• After China’s Exim Bank deal, China Development Bank officials expected this week for talks
• Chinese Vice President asks for Shi Yan 6 to visit SL this month, SL says can only permit in Nov.
• Govt. asks China’s Exim Bank to share agreed framework with Sri Lanka’s other bilateral creditors
• IMF says Staff-Level Agreement reached on Sri Lanka, 2nd EFF tranche after IMF Board approval
• Chamara objects to tax increases on liquor, asks Siyambalapitiya to tell IMF about local ‘kasippu’
• RW’s standoff with CC over IGP creates a stir, Opposition asks Speaker to get AG’s observations
• Wijeyadasa says no to abolishing Executive Presidency, only changing Parliament electoral process
• Opposition objects to Govt.’s move to amend parliamentary electoral process, boycotts meeting
• UNP holds annual convention with much vigour after years, RW announces Prez and other polls
• Group of SLFP seniors proposes new party position of Snr. VP for Dayasiri to unite fractioned party

The Ranil Wickremesinghe Government seems quite elated over its ability to overcome one of the biggest hurdles in the country’s debt restructuring programme – getting the Chinese to officially express commitment to the process.

Wickremesinghe’s party, the United National Party (UNP), held its annual convention yesterday (21) with much vigour after many years, with green flags also being put up in all parts of Colombo. At the convention, the President announced that Presidential Polls would be held in 2024 in line with the Constitution, followed by General Elections and Provincial Council Elections in early 2025.

Following the recent statement by Chinese Foreign Ministry Spokesperson Wang Wenbin that China’s Exim Bank and the Sri Lankan authorities had reached a preliminary agreement on restructuring debt owed by Sri Lanka to China, President Wickremesinghe’s four-day official visit to China had further consolidated China’s commitment to move ahead in the debt restructuring programme.

It is learnt that while the Exim Bank and Sri Lanka have reached a preliminary agreement on debt, officials from the China Development Bank (CDB) are to arrive in Sri Lanka this week to discuss debt treatment with officials of Sri Lanka’s Finance Ministry. Once an agreement is reached with the CDB, Sri Lanka will have technically completed an agreement on debt treatment with China.

China has managed to upstage the rest of Sri Lanka’s bilateral creditors, who have now formed a group under the Paris Club, which has set an end-October timeline for agreeing on a framework to restructure Sri Lanka’s debt.

Chinese Finance Minister Liu Kun last week reaffirmed China’s commitment to extend comprehensive support for the implementation of a medium- and long-term programme that is mutually beneficial to both parties and aimed at optimising Sri Lanka’s debt.

The Chinese Finance Minister conveyed this commitment during bilateral discussions held on Thursday (19) in Beijing with President Wickremesinghe.

The International Monetary Fund (IMF), which concluded its review of the Extended Fund Facility (EFF) extended to Sri Lanka last month stating that the second tranche disbursement would be delayed, last week said that it looked forward to analysing the details of the recent agreement between Sri Lankan authorities and the Exim Bank of China on debt treatment terms.

Senior IMF Mission Chief for Sri Lanka Peter Breuer told a media briefing on Friday (20) that the global lender had taken note of the tentative agreement.

The IMF also made a statement last week on the disbursement of the second tranche under the EFF, stating that the IMF staff and the Sri Lankan authorities had reached a Staff-Level Agreement (SLA) on economic policies to conclude the first review of the programme. 

According to the IMF, Sri Lanka will have access to SDR 254 million (about $ 330 million) in financing once the review is approved by the IMF Management and IMF Executive Board.

The IMF further stated that macroeconomic policy reforms were starting to bear fruit and the economy was showing tentative signs of stabilisation. Sustaining the reform momentum and addressing governance weaknesses and corruption vulnerabilities are critical to put the economy on a path towards lasting recovery and stable and inclusive growth.

Completion of the review by the IMF’s Executive Board requires: (i) the implementation by the authorities of all prior actions and (ii) the completion of financing assurances reviews.

Chinese preference

Meanwhile, a sovereign debt expert noted that China reaching a preliminary debt deal with Sri Lanka showed that the former was more comfortable negotiating debt bilaterally outside the Official Creditor Committee (OCC).

Speaking at an event held on 13 October by the US think tank Atlantic Council on the sidelines of the IMF-World Bank meetings, Council on Foreign Relations Senior Fellow and sovereign debt expert Brad Setser had said that China was reaching a debt deal with Sri Lanka that was not well coordinated with other creditors.

“China is more comfortable negotiating bilaterally,” he had observed.

