• China under pressure as September deadline for debt restructuring nears
• Japan to start projects after debt talks; India interested in starting projects
• Indian High Commissioner meets TNA while TNA demands federal solution
• RW sets 15 August deadline for party leaders to send their proposals on 13A
• Basil and seniors warn dissidents against forming new alliance; Basil meets RW
• RW silent on Lanza’s role, informs Basil that elections would be held next year
• Lanza says new alliance next month; dissidents meet SLFP Leader, other dissidents
• Ideological clashes within SLPP out on stage; Shehan, Kanchana vs. Namal, Nipuna
• UNP to formulate new party constitution in line with Aragalaya’s ‘system change’
• New six-member Leadership Council to be set up; Sept. convention to see changes

The Ranil Wickremesinghe Government continues with its balancing act – attempting to balance the economy and politics. 

Whether the Government will pass in its balancing act or not will depend on how it manoeuvres through several difficult challenges. The score card includes meeting the International Monetary Fund (IMF) conditions, finalising the debt restructuring programme, holding the delayed Local Government (LG) as well as Provincial Council (PC) Elections, and the devolution of powers in line with the 13th Amendment to the Constitution.

There has been much focus on the fluctuation of the rupee in the market during the past few weeks given the fears of the drastic depreciation of the rupee witnessed last year.

According to State Minister of Finance Ranjith Siyambalapitiya, the recent depreciation of the Sri Lankan Rupee (LKR) is a temporary fluctuation caused by changes in demand and supply. He had stated that the Government had allowed the value of the US Dollar (USD) and the rupee to be determined based on market conditions. 

The Government meanwhile continues to focus on setting the ground to re-commence several large-scale projects that have now been put on hold pending the finalisation of the country’s debt restructuring programme.

India and Japan have already expressed interest in continuing with projects in Sri Lanka after the debt restructuring programme is put in place.

However, the Government of India, in a bid to show further progress in Indo-Lanka relations in investments, last week made a financial advance to an Indian project in the digital sector in Sri Lanka.

The Indo-Sri Lanka Joint Project Monitoring Committee last week took a decisive step towards the implementation of the Sri Lanka Unique Digital Identity (SL-UDI) – a key project in Sri Lanka’s digitisation drive. 

Indian High Commissioner to Sri Lanka Gopal Baglay on Friday (4) handed over a significant contribution of Indian Rs. 450 million to State Minister of Technology Kanaka Herath, constituting 15% of the total funds required for the successful implementation of the project as an advance payment.

Meanwhile, Japan has also reiterated that stalled projects in Sri Lanka will resume after the debt restructuring process is completed.

Japan’s Minister of State in the Cabinet Office Fujimaru Satoshi and former Minister of State for Regional Revitalisation and Regulatory Reform Yamamoto Kozo met President Wickremesinghe on Monday (31 July)

During the meeting, they discussed the stalled development projects in Sri Lanka, which were previously supported by the Japanese Government.

“The parties agreed to restart these projects once the credit optimisation process in Sri Lanka is completed. Additionally, they decided to involve officials from the Japanese Embassy in Sri Lanka in conducting an investigation related to these projects,” the President’s Media Division has said.

Debt restructuring

With September edging closer, Sri Lanka’s bilateral creditors continue to push for the finalisation of the country’s debt restructuring programme.

France and India have openly expressed support for the debt restructuring talks. French President Emmanuel Macron during his brief visit to Sri Lanka recently informed President Wickremesinghe that he would personally intervene to expedite the debt restructuring programme and to get the Chinese side also to the main discussion table.

China has so far refrained from participating in the formal Paris Club talks on Sri Lanka’s debt restructuring, but has participated in the discussions so far as an observer.

The President is also focused on getting the debt restructuring programme off the ground.

