation to Sri Lanka’s debt restructuring programme. The tone was set to proceed with the restructuring programme during Foreign Minister Ali Sabry’s recent visit to China. It is learnt that Sabry had received indications that China was prepared to cooperate with Sri Lanka on the restructuring programme.

It is also learnt that the Secretary of Sri Lanka’s Finance Ministry is to visit Beijing this coming week to initiate discussions with the Chinese financial institutions on proceeding with the debt restructuring programme. The Finance Ministry Secretary is expected to leave for China around Friday (7).

Minister Sabry met with the Chinese Foreign and Finance Ministers during his visit, meeting Chinese Foreign Minister Qin Gang in Beijing on Sunday (25 June). Gang had said that since the establishment of diplomatic relations between China and Sri Lanka, the two sides had always respected and supported each other, setting a good example of friendly coexistence and mutually-beneficial cooperation between large and small countries.

Sri Lanka and China’s EXIM Bank also had talks on the debt restructuring exercise. Foreign Minister Sabry had detailed discussions in Beijing with EXIM Bank of China Chairman Wu Fulin and a team from the EXIM Bank. 

The Sri Lankan Embassy in China said that both sides expressed satisfaction at the conclusion of the talks. According to Sabry, EXIM Bank had assured that it would hold talks with Sri Lanka’s negotiators to attain debt sustainability.

Meanwhile, China Harbour had expressed intentions of investing $ 1.2 billion in the Colombo Port City, while China’s Sinopec had communicated that it was keen on proceeding with the proposed oil refinery project in Hambantota.

SJB’s decision

However, the main focus last week was on the proposed DDR programme and the goings-on in the political circles.

The main Opposition SJB, after adopting a ‘wait-and-see’ attitude with regard to the proposed DDR programme and saying that the party would make a decision on the matter after seeing the Government’s proposal on the matter, announced its decision on Thursday (29 June) to vote against the DDR in Parliament.

Earlier in the week, SJB MP Dr. Harsha de Silva stated that the party would not support a haircut on the anticipated domestic debt deal, but would be open to other options. He told reporters last Sunday that although SJB had opposed DDR from the beginning, it would support DDR without a haircut if it must be done somehow.

He said that the SJB was prepared to pass a law in Parliament to protect the people and creditors from DDR while supporting the Government on the matter. “In order to support the Government in Parliament on DDR, we should be satisfied with the way Domestic Debt (DD) is being restructured,” he had said.

“We have a ‘do not cross line’ in order to support the Government [in DDR]; that is a haircut on DD,” he had said, adding that SJB has done a deep analysis on the matter and has identified several options for DDR.

“We have a certain understanding of how much of the domestic debt should be pushed beyond 2032. In order to do that, we also have a sense of who the owners of those debts are. We also know how much of this debt is owned by private and State banks and we also know that we can do this without laying hands on the EPF,” de Silva had added.

Heated session

Nevertheless, the proposed DDR programme had resulted in a heated argument taking place during the SJB’s parliamentary group meeting on Tuesday.

MPs S.M. Marikkar, Harshana Rajakaruna, and Hector Appuhamy had posed a series of questions to de Silva about the DDR. The MPs had expressed doubts and concern over the manner in which the Government was trying to move the proposed DDR programme to Parliament and had asked de Silva how it would affect the deposits in banks and the EPF.

De Silva however had responded saying that he too was unaware of the exact programme the Government was proposing. “I also don’t know, but what I have heard is that such a situation will not arise. But I don’t know for sure,” he had said.

However, SJB and Opposition Leader Premadasa, along with a majority of the SJB MPs, had noted that the party could not support any proposal that could have an adverse impact on the general public.

It was then discussed as to who would take the responsibility if there was any adverse impact that could befall the country following the proposed debt restructuring programme.

A group of SJB MPs had pointed out that the party did not need to toe Wickremesinghe’s line and had decided to await the details of the Government’s proposed DDR programme until a final decision was reached on Thursday.

The Executive Committee of the Joint Opposition coalition had also met last week to discuss the latest developments in the country. Focus at the meeting was on the Aswesuma social welfare scheme and the proposed DDR. 

The Opposition coalition had decided that it would oppose any proposal that would have an adverse impact on the country’s banking sector or public funds.

RW convenes meetings

President Wickremesinghe meanwhile convened a special meeting of the Cabinet as well as a meeting of the ruling Sri Lanka Podujana Peramuna (SLPP) on Wednesday (28 June) at the Presidential Secretariat.