However, he had said that it was a major problem in a world where China was not the only bilateral creditor, while it was also a problem where China was both a bilateral creditor and a commercial creditor.

“China has decided that one of its policy banks, the China Development Bank, should be considered a commercial creditor and there are other State commercial banks that are considered commercial creditors,” Setser had noted.

He had added that it was very hard for debtors to negotiate with China for its bilateral and commercial debt and keep that deal a secret from the other party.

The OCC – which is co-chaired by India, Japan, and France – includes 17 countries to discuss the Sri Lankan authorities’ request for a debt treatment.

China asked to share 

The Sri Lankan Government meanwhile has reportedly called on China to share with other creditors the terms of its recent $ 4.2 billion bilateral debt deal, while pointing out the necessity for the move to help the country speed up the process of restoring its finances. 

Central Bank of Sri Lanka (CBSL) Governor Dr. Nandalal Weerasinghe had said recently that sharing the information would ensure transparency and assure other bilateral creditors that they were getting a comparable deal. 

Sri Lanka has made this request in the backdrop of the country trying to finalise a deal with the OCC, co-led by Japan, India, and France. This, according to foreign media, is according to information received by an informal and influential group of Western lenders. 

China has reportedly been asked to share the deal terms “with all other creditors” as soon as possible to “make it more transparent and ensure comparability so that we can make progress,” Weerasinghe had said. “Because this is a bilateral agreement, obviously, we need to have a consensus from the other party to share that information.” 

So far, private creditors have sought a separate deal while an ad hoc group of bondholders, organised by advisers including Rothschild & Co., which had recently submitted a proposal to Sri Lanka that includes taking a 20% haircut and issuance of new debt, including a so-called Macro-Linked Bond (MLB).

The MLB is said to be an innovative instrument that is designed to be liquid and index-eligible, with its payouts linked to the evolution of Sri Lanka’s Gross Domestic Product. 

RW in China

President Wickremesinghe’s four-day official visit to China commenced with a media interview with China’s CGTN channel prior to any other official engagement.

During the interview, the President said that Sri Lanka had engaged with each country as an independent state after weighing the pros and cons for Sri Lanka and that the transaction with China was beneficial for the country.

Wickremesinghe had made these observations in response to a question posed on the claims made by some Western media that Sri Lanka would fall into a debt trap.

The President during the interview indicated that Sri Lanka’s decisions on borrowing had been based on the country’s requirements and interests.

Interestingly, Wickremesinghe’s line of thinking was in contravention to the IMF’s governance diagnostic report, where it was pointed out that some of the projects, including highway projects, had seen cost estimations far higher than the global prices at the time, resulting in excessive borrowings.

Wimal joins RW

Meanwhile, National Freedom Front (NFF) Leader and Sri Lanka Podujana Peramuna (SLPP) dissident MP Wimal Weerawansa also left the country to attend the BRI summit in Beijing, China, which President Wickremesinghe had also attended.

The two-day summit commenced on Tuesday (17).

No agreement on Shi Yan 6

During President Wickremesinghe’s visit to China, the issue of the Chinese research vessel Shi Yan 6, which has caused much controversy in Sri Lanka over its impending visit to the island, had come up during the President’s meeting with the Chinese Vice President.

The Chinese official had underscored the importance of the Chinese vessel visiting Sri Lanka this month as requested by Shi Yan 6.

However, the Sri Lankan Government had explained that the country could only grant permission for the vessel to dock in Sri Lanka next month (November).

‘Kasippu’ for IMF

While the President was in China on an official tour, an interesting incident had taken place at the Government’s parliamentary group meeting last week.

The meeting was chaired by Prime Minister Dinesh Gunawardena and by 9.30 a.m. on Tuesday (17), only a few parliamentarians had been present in the meeting room. Once around 40 Government parliamentarians were in the room, State Finance Minister Ranjith Siyambalapitiya had explained the IMF’s proposals on increasing State revenue to the group.

State Minister Chamara Sampath Dasanayake had then objected to increasing taxes, saying that the increase of taxes had resulted in people moving towards consuming illicit liquor like ‘kasippu’ instead of alcohol.

“Mr. Minister, you are only talking about revenue generation. Increasing taxes have stopped people from consuming alcohol and they are now consuming ‘kasippu’. It is counterproductive since the Government loses revenue and people fall sick and die. The IMF does not know about ‘kasippu’. Please go and tell the IMF about ‘kasippu’. If you can’t, I will tell them. But I can’t speak English so I will need a translator,” Dasanayake has said, making his colleagues roar in laughter.

