• RW’s Indian visit agenda to be finalised during Kwatra’s planned visit this week
• Shortlisting Indian projects, talking points to be decided, RW-Modi meet on 21st
• Finance Ministry Secy. Siriwardana starts talks with Chinese officials on debt
• China continues push for FTA with SL amidst expressing support, investments
• Nandalal disputes Nishan’s calculations on EPF, Harsha notes need for accuracy
• MR and Namal’s absence during DDO vote noted, Namal explains absence
• Anti-Corruption Bill shows split in Govt., Sajith exposes split through Wijeyadasa
• RW takes a swipe at Sajith; asks Namal jokingly not to unseat Opposition Leader
• SLPP losing grip on former LG members, calls for Nelum Mw. meetings ignored
• Basil looks for solutions, Ketagoda and Sanjeeva push new bill as solution

The passage of the domestic debt restructuring programme in Parliament on 1 July has now opened up a new set of challenges for President Ranil Wickremesinghe and his Government.

Apart from creating awareness about the programme and pushing ahead with external debt restructuring talks, the Government has to manage geopolitics as well. Following Foreign Minister Ali Sabry’s recent visit to China, the stage is now being set for Wickremesinghe’s first official visit to India, with Indian Foreign Secretary Vinay Kwatra expected to visit Sri Lanka this week to make the final preparations.

Meanwhile, the approval rating of the Government doubled to 21% in June 2023 from the 10% that was recorded in both February 2023 and October 2022, according to the latest round of the Gallup-style ‘Mood of the Nation’ poll of Verité Research.

However, another calculation of the same think tank in relation to the Domestic Debt Optimisation (DDO) programme and its impact on the Employees’ Provident Fund (EPF) was disputed by Central Bank of Sri Lanka (CBSL) Governor Dr. Nandalal Weerasinghe last week.

Verité Research Executive Director Dr. Nishan de Mel had said during an interview with a private television channel that the EPF would lose about Rs. 12 trillion if the fund decided to go ahead with the DDO. 

However, Weerasinghe said that the assessment done by Verité Research on the DDO’s impact on the EPF was inaccurate and misrepresented the facts, figures, and reality. He had noted that the 13.5% average yield of the Treasury bond portfolio of the EPF was taken out of some assumption when the average yield of the medium to longer-term bonds of the EPF was about 11.5%, which was the reason for the 9% interest rate given by the EPF to its members in the past few years.

Meanwhile, Committee on Public Finance (COPF) Chairman and Opposition MP Dr. Harsha de Silva last week noted that the loss to the EPF could be calculated in many different ways, but to him, the calculation had to be the difference between the 9.4% given in the presentation if nothing happened and 9.1% if the DDO was implemented.

De Silva, who has been in politics for 12 years now, is an economist by profession. Known to be responsible and accurate in his economic calculations, de Silva had said during a recent television political talk show that he did not subscribe to the talk of a loss amounting to Rs. 12 trillion that would be incurred by the EPF. He had explained that the cost to the Government was 13.5% as at May 2023 but it was only around 12.3% in 2022 and 10.2% in 2021.

De Silva had observed that the rate had seen fluctuations and one could not take the highest cost and use it as the loss of opportunity. Therefore, with interest rates coming down, the loss has to be calculated accurately.

Given the growing public concerns over the EPF due to various opinions presented by politicians, Labour Minister Manusha Nanayakkara stated last week that a law would be adopted by Parliament to guarantee a minimum 9% interest for contributions from the EPF in the next three years. He had noted that this would be done to prevent any impact on the EPF from domestic debt restructuring.

The required amendment to the EPF Act will first be presented to Cabinet before being tabled in Parliament. 

At a recent meeting with trade union representatives, President Wickremesinghe had also assured a minimum 9% interest for the EPF.

Meanwhile, Fitch Ratings has warned of risks in Sri Lanka’s domestic debt restructuring plan but noted that it resolved uncertainties around its impact on the local banking sector.

The Sri Lankan Government’s proposal for treatment of domestic debt marks a significant step towards resolving uncertainties around the impact of the sovereign’s debt restructuring on the local banking sector, but complications may arise from a number of factors, Fitch Ratings said.