The Cabinet meeting was scheduled for 4 p.m. while the SLPP parliamentary group meeting was convened at 5 p.m. Both meetings were convened to discuss the DDR programme and the need to create proper awareness about it among the people.

CBSL Governor Dr. Weerasinghe was invited by the President to present the proposed DDR programme to the Cabinet of Ministers. The Governor had made a detailed presentation with technical details to the ministers. Following the CBSL Governor’s presentation, the Cabinet had unanimously approved the DDR programme.

Soon after the Cabinet meeting, the President had attended the Government parliamentary group meeting. Dr. Weerasinghe and Finance Ministry Secretary Mahinda Siriwardana had also attended the meeting.

SLPP MP Gamini Lokuge was one of the first to pose questions about the proposed programme. He had questioned the impact the proposed DDR would have on the Employees’ Provident Fund (EPF). Dr. Weerasinghe had responded by making a statement similar to the one he had made at the Cabinet meeting. The CBSL Governor had said that the EPF would not be affected adversely and that a 9% interest would be given by the fund.

After the CBSL Governor’s statement, President Wickremesinghe had addressed the group. “Now there’s no issue. There was talk that the banking sector and the EPF would be affected, but now the Central Bank Governor has cleared all that. Therefore, it’s best to get this programme approved in Parliament on Saturday,” the President had said.

After discussing the proposed DDR, the SLPP parliamentary group had then spoken of the controversy surrounding the new Aswesuma social welfare scheme introduced by the Government. The Government parliamentarians had noted that the Aswesuma programme had resulted in many people in the districts raising objections over the programme. Some MPs had said that they were once again finding it difficult to go to their constituencies because of the growing objections over the programme.

However, State Finance Minister Shehan Semasinghe had explained that the current list of Aswesuma beneficiaries was not the final one and that a 10-day period had been given for people to make their appeals. MP Jagath Kumara had not accepted Semasinghe’s explanation and said there were valid issues related to the manner in which beneficiaries were being selected.

Finally, the President had intervened to put a stop to the debate over Aswesuma by wishing a Government MP for his birthday. As a birthday cake was brought into the meeting room, the President had said: “No, we won’t stop Aswesuma. But let’s wish Shasheendra Rajapaksa. It’s his birthday today. Let’s wish him and cut the cake. Where is Minister Diana Gamage? You can start wishing Shasheendra for his birthday.”

Nevertheless, the exchange of words between Jagath Kumara and Semasinghe over Aswesuma had continued.

Suma’s meeting

Following the conclusion of the SLPP parliamentary group meeting, the President had attended another meeting to discuss the proposed DDR that was organised by TNA MP Sumanthiran at a hotel in Colombo 7.

The meeting at the hotel had been attended by parliamentary party leaders and CBSL Governor Dr. Weerasinghe. When the President had made his way to the meeting, the Governor was in the process of showing the presentation that had been made before the Cabinet meeting earlier that day. The CBSL Governor had informed the participants that the banking sector would not be affected by the proposed programme.

Parliamentarians Sumanthiran, Rauff Hakeem, and Verité Research Executive Director Dr. Nishan de Mel had posed questions on the proposed programme to Dr. Weerasinghe. One of the main arguments presented by them was on why the Government was looking at restructuring that would affect the EPF of the general public without restructuring the bonds issued on high interest rates that were purchased by wealthy investors.

COPF Chairman de Silva had also spoken in support of Dr. Weerasinghe’s explanation on the DDR programme.

Sajith at COPF

Meanwhile, Opposition Leader Premadasa decided to attend the COPF meeting scheduled from 2-5 p.m. in Parliament on Thursday (29 June), where the Government’s proposed DDR was taken up for discussion and approval.

Dissident SLPP MP Udaya Gammanpila, who is now seated in the Opposition, had also attended the COPF meeting. Both Premadasa and Gammanpila had said they would attend the meeting as observers. However, Gammanpila had not attended the meeting on Thursday.

According to members of COPF, the meetings held on Thursday and Friday were to discuss the DDO with financial stakeholders and get their feedback. It is learnt that Premadasa had wanted to actively participate in the meetings, questioning those invited to appear before the committee. However, since Premadasa is not a member of COPF, the members had decided that the Opposition Leader could only participate as an observer. 

According to sources within the SJB, Dr. de Silva had not been impressed that his Party Leader had attempted to force his way into the committee meeting and had chosen to remain silent, leaving the members of the committee to decide on Premadasa’s request.