He had further noted that the cost of manufacturing a bottle of arrack was Rs. 1,200, but it was being sold at Rs. 3,200. “People in our area are unhappy with us.”

Siyambalapitiya had responded saying that he too had heard the displeasure of people in his constituency. Dasanayake had then told Siyambalapitiya: “That’s the problem, you only walk around and hear things, but these are issues for people who consume liquor. You have to speak to them.”

Clash with CC

However, one of the focal points in the political scene last week was the clash between the Constitutional Council (CC) and President Wickremesinghe over the third service extension granted to Inspector General of Police (IGP) C.D. Wickramaratne.

The President, it is learnt, had proposed Wickramaratne’s name for the third extension after the Constitutional Council had made a recommendation after granting Wickramaratne’s second extension several months back for the President not to present the same name for another extension.

Following the end of the second extension, Wickramaratne moved out of his office and the country was without an IGP for several days. It is evident that President Wickremesinghe was using Wickramaratne to prevent the task of appointing a new IGP to the Police, which has caused much controversy given the names of the senior Police officers high on the list of contenders.

However, the controversy over the IGP started with the President proposing Wickramaratne’s name for a third service extension.

The Constitutional Council, which met on Tuesday (17), was chaired by Speaker Mahinda Yapa Abeywardena and attended by Opposition Leader Sajith Premadasa, Parliamentarian Sagara Kariyawasam, and civil members.

The President’s representative to the council, Minister Nimal Siripala de Silva, was not present at the meeting since he was in India.

The Constitutional Council had decided not to approve the three-week service extension granted to Wickramaratne.

News of the council’s decision had reached Wickremesinghe, who was in China at the time. The President had decided to install Wickramaratne as the IGP for a temporary period, ignoring the Constitutional Council.

Meanwhile, senior Government members believed that it was a serious blunder by the Constitutional Council to remove Wickramaratne at a time when both the President and the subject minister – Public Security Minister Tiran Alles – were out of the country.

Wickremesinghe loyalists claimed that the move by the Constitutional Council was akin to a conspiracy, noting that the removal of the IGP when the President and subject minister were out of the country was similar to the closing down of the entire Police force.

News items reflecting this sentiment were seen in State-owned media.

However, it is interesting that the members of the Government who felt the Constitutional Council’s decision not to approve the President’s proposal on the IGP was a conspiracy were in fact raising suspicion regarding the Government’s Prime Minister as well as the General Secretary of the Government’s key coalition party, both of whom were present at last week’s Constitutional Council meeting.

Also, speculation that the President had granted the third service extension to Wickramaratne without consulting Minister Alles was refuted by him, saying that he was consulted by the President prior to granting the service extension.

Meanwhile, a member of the Constitutional Council had told the media last week that since President Wickremesinghe had decided to act regardless of the decision of the council not to approve the three-week service extension granted to Wickramaratne, if anyone opposed it, they could challenge the President’s move before the Supreme Court.

The council member had further stated: “The role of the Constitutional Council is very clear. When the President refers us a nomination, we only have to approve whether the relevant person is eligible to hold that position or not. Besides, we cannot express an opinion as to whether the appointment is right or wrong. In this case, what we approve of is not the service extension, but the person. Referring to the name of a person who was earlier approved by the council is also something that is meaningless. However, the President referred us to a name. Some were in agreement and some were not. Finally, it was decided not to approve the service extension.”

Meanwhile, the Opposition had last week requested Speaker and Constitutional Council Chairperson Abeywardena to seek the opinion of the Attorney General on the powers of the council and to not allow the President to grab the council’s powers.

Confusion over IGP

Janatha Vimukthi Peramuna (JVP) and National People’s Power (NPP) Leader, Parliamentarian Anura Kumara Dissanayake meanwhile had raised concerns over the third service extension granted to Wickramaratne. 

“The President granted this service extension to Wickramaratne, subject to the Constitutional Council’s approval, but the council did not approve it. Then, who is the current IGP of the country? Wickramaratne’s tenure of service ended on 9 October,” he had pointed out and asked Public Security Minister Alles which IGP he (Alles) had issued orders to.

Prime Minister Gunawardena had responded saying that the person to whom the service extension had been granted (Wickramaratne) would oversee the duties of the IGP until the end of this month (October), as per the powers vested in the President.

With Dissanayake again pointing out that Wickramaratne could not function as the IGP when the Constitutional Council had not approved the service extension granted to him, Abeywardena had said that while it was true that the council should approve such a service extension, the authority to make appointments was with the President. 