“The control of public finances lies with the Parliament and the debt optimisation activities have already been approved by it. The Parliament, being the custodian of the sovereign power of the people, under Article 4 of the Constitution, exercises all the necessary powers. The Government operates within the framework set by the laws of the Parliament and decisions can only be changed or continued with the Parliament’s notification,” President Wickremesinghe noted on Friday (4) during a business forum.

“Loan optimisation activities are underway and discussions have taken place with leaders from various countries. The goal is not to default on outstanding loans but to gain more time to repay them while finding ways to pay off debts incurred for necessary imports. This necessitates a shift towards a highly-competitive export economy,” he added, while highlighting the work carried out by the Government. 

China under pressure

However, China, which is one of Sri Lanka’s main creditors, is now under pressure by Sri Lanka’s other creditors to join the main discussion in order to finalise the country’s debt restructuring programme.

India’s Finance Minister Nirmala Sitharaman has been quoted as saying recently that as a large creditor to Sri Lanka, China is welcome to join the effort steered by Japan, India, and France to help the island nation cope with its debt distress. She had also called upon the IMF and the World Bank to speed up relief measures for countries facing debt vulnerabilities.

Terming reforms and debt relief measures of Multilateral Development Banks (MDBs) for many stressed economies as the top two finance track priorities for India during its G20 presidency, Sitharaman had noted that a comprehensive, better, and quicker approach was required to address the problem within the common framework of the IMF and the World Bank, as well as “outside” it.

“I quote the ‘outside of it’ equally as much as within the framework, as we have the example of Sri Lanka, a middle-income country which got into distress because its earnings were limited to tourism and some other areas like export of tea… Sri Lanka required a quick redressal, although outside of the framework because it is a middle-income country,” she had stated in a discussion at the India-Japan Forum.

Sitharaman had also noted that In Sri Lanka’s case, Japan, which holds the G7 presidency currently, had quickly taken the lead to address the distress. “Japan, along with France and India, quickly came up with a committee of creditors’ group, which started addressing the issue. And, of course, it was an open forum; it wasn’t limited to just to the three countries, China is welcome to participate as one of the big creditors,” the Indian Minister had said.

Japan’s leadership in such cases with “a constructive approach to address debt distress” has been well-received, she had said, adding that this was an indicator that the G7 and G20 together would come up with solutions to the problem.

However, China has thus far remained silent on the statements made by other creditors.

Meanwhile, Sri Lanka is likely to gain access to a Chinese Yuan 10 billion currency swap that was agreed by Sri Lanka and the People’s Bank of China 28 months ago.

The currency swap, which was equivalent to $ 1.5 billion, remained unusable even amidst the height of Sri Lanka’s economic crisis due to the term of the currency swap that there was a requirement of a three-month import cover. Therefore, with the Sri Lankan Government’s move to continue with the easing of import restrictions, there is a possibility of Sri Lanka finally gaining access to China’s yuan swap.

A federal solution

Amidst the Government’s attempt to resolve the financial crisis, the political front continues to remain complex, with the latest discussion focusing around the President’s call to fully implement the 13th Amendment sans Police powers.

Following the all-party meeting convened by President Wickremesinghe on 26 July to discuss the implementation of the 13th Amendment that concluded abruptly without reaching any consensus, the Tamil National Alliance (TNA) last week demanded a federal solution to the Tamil issue and also for the long-delayed Provincial Council Elections to be held. 

TNA Spokesperson MP M.A. Sumanthiran, issuing a statement, has noted that power sharing must be done within a federal structure, consistent with the aspirations of the Tamil people expressed at every election since 1956. “Our position is that power sharing must be in a federal structure, consistent with the aspirations of the Tamil people,” the TNA said.

The TNA also recalled that India had called for the implementation of the 13th Amendment to the Constitution and to also ensure a life of respect and dignity for the Tamil community of Sri Lanka.