“We do not believe a restructuring of the sovereign’s local-currency obligations is likely to trigger a loss of depositor confidence in the banking system, based on the proposed plans. However, funding stress remains a negative sensitivity for bank ratings. Fitch-rated Sri Lankan banks’ national ratings remain on Rating Watch Negative (RWN) to reflect the potential for the banks’ creditworthiness relative to other entities on the Sri Lankan national ratings scale to deteriorate. This reflects heightened near-term downside risks to credit profiles from capital and funding stress,” Fitch Ratings said.

External restructuring

Finance Ministry Secretary Mahinda Siriwardana is expected to commence talks with Beijing, China this week on the bilateral debt restructuring programme with the Chinese side.

Siriwardana’s discussions with China are a follow-up to Sabry’s recent visit, where he had met with the Chinese Foreign and Finance Ministers as well as several leading Chinese business enterprises.

However, it is learnt that while extending support to Sri Lanka and promising new investments to the country, the Chinese Government continues to push the Sri Lankan Government to sign the proposed Free Trade Agreement (FTA) between Sri Lanka and China that has been in the pipeline for several years.

India bound

Meanwhile, arrangements are now being made for President Wickremesinghe’s first official visit to India on 20 July on a two-day visit.

Wickremesinghe’s meeting with Indian Prime Minister Narendra Modi is scheduled for 21 July. It is in such a backdrop that Indian Foreign Secretary Kwatra is expected to visit Sri Lanka this week to make arrangements for the President’s Indian tour.

The final agenda of Wickremesinghe’s Indian visit will be made following Kwatra’s visit since his meetings with Sri Lankan Government officials would focus on the matters that would be taken up for discussion during the President’s tour. It would also result in a final decision on the Indian projects that would be taken up for final-stage discussions during the visit.

Fisheries Minister Douglas Devananda, Power and Energy Minister Kanchana Wijesekera, Foreign Affairs Minister Ali Sabry, and President’s Chief of Staff Sagala Ratnayaka are expected to join the visit.

Meanwhile, the Indian media last week stated that India’s Export Credit Guarantee Corporation (ECGC) Ltd.’s Chairman/Managing Director M. Senthilnathan had said India planned to allow Sri Lanka up to 12 years to repay its debt to help ease the financial burden on the island nation.

“Sri Lanka’s negotiations with the IMF are going on. After that restructuring package will come, we will recover [our] money over a period of time. What we are supposed to get in 3-4 years may get extended to 10-12 years,” Senthilnathan has been quoted as saying.

“But the interest rate will come down. This is a situation induced by inflation and because of the fallout of (Ukraine) war. You accommodate them for the next 5-6 years and later the markets will open up,” Senthilnathan has added.

Senthilnathan has further stated that the National Export Insurance Account, managed by the ECGC, has received close to Indian Rs. 45 million worth of claims from exporters facing default in countries such as Sri Lanka, Zambia, Suriname, and Ghana.

Anti-corruption googly

The Government meanwhile faced some split in its side in Parliament last week over the proposed new anti-corruption legislation.

The split within the ruling Sri Lanka Podujana Peramuna (SLPP) was witnessed during a meeting convened at Prime Minister Dinesh Gunawardena’s office in Parliament on Thursday (6). A group of SLPP parliamentarians who had attended the meeting had requested the Prime Minister to postpone the vote on the piece of legislation since some of them had amendments to propose to be included in the bill.

After listening to the parliamentarians, the Prime Minister and Leader of the House Dr. Susil Premajayantha had expressed willingness to postpone the vote. However, Justice Minister Dr. Wijeyadasa Rajapakshe had expressed an opposing view. He had noted that the proposed legislation should be put to a vote that day.

Nevertheless, given that a majority of the SLPP legislators was for postponing the vote, Rajapakshe had not raised further objections and the Government side decided to postpone the vote on the proposed anti-corruption legislation.

Interestingly, details of the discussion that had taken place at the Prime Minister’s office and the split in the SLPP group had made their way to the Opposition Leader’s ears.

Samagi Jana Balawegaya (SJB) and Opposition Leader Sajith Premadasa, after hearing the details, decided to raise the issue in the Chamber and put the SLPP on the spot. Once in the Chamber, Premadasa questioned why the legislation was not being put to a vote that day and asked the Justice Minister for his stance on the matter. Minister Rajapakshe responded saying that he did not have any objection to putting the legislation to a vote that day.