“The President has the powers to make appointments. The Constitution has not grabbed it. The Constitutional Council has the power to approve or disapprove an appointment. On the other hand, even if it is approved, the President has the power to appoint or not appoint that person.”

Dissanayake had then said that the Constitution had clearly mentioned that the President could make such appointments only with the approval of the Constitutional Council. “You (Abeywardena) are the Chairman of the Constitutional Council, so don’t let the President grab the council’s powers. You should stand firm on the stance that the President has no power to make an appointment of this sort without the approval of the Constitutional Council.”

SLPP dissident Parliamentarian Udaya Gammanpila had also stood at this point and said that the President had no power to make appointments without the Constitutional Council’s approval.

“I just read the Constitution. What it clearly says is that the President cannot make an appointment without the Constitutional Council’s approval. He can only make a recommendation to the council. When it is approved only can he make the appointment. However, a new culture of making the appointment first and then seeking the Constitutional Council’s approval has been created now. Therefore, I urge you (Abeywardena) to seek the Attorney General’s opinion in this regard.”

Executive Presidency issue

Meanwhile, the issue of moves to abolish the Executive Presidency were denied by Justice Minister Dr. Wijeyadasa Rajapakshe, who had claimed that media reports on him submitting a paper to the Cabinet to abolish the Executive Presidency were not true.

The Minister had clarified that he had presented an amendment to the electoral system to elect 160 MPs at electoral level and 65 others under the Proportional Representation (PR) system.

Rajapakshe had told the media that the proposal was similar to the one previously made by a parliamentary committee headed by Prime Minister Gunawardena to introduce such a mixed electoral system.

Rajapakshe had further noted that the proposal would be discussed with party leaders.

Rajapakshe’s denial comes in the backdrop of some news reports stating that a draft constitutional amendment is being prepared to abolish the Executive Presidency and re-establish a premiership with full powers.

Executive Presidency stays

Minister Rajapakshe reiterated in Parliament on Wednesday (18) that there were no moves to scrap the Executive Presidency.

“Scrapping the Executive Presidency is a complicated and difficult process. There is no way we can do it through the present Parliament. It is also an exercise in which the people of this country have to be engaged in,” he had told Parliament.

“However, we have proposed introducing a new electoral system for electing members to Parliament. Accordingly, we propose to elect 160 members through the First Past the Post (FPP) system and to appoint a certain number of MPs from the National List and the rest through a PR system. However, some want the number of MPs elected under the FPP system reduced to 150 while some others want it reduced further to 140. The Government is open to discussions on the matter. People want this change. Therefore, a change is a must,” Rajapakshe had added.

No agreement

Meanwhile, Prime Minister Gunawardena convened a meeting of party leaders to discuss parliamentary electoral reforms at the Parliamentary Complex on Wednesday (18), but the meeting concluded without reaching any final agreement. 

“We have called for this meeting on a request by the Cabinet. I will inform the Cabinet on the outcome of today’s meeting. The present Government had obtained a mandate to bring in electoral reforms in 2019 and 2020,” the Prime Minister had told Parliament prior to convening the meeting.

However, the main Opposition Samagi Jana Balawegaya (SJB) stated that the party would not be attending the meeting convened by the Prime Minister.

After boycotting the party leaders’ meeting, the SJB had stated that the Government’s claims that it was working in good faith to bring in electoral reforms were ridiculous as it was the Government itself that had taken away the people’s right to vote.

“The SJB has issued a statement that they will not attend this discussion. I invite Opposition and SJB Leader Sajith Premadasa to attend it. We cannot make these changes possible with suspicions in mind. We have proposed these reforms in good faith and not based on any other intention,” the Premier had responded.

However, Premadasa had said that it was ridiculous for the Prime Minister to talk about electoral reforms when the Government had prevented the holding of Local Government Elections. 

“The Prime Minister is talking about good faith. I would like to ask him how he can talk about it. You have all failed to hold the Local Government Elections. You have all already violated the rights of the people by not releasing funds for the Local Government Elections. It was the Government MPs who raised privilege issues and attempted to summon judges and the Election Commission before parliamentary committees. Therefore, do not come to utter lies about good faith. Let us change the electoral systems, but only after the elections are held,” the Opposition Leader had said.

Opposition Parliamentarians Mano Ganesan, Rishad Bathiudeen, Gajendrakumar Ponnambalam, M. Rameshwaran (Ceylon Workers’ Congress), and State Minister Arvind Kumar, who had attended the meeting convened by Gunawardena, had stood united in their rejection of any move to change the existing parliamentary electoral system, saying that it would take away Tamil and Muslim representation. 

