• Group of SLPPers led by MR vote for IMF deal while Namal and group abstain
• MR first decided not to vote for IMF deal, last-minute change to push SLPPers
• SJB split over IMF deal since party pushed for IMF solution first, finally abstains
• SJB’s Fowzie, SLPP dissidents John, Anura, Sudharshani and SLFP’s Duminda vote
• SLFP abstains from voting, Leader Maithripala says would have voted in favour
• Debt talks with Paris Club and India on one platform, separate platform for China
• Final decision yet to be made on domestic debt restructuring, pvt. creditors’ demand
• RW meets BR and MR separately, discusses economy, politics, and Cabinet members
• Opposition forms a joint coalition sans JVP-led NPP to protest against RW and Govt.

The Ranil Wickremesinghe Government managed to overcome a key hurdle in Parliament last week by getting House approval for the deal reached with the International Monetary Fund (IMF). However, the Government continues to face challenges in finalising the country’s debt restructuring plan that was earlier scheduled to be sent to the IMF by end April.

While there was a key discussion on the matter that was to be held on Friday (28), the meeting had not taken place, according to Government sources. Hence, the country’s debt restructuring programme is now likely to drag on to the month of May as well.

President Wickremesinghe stated in Parliament on Wednesday (26) that Sri Lanka was scheduled to hold debt restructuring talks with the Paris Club and India on one platform and with China on a separate platform, all before the discussion with private creditors.

Referring to Sri Lanka’s economic and political crises, Wickremesinghe highlighted Sri Lanka’s recovery thus far, stating that nearly eight months after the unrest in July 2022, Sri Lanka had now made a comeback. He also urged the whole country to join in the efforts to resurrect the country.

Meanwhile, global development policy expert Kevin Gallagher had stated during a podcast with the China Global South Project recently that China had requested that Multilateral Development Banks (MDBs) such as the World Bank commit to providing grants and concessional loans to debt-distressed countries if China was to have a more meaningful role at the debt negotiation table.

Gallagher, who is a Professor of Global Development Policy at Boston University and Director of the Global Development Policy Center, had stated that, during the recent World Bank and IMF spring meetings, official creditors had a breakthrough in their meetings when China had asked MDBs to commit to providing grants and concessional loans for China to participate in the debt talks in a more meaningful way.

Gallagher, who was involved in the spring meetings, had said that China had dropped its original stance that MDBs should share a fair burden in debt restructuring and be subject to equitable treatment as other creditors.

“China originally said that MDBs should take haircuts and re-profile debt,” he had noted.

However, Gallagher had stated that there was one problem with the proposal presented by China to MDBs: if the debt-distressed countries take the grants by the MDBs and pay back the creditors, it would not help those countries to get back on their feet.

The Government meanwhile is continuing with its public sector reforms programme, especially in the public sector.

It is in such a backdrop that State-Owned Enterprise Restructuring Unit (SOERU) Head Suresh Shah had stated that the unit expected to hire transaction advisors by the end of May who would be paid based on the transaction value of each SOE.

In a media interview on April 20, he has said that Requests for Proposal (RFPs) and Expressions of Interest (EOIs) had been put out for transaction advisors with the deadline extended till 8 May and had added that the unit expected to have the transaction advisors in place towards the end of May.

Shah had noted that transaction advisors would be paid through the successful completion of a transaction, where the fee would be based on the transaction value, which was also an incentive for the transaction advisor to help increase the value of an SOE and increase the Government’s revenue at the end of the transaction.

Opposition Leader Sajith Premadasa meanwhile alleged that although loss-making State institutions needed to be reformed, the Government was planning to sell off the profit-making State institutions as well.

Making a special statement regarding the IMF’s Extended Fund Facility (EFF), the Opposition Leader claimed that the Government had failed to secure the best IMF agreement for the country and its people by reaching out for the global lender at the last moment.

“It is very much clear that loss-making State institutions should be reformed. A bankrupt country cannot maintain unprofitable State institutions,” he said.

Opposition split

However, the Government’s deal with the IMF was passed with a majority of 95 votes with 120 voting for and 25 voting against. The vote was preceded by a three-day parliamentary debate that commenced on Wednesday (26). 