Finally, it was decided to take up the legislation for the third reading vote on 19 July after receiving the amendments proposed by legislators. 

Probing bankruptcy

However, the Opposition raised concerns over the appointment of a special parliamentary committee to probe the country’s financial bankruptcy. The announcement of appointing the committee was made by Speaker Mahinda Yapa Abeywardena at Thursday’s (6) parliamentary session.

He had stated that SLPP General Secretary MP Sagara Kariyawasam would serve as the chairman of the said committee. Other SLPP MPs in the committee are Pavithradevi Wanniarachchi, D.V. Chanaka, Mahindananda Aluthgamage, Jayantha Ketagoda, Major Pradeep Undugoda, Sanjeeva Edirimanna, and Ranjith Bandara.

Opposition MPs Vijitha Herath, Eran Wickramaratne, Ashok Abeysinghe, Harshana Rajakaruna, and Shanakiyan Rajaputhiran Rasamanickam are also in the committee.

Chief Opposition Whip MP Lakshman Kiriella objected to Kariyawasam’s appointment, claiming that it was ‘unbelievable’ that a member of the ruling party had been tasked with investigating the reason behind the country’s bankruptcy. “This is like asking the mother of a thief where the thief is,” he commented in this regard.

Meanwhile, MP Anura Priyadarshana Yapa expressed concerns over Kiriella’s statement, adding that all governments were responsible for the state to which Sri Lanka had fallen today and that it was not ‘the work of just one or two’ governments.

RW’s invite

President Wickremesinghe meanwhile urged Opposition Leader Premadasa to prioritise national interests over politics. He made this comment at the ‘Amaraviru Abhiman 32’ commemoration ceremony held in Hambantota last week.

The President had encouraged the Opposition to participate in the next Presidential Election and contribute to rebuilding the country by fulfilling their responsibilities to the people and expressed his willingness to assign additional duties to the Opposition in consultation with the Speaker, if necessary. He had further hinted that he would even help the Opposition Leader become president.

Meanwhile, SJB General Secretary Ranjith Madduma Bandara has said that the party’s Working Committee would discuss and decide on the invitation extended by the President. He had told the media that the President had not made his intentions clear and that there had been no official communication to the party by the President.

Madduma Bandara had further noted that the President had extended similar invitations in the past but had not followed them up with discussions. He had observed that Wickremesinghe’s political intentions were clear and that all statements made by him were targeting the next election.

However, the SJB General Secretary had also said that the party was prepared to do what was necessary to support the bankrupt country and would extend support to a proper plan aimed at reviving the country’s economy.

Interestingly, President Wickremesinghe had recently made a reference in jest about the incumbent Opposition Leader. During a recent event that was attended by many VIPs, including the President, the President had spoken to SLPP MP Namal Rajapaksa about his political work. 

The President had then said, while laughing, “I see that you are now trying to take over the seat of the Opposition Leader. Just let him be.” Everyone had started to laugh at the President’s words.

New alliances

However, a group of young SLPP politicians are currently engaged in a discussion on forming a political alliance targeting the next General Elections, it is learnt. This group also includes several state ministers who are disgruntled at the manner in which the SLPP is conducting its political affairs.

The group of SLPPers has decided to approach some legislators currently seated in the Opposition to also discuss the possibility of forming a new political alliance that would follow a political agenda that was more in line with the changing times.

Rajapaksa absence

Meanwhile, there was much talk last week among political circles about the absence of two Rajapaksa family MPs during the 1 July vote on the DDO, which was very visible during the vote. SLPP Leader and former President MP Mahinda Rajapaksa (MR) and Namal Rajapaksa were absent during the voting on the DDO on 1 July.

Initial reports following the vote noted that another senior Rajapaksa – Chamal Rajapaksa – had also not attended the vote. However, Secretary General of Parliament Kushani Rohanadeera stated that Chamal had participated in the vote on the DDO.

According to the SLPP, the absence of two Rajapaksas during the vote was not a planned occurrence. SLPP General Secretary Kariyawasam said that there was no special reason for the three said MPs to not attend the voting and that their absence was not planned.

“Mahinda Rajapaksa anyway does not stay in Parliament for long. Namal was attending a meeting in Piliyandala and had to attend another one after that. Their absence was not something that was planned,” he claimed.