Government MPs in the COPF had objected to Premadasa’s request to pose questions at the meeting. SLPP MPs Nimal Lanza, Suren Raghavan, and Mahindananda Aluthgamage had objected and noted that since the Opposition Leader was not part of COPF, he could not pose questions but could attend the meeting as an observer. However, the Opposition MPs in COPF had pointed out that the Opposition Leader had the right to attend any committee meeting.

Following the continuing argument over the matter, the COPF Chair had called for a vote on the matter. The call by Government MPs calling on the Opposition Leader to be a silent observer had received 10 votes while the Opposition camp had six votes. The 10 MPs who voted against Premadasa’s questioning were Aluthgamage, Raghavan, Lanza, Johnston Fernando, Seetha Arambepola, Premitha Bandara Tennakoon, Duminda Dissanayake, Vajira Abeywardena, Anupa Pasqual, and Madhura Withanage. The six supporting votes were from MPs Hakeem, Sumanthiran, Nalaka Godahewa, Chandima Weerakkody, Harshana Rajakaruna, and Kavinda Jayawardana.

Committee Chair de Silva, State Minister Semasinghe, and MP Patali Champika Ranawaka had refrained from voting.

Nevertheless, once the vote was concluded, MP Dissanayake had noted that representatives of all key parties were represented in the COPF and that any question of the Opposition Leader could be posed to the committee via the SJB MPs in the committee.

Following Premadasa’s unsuccessful attempts to intervene in COPF, the SJB announced that it would not be supporting the DDO. This had reportedly resulted in de Silva telling some colleagues that as Chairman of COPF, he should first be allowed to report back to the SJB on the content of the plan before the party took such a decision. 

It is learnt that de Silva’s sentiment had been shared by several other SJB members, who had voiced annoyance with their party’s continual opposition to all reform measures being adopted by the Government. 

Meanwhile, Premadasa had also attended the second meeting of the COPF on Friday (30 June) as an observer.

However, the SJB’s decision on the DDR placed de Silva in a difficult situation since he would not be able to vote against the proposed programme after the COPF under his chairmanship had approved it.

Questions on EPF

A majority of the questions posed on the Government’s proposed DDR programme was based on its possible impact on the EPF. Questions on this issue were directed at CBSL Governor Dr. Weerasinghe during Thursday’s (29) COPF meeting.

Monetary Board members, who are the custodians of the EPF, had also attended the two-day COPF meetings.

The CBSL Governor had reassured that the EPF would be given a 9% interest and that according to the EPF laws adopted decades ago, the fund should be given an interest of at least 2.5%.

MP Ranawaka had questioned whether the EPF would be able to handle the outflows given the high levels of migration. The Governor had said that the fund did not have any liquidity issues at present and that inflows to the fund were still higher than the outflows and that they were at a manageable level.

It was then pointed out that the interest rates that were given by the EPF earlier were decided under different and better economic conditions.

COPF approves DDR

Finally, after two days of discussion, the COPF approved the proposed DDR programme on Friday (30) evening.

While a vote was called to approve the programme at the committee, only five parliamentarians had voted against it. Opposition MPs Sumanthiran, Godahewa, Chandima Weerakkody, Vijitha Herath, and Rajakaruna had voted against. MP Hakeem had refrained from voting while MP Ranawaka had been out of the meeting room at the time of voting. Also, SJB MP Kavinda Jayawardana who had attended the COPF meeting on Thursday had not attended Friday’s meeting, while SJB MP Mayantha Dissanayake had been absent from COPF meetings on both days.

Treating diplomats

While Parliament turned towards debating and deciding on the DDR programme, the President has been keen to develop Sri Lanka’s tourism industry with a new and aggressive approach. 

This weekend, all Colombo-based diplomats (along with their spouses) were treated to a weekend in Nuwara Eliya, including a visit to Ella, via the Viceroy train. While having been organised by the Ministry of Foreign Affairs and the Ministry of Tourism, it is said to be a testament to the support Sri Lanka is receiving from the foreign missions that the embassies themselves had financed the travel and accommodation of their ambassadors and spouses. 

The aim of the visit, it is learnt, was to take the foreign diplomats to areas of Sri Lanka which they had not travelled to before in the hope that the publicity their embassies would provide would be spread back in their home countries. 

The President and his wife, Prof. Maithree, had hosted the ambassadors for a dinner on Saturday in Nuwara Eliya to cap off their visit to the region.