Ganesan had further said that before reforming the parliamentary electoral system, the Government should conduct Provincial Council Elections under the PR system as agreed in the report of the concluded Select Committee on Electoral Reform. 

Parliamentarians Dullas Alahapperuma, Gammanpila, Prof. Tissa Vitarana, and Ven. Athuraliye Rathana Thera had also opposed the proposed electoral reforms process, stating that the Government seemed to be having a hidden agenda.

Prime Minister Gunawardena had then concluded the meeting saying that another meeting would be convened after two weeks.

The President’s push

However, President Wickremesinghe has issued a gazette notification appointing a nine-member Commission of Inquiry (CoI) headed by President’s Counsel and former Chief Justice Wewage Priyasath Gerard Dep to prepare proposals for electoral reforms.

The other members of the committee include Sundaram Arumainayagam, Senanayake Alisandaralage Nalin Jayantha Abeysekera, PC, Rajitha Naveen Christopher Senaratna Perera, Ahamed Lebbe Mohamed Saleem, Sagarica Delgoda, Esther Sriyani Nimalka Fernando, and Vitharanage Deepani Samantha Rodrigo. 

The relevant gazette notification mentions that new laws have been introduced effecting changes to the electoral system and the mode of conducting elections of the country with the 1978 Constitution and that such laws need to be amended to suit current societal needs by conforming with the principles of good governance and strengthening representative democracy.

“There is a tendency on certain occasions for political parties, independent groups, and their membership to engage in unbecoming behaviour in their political and public affairs, and in inappropriate media use, and therefore, a need has arisen to introduce a code of conduct and media standards,” the notification had stated.

Furthermore, it has been mentioned in the gazette notification that due to the registration of political parties without an actual need for the purpose of transference to other parties for financial gains and other improper objectives – as well as certain other activities of political parties – public trust in such parties has eroded.

Not joining SJB

Meanwhile, Seyed Ali Zahir Moulana, who was sworn in as an MP on Tuesday (17) to fill the seat that fell vacant after Naseer Ahamed’s removal from the House following a court verdict, has said that he will remain in the Opposition but will not support the SJB.

“There were reports that I have met Opposition Leader Sajith Premadasa. It was true that I met him as the Leader of Opposition at his office. I met him at the Opposition Leader’s Office and not at the SJB office,” Moulana had told a group of journalists in Parliament.

“I will not cross over to the Government unilaterally but will only do so if my party, the Sri Lanka Muslim Congress (SLMC), comes up with such a decision,” he had noted.

Photographs of Moulana at the Opposition Leader’s Office were used by some media outlets to state that he had joined the SJB prior to being sworn into Parliament.

Dayasiri’s new position

On the front of the Sri Lanka Freedom Party (SLFP), the controversy surrounding the removal of former Party General Secretary Dayasiri Jayasekara has now died down, with news of his name being proposed for another position in the party making the rounds.

It is learnt that Jayasekara’s name is being proposed for the post of senior vice president of the SLFP. The party currently has six senior vice presidents.

The proposal, it is learnt, has been made to SLFP Leader, former President Maithripala Sirisena by a group of party seniors.

Sirisena, however, had responded saying that Jayasekara would be offered any position in the SLFP other than the posts of party leader, general secretary, and national organiser, if he returned to the party fold.

Easy payment scheme

Meanwhile, on the elections front, the Election Commission had last week stated that it had proposed a more feasible option for the Treasury to provide it with the required funds to recommence the stalled Local Government Elections.

The commission had earlier sought a sum of Rs. 2 billion from the Treasury to revive the delayed Local Government Elections. Treasury Deputy Secretary R.M.P. Rathnayake had said that they expected to respond to the Election Commission’s request for Rs. 2 billion following a discussion with the Treasury Secretary.

Election Commission Chairman R.M.A.L. Rathnayake had told the media that instead of the usual request seeking Rs. 9 billion for the Local Government Elections, the commission had requested the Treasury to release the relevant sum in instalments, including Rs. 2.2 billion until the date of the elections.

Funds for Prez Polls

The Election Commission has also requested the Finance Ministry to allocate Rs. 11 billion from the Budget for the year 2024 for the Presidential Election to be held next year.

Commission Chairman Rathnayake had said that it was a general practice for the Election Commission to request the Finance Ministry to allocate funds from the budget for a particular year if an election is scheduled to be held that year. The relevant budgetary estimate, he had said, included all other expenses of the commission during the course of the relevant year.