Meanwhile, Namal had last week said that decisions to build the country should be people-friendly decisions. “Decisions need to be taken to build the country’s economy. The duty of the Podujana Peramuna is to ensure that such decisions are converted into people-friendly ones. Restructuring debt is ok, but it should be done in a fair manner. There needs to be a reason for it to be applied to one segment of the country and not another. There’s no point in giving the reason to us in Parliament. It needs to be told to the country. We have to now make decisions that are very decisive to the country. We saw Sajith Premadasa and his group saying they will first support the programme and then later voting against it. I don’t know the reason. Like all other times, they opposed at the last minute. That’s their political style. We have a duty to stabilise the country,” Namal had said during a public meeting.

However, Kariyawasam last week expressed support for the DDO by saying that those opposing it should look at providing alternatives to revive the economy. He had told a media briefing on Tuesday (4) that there was no other option other than the DDO and that those who were opposing the programme were those responsible for the current plight of the country.

Harsha’s stance

COPF Chairman de Silva, who also voted against the DDO along with his party, had stated last week that domestic debt restructuring should be carried out in a way that affected not only the ordinary working people, but also the rich.

He had noted: “The Employees’ Provident Fund is usually the only fund that working people have for expenses for the rest of their lives following retirement. I have continuously shown what has happened to this fund so far.

“For example, if someone had needed to invite 100 people for his daughter’s wedding, hoping to spend money from the EPF, now he can only invite 50 people instead of 100 people. That is the truth,” the MP had claimed. “So the domestic debt restructuring burden has also been placed on the same fund. That is where the question of fairness arose,” he said, adding, “If this is shared among everyone as a whole, it can be justified in some way.”

He had observed that the burden should not only be borne by the working people but also by the rich and the bank owners. “We, the Opposition, strongly opposed the DDO strategy because the entire burden of this was placed on the EPF and the Employees’ Trust Fund (ETF),” de Silva had emphasised.

Disciplinary action

The SJB meanwhile has decided to initiate disciplinary inquiries against SJB MPs who have voted in favour of the said proposal and were absent during the voting without prior notice.

SJB General Secretary Madduma Bandara had told the media last week: “We will definitely take disciplinary action. There are a few MPs who were not in the country and they will be excluded. The disciplinary action will be against those who voted in favour of the proposal and were absent despite their presence in the country.”

MPs representing the SJB including Dr. Rajitha Senaratne, Mayantha Dissanayake, Rohini Kumari Wijerathna Kaviratne, and Mano Ganesan were absent during the voting. Among them, Kaviratne had gone abroad, while Dissanayake was reportedly unwell.

MP Vadivel Suresh voted in favour of the DDO proposal.

SLFP’s demand

The Sri Lanka Freedom Party (SLFP) is to write to the Speaker Abeywardena this week, demanding a representation for their party at the party leaders’ meeting.

SLFP General Secretary Dayasiri Jayasekara had said that the SLFP had not been given representation at the party leaders’ meeting, even though the party held 14 seats in Parliament. Jayasekara had claimed that not only the SLFP, but also the recently-formed Supreme Lanka Coalition (SLC) made up of several ‘independent’ MPs had not been given representation at the party leaders’ meeting.

He had said that when a request had been made to the Speaker earlier in this regard, the opportunity had been given to SLFP MP Nimal Siripala de Silva, who currently holds a Cabinet portfolio. This move, Jayasekara had said, was not ethical nor in line with traditions of the Parliament.

“We have 14 MPs in Parliament and nine out of them are now supporting the incumbent Government. As a separate party, which is not in an alliance with any party, we must get a seat at the party leaders’ meeting. Even though we are working with Samagi Jana Balawegaya on some occasions, we are not a part of it but the People’s Freedom Alliance (PFA) has also been given representation at the party leaders’ meeting. Therefore, it is very unfair that we are not being given an opportunity to attend those meetings. Therefore, we are going to write to the Speaker in this regard,” he had said.

The SLFP had recently threatened to storm Parliament committee meetings, including the party leaders’ meeting, if it was not given a slot to attend the meetings.

Jayasekara had said in Parliament that Opposition Leader Premadasa could reduce the participation of SJB members in the committee meetings and include the SLFP. “We are working for the Opposition,” he had added.

Jayasekara had further stated that the Speaker could increase the number of MPs who could attend the meetings in order to include the SLFP and other independent and Opposition groups. 