The debate saw many opinions supportive as well as opposing the Government’s deal with the IMF while some cautioned the Government on areas of concern in the agreement.

The vote saw a divided Opposition while the ruling Sri Lanka Podujana Peramuna (SLPP) also engaged in political manoeuvring. 

In fact, the vote on the IMF agreement that took place on Friday (28) evening saw a divided Opposition while the SLPP was also not in full force in the House to back the Government. The SLPP’s move seems to have been aimed at sending a message to President Wickremesinghe that the party was still required to help him (the President) to secure numbers in the House.

SLPP Party Leader Mahinda Rajapaksa (MR) was in the Chamber for the vote and voted in favour of the IMF deal while son, MP Namal Rajapaksa, was a notable absentee. MR also announced that they would support anyone who was taking proactive steps for the betterment of the people. 

It is learnt that MR had earlier decided not to cast his vote for the IMF deal by not attending Parliament. However, he had decided at the last minute to change plans in order to attend Parliament and to vote in favour of the IMF deal. 

Upon inquiry, ‘The Black Box’ learnt that both President Wickremesinghe and SLPP National Organiser Basil Rajapaksa had spoken to MR and convinced him to vote for the IMF deal as it would also strengthen the SLPP MPs to cast their votes in favour as well.

The main Opposition Samagi Jana Balawegaya (SJB) abstained from voting while one of its MPs – National List MP A.H.M. Fowzie – voted in favour of the agreement.

The SJB yesterday (29) decided to take disciplinary action against MP Fowzie for voting in Parliament in favour of the agreement in contravention of the party decision, SJB General Secretary Ranjith Madduma Bandara said yesterday.

Although a group of SJB seniors including the party leadership earlier pushed for the party to vote against the IMF deal, the split witnessed among the SJB MPs over the vote resulted in the SJB deciding to mark the party’s protest and abstain from voting.

The SJB parliamentary group at its meeting last week had shown a clear division, with a group of MPs pointing out that the SJB could not oppose the IMF deal in the House since it was the party that had pushed for the former Government to seek IMF assistance. However, another group had noted that some of the conditions in the deal would result in a series of protests being carried out by members of the civil society and trade unions and would therefore be difficult for the SJB to turn away from them.

It is learnt that this past week saw several senior SJB members meet the President both in Parliament and in private to discuss the possibility of extending their support towards the agreement. It is also learnt that in return they had requested ministerial portfolios. 

The President had indicated that at this juncture a crossover of SJB members would not bring dividends to either the Government or those members as they would be accused by the public of being opportunists. Wickremesinghe had explained that they should pressure the SJB to support the agreement wholesale, which would increase their standing within the party, allowing for a clean extension of support to the Government in a meaningful manner.

Meanwhile, members of the Janatha Vimukthi Peramuna (JVP)-led National People’s Power (NPP), the Dullas Alahapperuma-led National Freedom Council, and the Wimal Weerawansa-led Supreme Lanka Coalition voted against the IMF deal. However, Weerawansa was not present in the House at the time of the vote.

Interestingly, SLPP dissident MP Weerawansa, who had earlier claimed that he would vote against the IMF deal, was absent at the time of the vote, it is learnt.

SLPP dissidents Anura Priyadarshana Yapa, John Seneviratne, and Sudharshani Fernandopulle voted in favour of the IMF deal. Sri Lanka Freedom Party (SLFP) National Organiser Duminda Dissanayake also voted in favour.

The rest of the SLFP MPs seated in the Opposition had abstained from voting. However, SLFP Leader Maithripala Sirisena had said that there was nothing wrong in the Government reaching a deal with the IMF and that he would have voted in favour of the IMF deal if he was in Parliament during the vote. He had explained that he had to spend time in Polonnaruwa for personal reasons and was therefore unable to attend parliamentary sessions.

Sirisena had told the media in Polonnaruwa on Friday, the day of the vote, that he too had approached the IMF during his tenure as President and that IMF funds had been sought even 45 years earlier when Ronnie de Mel was the Finance Minister. He had also observed that if there were any unfavourable clauses in the IMF deal, the Sri Lankan Government could negotiate and resolve them.