Mix-up

Interestingly, the Foreign Ministry officials were left red-faced on Friday during an accreditation ceremony for new ambassadors. With 10 new ambassadors due to hand over their credentials to the President in Kandy, the Foreign Ministry had organised five vehicles, intending to bring the ambassadors to the President’s House in two batches. However, on the morning of the ceremony, one of the drivers had mistakenly pumped diesel into a petrol vehicle, with the Foreign Ministry officials then having to rush and send the ambassadors across in three batches – one batch of four envoys, second batch of four envoys, and a third batch of two envoys.

Those who handed over their credentials were Dr. Roger Gopaul (High Commissioner-designate of the Republic of Trinidad and Tobago based in New Delhi), Eligio Alberto Salas De Leon (Ambassador-designate of the Republic of Panama based in Ha Noi), Didier Vanderhasselt (Ambassador-designate of the Kingdom of Belgium based in New Delhi), Prof. Joyce K. Kikafunda (High Commissioner-designate of the Republic of Uganda based in New Delhi), Dimitrios Ioannou (Ambassador-designate of the Hellenic Republic based in New Delhi), Dr. Bassam Al-Khatib (Ambassador-designate of the Syrian Arab Republic based in New Delhi), Javier Manuel Paulinich Velarde (Ambassador-designate of the Republic of Peru based in New Delhi), Lee Miyon (Ambassador-designate of the Republic of Korea based in Colombo), István Szabó (Ambassador-designate of Hungary based in New Delhi), and Lalatiana Accouche (High Commissioner-designate of the Republic of Seychelles based in New Delhi).

SLPP has no idea

Meanwhile, the President’s Office last week dismissed rumours of an impending Cabinet reshuffle once the President returned to the country from his official visit to the UK and France. The SLPP has also stated that it has no knowledge of any impending Cabinet reshuffle.

It was recently reported that the President was expected to reshuffle the Cabinet in the coming days due to disappointing reports from certain ministries, as well as the failure of some ministers to perform to the expected level. It was also reported that a few more ministerial positions were expected to be given to SLPP MPs.

However, SLPP General Secretary MP Sagara Kariyawasam had said: “These rumours are spread by various parties. There has been no discussion between us [SLPP] and President Wickremesinghe on such a matter and we have not been informed of any preparation either.”

Kariyawasam had earlier said that they were expecting the President to appoint a new Cabinet with more ministries being given to those he called ‘real SLPPers’. “From the beginning, our request to the President was to appoint a new Cabinet with more ministries being given to real SLPPers, but he prefers to go with the final Cabinet of former President Gotabaya Rajapaksa. That does not mean that our request is invalid,” Kariyawasam said on an earlier occasion.

However, the SLPP has called for the removal of ministers who do not perform their responsibilities properly and replace them with suitable ones, without acting solely on the basis of the need to retain political power.

“It is the duty of the President to periodically monitor their work. Without merely working to retain political power, he should decide who fulfils their responsibilities and who does not. If there is anyone who does not work properly, they should be removed and replaced with suitable ones,” Kariyawasam had noted.

“I’m not going to name anyone, but if someone does not do their job, there should be action against them, irrespective of party affiliations. We are currently in a state of crisis, particularly in respect of the economy. In this situation, there is no possibility of protecting individuals. Therefore, Wickremesinghe should take appropriate action against anyone who does not perform well instead of trying to protect individuals,” he had told the media.

Supporting RW

Most Government MPs are intending to support incumbent President Wickremesinghe if he decides to contest the next Presidential Election, according to Minister Prasanna Ranatunga.

Ranatunga, while addressing the media last week, had attributed the stability regained by the country so far to the decisions taken by the President. Ranatunga and a group of SLPP MPs have already publicly stated their support for Wickremesinghe if he contests the next Presidential Election.

However, SLPP MP Namal Rajapaksa has said that the party will field a presidential candidate capable of winning with the ideologies represented by the SLPP-backed camp at the next Presidential Election. He has told BBC Sinhala Service that many political leaders, business figures, and entrepreneurs were now being promoted as candidates for the next Presidential Election.

Namal had further stated that he intended to go forward in politics after identifying and correcting the mistakes that had been committed in the past.

Dullas’s new book

Meanwhile, Freedom People’s Council Co-Leader, dissident SLPP MP Dullas Alahapperuma says that he plans to write a book on Wickremesinghe’s ascension to the presidency.

Alahapperuma also contested for the presidency during the Parliamentary Election to appoint the new President after former President Gotabaya Rajapaksa (GR) fled the country and resigned from the post on 9 July last year. Alahapperuma had said during an interview with an online channel that there was much to be said about the manner in which Wickremesinghe had assumed office.

President Wickremesinghe also recounted details behind his assumption of the President’s Office during a recent discussion at the International Democrat Union (IDU) in the UK.