Concerns over Speaker

The SJB, along with several other groups in the Opposition, has called on the Inter-Parliamentary Union (IPU) and the Commonwealth Parliamentary Association (CPA) to act appropriately to ensure the survival and the further strengthening of a sound parliamentary tradition in Sri Lanka by expressing concerns over the behaviour and attitude of Speaker Abeywardena.

The letters have been dispatched following the conflict between the Opposition and the Speaker over several members of the Opposition not being granted the opportunity to speak during the debate on the domestic debt restructuring programme on 1 July.

The letter, dated 5 July, was signed by 34 MPs, including Opposition Leader Premadasa.

SLPP’s predicament

While the Opposition was breathing fire on the Speaker and taking on the Government in the House, the SLPP was busy trying to resolve issues concerning the party’s members in the now-dissolved Local Government (LG) bodies.

The last LG Elections in 2018 was the first victory of the SLPP since it was inaugurated by the party’s National Organiser Basil Rajapaksa. A large number of SLPPers entered the LG bodies following the 2018 elections and the current uncertainty over LG Elections following their dissolution has left a large portion of the SLPP’s electoral activists disgruntled.

The uncertainty in holding LG Polls has also resulted in these SLPPers distancing themselves from the party. It is learnt that a majority of the party’s former LG members have not attended meetings convened by the SLPP seniors at the Party Headquarters, saying that they did not have vehicles or fuel to attend the meeting.

It is this situation that earlier resulted in the SLPP proposing a mechanism to empower the former LG members to engage in work related to LG bodies while assisting the people in the area. However, this plan had to be withdrawn after the parliamentary Opposition raised objections to it and continued demanding for polls.

The Basil faction of the SLPP had to return to the drawing boards to formulate a new plan to address the displeasure of its members who represented the LG bodies.

Extending LG tenure

It is in such a backdrop that SLPP MP Jayantha Ketagoda presented a private member’s motion to Parliament last week seeking to empower the Minister of Local Government to extend the tenure of LG bodies without elections. The motion was tabled in Parliament on Wednesday (5) and seconded by SLPP MP Sanjeeva Edirimanna.

It is interesting to note that both Ketagoda and Edirimanna are Basil loyalists and represent the Basil faction in the now-split SLPP.

In response to Ketagoda’s motion, several Opposition MPs, including Opposition and SJB Leader Premadasa and MP Dr. Harsha de Silva, opposed and criticised the Government’s efforts to postpone the LG Elections and recall the former LG institutions’ elected members. 

Speaking in Parliament, de Silva said that the Constitution did not include provisions to recall the members of LG institutions since the terms of those institutions had already ended. He also said that instead of bringing such unconstitutional bills to the Parliament, the Government must take steps to hold the postponed LG Polls.

In response to de Silva, Speaker Abeywardena said that if there was any opposition to the bill, it could be presented during the debate, but not at the moment.

Meanwhile, Premadasa claimed that even though the people in this country had ousted the Rajapaksas (former President Gotabaya Rajapaksa, former Prime Minister MR, and former Minister Basil) from power, some of their henchmen in the House (Medamulana agents) were still trying to achieve what the Rajapaksas could not. 

Premadasa further claimed that the SJB would go to court against the SLPP’s latest move to reconvene the dissolved LG bodies since it was an anti-democratic move.

The Opposition Leader accused the Government of engaging in a conspiracy to delay the holding of LG Elections with the support of some officials at the Treasury and Government Printer’s Department. He added that these officials would be held responsible for their actions in the future.

The private member’s motion by Ketagoda had sought to amend certain sections of the Urban Councils Ordinance, Municipal Councils Ordinance, and the Pradeshiya Sabhas Act.

Meanwhile, the Election Commission has noted that although it was legally possible to extend the tenure of LG bodies through the adoption of an act without holding the elections, it was however not ethical.

Commissioner General of Elections Saman Sri Ratnayake has said: “We don’t believe that this bill will go that far. When the people have given the power to LG members and councillors for only four years, it is not ethical to extend their tenures in this manner. Some former LG members and councillors are even candidates who have submitted nominations for the LG Polls.”

However, several civil society movements, especially organisations engaged in election monitoring, have stated that they would file petitions objecting to the proposed bill before the Supreme Court this coming week.