“The TNA unequivocally conveyed to the President at the very first All-Party Conference on 10 December 2022 that the Provincial Council Elections must be held without further delay. We also discussed measures necessary to make devolution meaningful. Several discussions were held with the President and at the second All-Party Conference on 26 January 2023, we again reiterated our position. It was the same position that was conveyed at the last All-Party Conference that was held on 26 July 2023. 

“There was absolutely no change of the positions by the TNA; nor is there any contradiction between calling for immediate PC Elections and enhanced and meaningful devolution. In fact, one without the other is meaningless,” Sumanthiran has said.

Meeting Indian HC

Meanwhile, Indian High Commissioner Gopal Baglay met with representatives of the TNA on Tuesday (1) at India House to brief them about President Wickremesinghe’s recent visit to India. The TNA members were invited for the discussion by Baglay.

The TNA representatives had been informed that the Indian Government had urged the President to hold the delayed Provincial Council Elections. The TNA MPs had also urged the Indian High Commissioner to impress upon the Sri Lankan Government to hold the Provincial Council Elections.

It is learnt that the TNA had also called on the Indian High Commissioner to intervene to resolve the issues faced by the Tamil people in the country.

However, India has remained silent on the issue of implementing the 13th Amendment in full following the discussion between President Wickremesinghe and Indian Prime Minister Narendra Modi on 21 July.

During the discussion, Wickremesinghe had noted that while he would ensure that all contents in the document handed over by him to the TNA and other political parties on addressing the Tamil issue would be implemented, devolution and development needed to be carried out simultaneously. Nevertheless, Wickremesinghe continues to remain firm that Police powers will not be devolved to the provinces.

Letter to party leaders

It is in this backdrop that President Wickremesinghe last week decided to send out a formal message to all political party leaders seeking their recommendations on the 13th Amendment to the Constitution.

President’s Secretary Saman Ekanayake had formally sent out the letters to all party leaders, requesting their suggestions and comments on the implementation of the 13th Amendment.

The notice was sent to all political parties and groups represented in the Parliament, with a submission deadline of 15 August.

The President, during the 26 July all-party meeting, had also called on the parties represented in Parliament to present their proposals.

Wickremesinghe is also scheduled to make a statement in Parliament this week on the 13th Amendment and moves to implement it.

Motion for dissolution

Meanwhile, the main Opposition Samagi Jana Balawegaya (SJB) is now looking at presenting a resolution to the House to dissolve Parliament and hold a snap General Election. The party has called on other parties to support this motion as well.

SJB MP S.M. Marikkar has hinted at introducing the said resolution by telling the media that all parties in the House including the Sri Lanka Podujana Peramuna (SLPP) and others should be ready to sign a resolution calling for the dissolution of Parliament and holding of a General Election.

“SLPP MP and former Minister Johnston Fernando had said the SLPP would emerge victorious in future elections. Therefore we challenge him and the SLPP to support a resolution to dissolve the House and face a General Election,” Marikkar has noted.

However, he has added that the party did not want to reveal all its political strategies. Marikkar had also noted that the SJB would support the actions taken by the ruling SLPP to push for an election since some SLPPers were demanding elections on political platforms.

Several Opposition parties in Parliament have expressed support for the motion.

Sri Lanka Freedom Party (SLFP) General Secretary MP Dayasiri Jayasekara meanwhile has said that the party is ready to help with the resolution, considering it as a need of the hour. However, he has noted that either the Parliamentary Election or the Presidential Election must be held first.

“We know that this Government is very successful at postponing elections. Earlier, the Provincial Council Elections were postponed when the incumbent President Wickremesinghe was the Prime Minister and now they have postponed the Local Government Polls. Next year (2024), the Presidential Election must be held. Anyway, an election must be held soon. We will support anyone, not just the SJB, who submits a resolution to call for an election,” he had told the media.

Meanwhile, the Freedom People’s Congress (FPC) led by MPs G.L Peiris and Dullas Alahapperuma has stated that as a party that advocates for democracy, the party will also back the proposed resolution to dissolve the House and go for polls.