Sirisena had added that the IMF representatives had met with him on two occasions prior to finalising the deal with the Government.

The Tamil National Alliance (TNA) MPs abstained from voting as well.

Domestic debt

Be that as it may, domestic debt restructuring continues to remain a contentious issue the Wickremesinghe Government is trying to manoeuvre, since the restructuring of private debt is also dependent on it.

The President last week told Parliament that while foreign creditors have asked the Government to discuss the restructuring of domestic debt, a final decision was yet to be made in that regard. 

“We are hoping to discuss with foreign creditors. They have also told us to discuss the restructuring of domestic debt. There is no final decision as of now, but we should discuss this to make decisions. We cannot impose conditions and go for discussions with them. If we do so, they will impose conditions. Therefore, it is advantageous for us to go for discussions without imposing conditions.”

He noted that the Government has to pay attention to all aspects when restructuring domestic debt and that no party would be subjected to harm. “There are certain banks that say that they cannot face this restructuring of domestic debt. If so, what I ask from them is to take over the economy and carry it forward. One cannot point guns at the head and say that this will fall down if this is done. Especially those in the equity market or share market say that it will fall down if domestic debt is restructured. If it falls down, I will shut it down. That is all that we have to do,” he added.

Hamilton case

Meanwhile, the United States District Court for the Southern District of New York last week ordered the Sri Lankan Government and its sovereign bondholder Hamilton Reserve Bank (HRB) to submit a joint status letter by 12 May 2023.

The decision by US District Judge Denise Cote follows a conference held involving the two parties on 20 April. 

The Government in early April in its answers to HRB’s Amended Complaint denied almost all the allegations.

The Sri Lankan Government had stated that the Plaintiff HRB’s claim was barred, in whole or in part, by reason of Sri Lanka’s sovereign immunity. This was communicated by Sri Lanka’s Attorneys Clifford Chance US LLP.

Furthermore, the Plaintiff’s claim is barred, in whole or in part, because Plaintiff lacks standing to sue and Plaintiff’s claim has been barred, in whole or in part, and/or should be stayed, on the grounds of international comity.

Therefore, the Sri Lankan Government has respectfully requested the US Court to dismiss HRB’s Amended Complaint with prejudice or, in the alternative, stay the proceedings, as well as award the Defendant its costs, attorneys’ fees, and such other and further legal and equitable relief as the court may deem just and proper.

Cabinet reshuffle

Amidst the economic recovery programme, focus in the local political scene continues to be placed on the appointment of new members to Cabinet of Ministers. 

Pressure continues to mount on the President from the ruling SLPP and some members of the main Opposition SJB to make the long-awaited appointments to the Cabinet. 

Chief Government Whip, Minister Prasanna Ranatunga has meanwhile hinted that a Cabinet reshuffle is likely to be held following a discussion between the President and Prime Minister since it is now a necessity.

According to Ranatunga, there are many MPs who are able to work and are in need of a portfolio to carry out the required work. He had added that there were also plans of forming a national government.

Ranatunga had also noted that President Wickremesinghe would be the common candidate of the ruling SLPP at the next Presidential Election.

He had also denied some news reports that SLPP Leader, former Prime Minister MR was to be re-appointed as Prime Minister in the Wickremesinghe Government. “Even MR has said that he had no plans on being appointed as prime minister. Then there are also reports that Sajith Premadasa is going to be appointed as prime minister. There is no truth in all these reports. These are being done with a clear intention of trying to cause a conflict within the Government,” Ranatunga told the media last week.

Basil meets RW

It is in such a backdrop that SLPP National Organiser Basil had met President Wickremesinghe last week to discuss several key issues related to the SLPP as well as the overall situation in the country. The meeting was initially said to be one where Wickremesinghe and Basil would meet and greet for the New Year.

During the discussion, the President had briefed Basil about the current economic conditions in the country and the developments in the political scene.