Clashes within SLPP

Amidst talk of elections, the split within the ruling SLPP continues to surface in public at various occasions. The differences in ideologies can now be seen in the electoral-level meetings being held islandwide under the patronage of SLPP MP Namal Rajapaksa.

The difference in ideologies is mainly on the issue of the next Presidential Election and the candidate the party will back at the polls. A group of SLPPers is rooting for President Wickremesinghe and believes the party should back him at the next Presidential Election, while another group believes the SLPP should rebuild itself on the policies of Party Leader former Prime Minister Mahinda Rajapaksa (MR).

The clash of ideologies surfaced during two electoral meetings of the SLPP – one in Bandarawela and the other in Matara.

SLPP MP State Minister Shehan Semasinghe had said in Bandarawela that that party should support President Wickremesinghe. He had said that if a majority of the SLPP had not supported Wickremesinghe, the country would have fallen into a worse crisis. 

He had further said that both Wickremesinghe and former President MR had set an example to the entire country on how leaders should act during a crisis. “If the leaders can set such an example, there is no reason why it cannot be followed at village level as well,” Semasinghe had said.

However, Namal, while addressing the same meeting, had made a contradictory statement. Namal had noted that the people had faith in President MR and that the party would not act in any way that would cause the people to lose faith in MR or the party.

Meanwhile, at a meeting in Matara, SLPP MP Minister Kanchana Wijesekera had said that the SLPP would join with the United National Party (UNP) to form the next government. He had said that while the SLPP and UNP engaged in politics on different platforms at present, the two parties would unite to contest and win at the next elections. 

At the same event, SLPP MP Nipuna Ranawaka had said the SLPP would contest the next election and win. As for the presidential candidate, Ranawaka had noted that there was more time to decide on the party’s candidate.

He had further said that the SLPP would stand by MR’s policies as well as the 6.9 million mandate received by the party.

However, SLPP MP Johnston Fernando had expressed confidence in an SLPP victory at elections, saying the party had reorganised itself in more than 70% of electorates.

“Many said that SLPP members will not be able to go to the electorates once again. This was the belief of many after we were attacked last year. However, we have been able to reorganise ourselves in more than 70% of electorates,” he had said during the SLPP Bala Mandala meeting in Polgahawela.

Basil’s move

Meanwhile, the SLPP is faced with a clear risk of a split, with a group of SLPP dissidents moving ahead with the formation of a broad electoral alliance outside of the SLPP.

SLPP National Organiser Basil Rajapaksa has cautioned several SLPP dissidents about moving to form a new political alliance while representing Parliament on seats secured through the SLPP. It is learnt that a message to the effect had been sent out to the President as well.

It is in such a backdrop that reports of a secret meeting that had taken place between Wickremesinghe and Basil had made its way to the media. Basil had met the President at his official residence and even SLPP Leader MR had not known about the meeting until it had concluded.

The last one-on-one meeting between Wickremesinghe and Basil had taken place in April and the duo had discussed the current political climate in the country during the latest meeting.

Basil had also expressed concern over SLPP dissident Nimal Lanza’s actions in moving to form a new political alliance. He had pointed out to the President that Lanza was making telephone calls to SLPPers from the Presidential Secretariat asking them to join the new alliance. According to Basil, the SLPPers who had received such calls had been confused since they had been made from the Presidential Secretariat.

Basil had reiterated that the move to form a new political alliance and Lanza’s intervention in the process was causing issues for the SLPP’s reforms programme. However, it is not clear whether the President had responded to Basil’s concerns.

Wickremesinghe had however communicated to Basil that there would be an election next year, but had refrained from stating whether it would first be a Presidential Election or a General Election.

The new alliance

The warning to SLPP dissidents by Basil and other SLPP seniors is that the party could initiate disciplinary action and sack them from the party, which in turn would make them lose their parliamentary seats.

The dissident’s group led by Anura Priyadarshana Yapa and Lanza has however ignored Basil’s warnings.

Yapa has in fact told the media last week that several Government, Opposition, and dissident independent parliamentarians were currently in discussions regarding the formation of a broad political alliance that suited the current trends. 

“Everyone will agree that the existing political culture in our country will not last much longer. That is because it has resulted in nothing but setbacks in almost every sector. Therefore, there is an urgent need for a political force that suits current trends and we are discussing the formation of such,” Yapa had said, adding that there would be no final decision on the leadership of the alliance until discussions with other parties were held.

It is learnt that the dissidents’ group continues to hold meetings with other parties represented in the parliamentary Opposition and a meeting had recently been held at the official residence of an SLFP MP and minister in Colombo. 

SLFP Leader Maithripala Sirisena has also met with Lanza and the group while a discussion had also been held with SLFP dissident Kumara Welgama.

SLPP General Secretary Sagara Kariyawasam meanwhile has stated that many SLPP dissidents have now fallen into political oblivion and that it will be interesting to observe the progress that will be made by the group of dissidents trying to form a new political alliance. Kariyawasam had referred to SLPP dissidents like Dullas Alahapperuma, Udaya Gammanpila, and Wimal Weerawansa, who have defected from the party and are trying to form alliances. 

However, Lanza, who is playing a lead role in the formation of the new alliance, has said that the new alliance will be formed by next month. Lanza had told the media that he had left the Government 18 months ago and that around 69 SLPP MPs who were on the same page as him would join the new alliance.

Bandara clarifies

Meanwhile, Private Secretary to former President Gotabaya Rajapaksa (GR), Sugeeshwara Bandara has clarified his position with regard to joining the new political alliance being formed by a group of SLPP dissidents led by Yapa and Lanza.

Bandara has said that groups with vested interests were spreading rumours that he was joining Lanza’s alliance and that such actions were part of petty political agendas of the persons involved in the campaign. He had further noted that he did not wish to join any alliance being formed by any person.

Bandara also serves as the Director General of Special Projects at the Presidential Secretariat – a position which was held by him during GR’s tenure.

UNP’s alliance

The UNP, meanwhile, is gearing to form a broad alliance to contest the 2024 Presidential and General Elections.

UNP Deputy Leader Ruwan Wijewardene has said that 2024 will be the year of elections, with the holding of Presidential, General, and Local Government Elections.

He had noted during a public gathering that a number of political parties had agreed to form an alliance with the UNP to back President Wickremesinghe at the next Presidential Election.

According to Wijewardene, several members of the SJB are also in talks with the UNP to join the alliance. “Some SJB members have spoken to me and some have also met the President,” he had added.

UNP’s new constitution

The UNP is also working currently to fully reorganise the party in order to commence its grassroots level work under a new outlook.

It is learnt that the UNP is also looking at adopting a new constitution for the party at the convention on 10 September. The party’s Working Committee, which met on Wednesday (2) at the Party Headquarters, Sirikotha, under Party Leader President Wickremesinghe’s patronage, had decided to amend the UNP Constitution while also endorsing 10 September to hold the party’s 77th convention.

It is also learnt that plans are underway to appoint a Leadership Council comprising six senior vice presidents to carry out the party work. Deputy Leader Wijewardene, Vajira Abeywardena, Ravi Karunanayake, Sagala Ratnayaka, Harin Fernando, and Manusha Nanayakkara are tipped to be included in the Leadership Council.

The party’s office bearers are also likely to be changed at the convention.

According to UNP General Secretary Palitha Range Bandara, the party’s new constitution will pay special attention to the demands of the Aragalaya youth and address the call for a ‘system change’.

He had also noted that the party had so far held 132 Bala Mandala meetings islandwide although the party leadership had expected to hold only 75 Bala Mandala meetings.

The UNP Working Committee last week also decided to lift the suspension on Ministers Harin Fernando and Manusha Nanayakkara and to re-appoint them to the party’s Working Committee.