Basil had observed that while the economic front was showing an improvement, there was chaos in the local political front. The President had been informed of the ongoing issues within the SLPP and the need for some party members to be appointed to the Cabinet.

The President, it is learnt, had noted that there were issues in trying to accommodate the individuals planning to join the Government from the Opposition while also appointing more SLPPers to the Cabinet.

However, the discussion had ended about an hour later.

It is also learnt that MR had also met Wickremesinghe recently at a meet-and-greet for the New Year. However, the matters discussed during this meeting were not immediately known.

Ready for defections

Meanwhile, SJB Leader Premadasa has last week sent out mixed signals on the matter of expected defections from the SJB side. While hinting that he will keep the doors open for anyone to leave the SJB, he has also warned of disciplinary action against errant members.

SJB Working Committee member Rehan Jayawickreme tweeted on Tuesday (25) that Premadasa had stated at the Working Committee meeting that strict disciplinary action would be taken against any member who went against the collective decisions of the party.

“He further stated that the party would not tolerate further indiscipline and tough choices would be made, irrelevant of who the individuals were,” Jayawickreme had stated.

Premadasa has also noted that any member was free to leave the party and those that want to join would also be considered.

The proposal made by the SJB Leader had been unanimously approved by the Working Committee.

There have been reports that some members of the SJB are likely to leave the party and join the Government. Among those strongly speculated as likely to leave are SJB MPs Dr. Rajitha Senaratne and Champika Ranawaka. Following the vote on the IMF deal, it is now speculated that Fowzie would also be another member of the SJB to join the Government in the coming days.

Opposition alliance

While discussions continued on the appointment of new members to the Cabinet, a group of Opposition legislators moved to form a joint coalition to object against what they claim as negative moves by the Wickremesinghe Government.

Several Opposition parties met on Monday (24) at the parliamentary complex to discuss the formation of a common alliance with the aim of opposing the anti-democratic activities of the current Government.

However, the NPP was a notable absentee at the meeting.

The discussion focused on all Opposition parties joining hands to form a new alliance to address the Government’s political, economic, and social policies.

Opposition Leader Premadasa said in a statement that during the discussion, it had been pointed out that several laws to be introduced by the Government violated the democratic and human rights of citizens. Therefore, the Opposition parties had decided to work together to defeat such actions of the Government, he said.

Pointing out that local and international awareness must be brought to the said issues, Premadasa had said that Imthiaz Bakeer Markar had been appointed as the convener of the proposed new alliance with the consent of all party representatives.

Prof. G.L. Peiris, Dullas Alahapperuma, Rauff Hakeem, Mano Ganesan, Lakshman Kiriella, Imthiaz Bakeer Markar, Chandima Weerakkody, Dr. Nalaka Godahewa, Udaya Gammanpila, Dr. Harsha de Silva, Weerasumana Weerasinghe, Gajendrakumar Ponnambalam, Dayasiri Jayasekara, and Gevidu Kumaratunga participated in the discussion.

Jayasekara had proposed that all Opposition parties should join forces to defeat the IMF deal and the proposed anti-terrorism legislation.

Prof. Peiris had pointed out that implementing the proposed anti-terrorism legislation would cause issues for Sri Lanka among the international community since the European Union (EU) was also likely to oppose such legislation.

Expressing views on the proposed legislation, Ganesan had said that it would help the President become a dictator legally.

Ponnambalam meanwhile had noted that it was important to form an alliance and oppose the proposed legislation and Hakeem had stated that the objections should be raised on the matter during parliamentary oversight committee meetings.

However, Weerakkody had explained that the Opposition should be mindful of the fact that objecting to the proposed new legislation should not be to retain the existing Prevention of Terrorism Act (PTA), but to get both the PTA and the proposed new legislation rolled back in order to pave the way for proper anti-terrorism laws similar to those being adopted in developed countries.

Gammanpila had observed that while it was evident that everyone was opposed to the proposed law, what was needed was to reach an agreement on the action to be taken against it.

The Opposition coalition had also met on Tuesday (25) for a further discussion. The meeting was convened at the parliamentary complex.

Several governing party defectors had also attended the meeting.

SLPP’s change

That the ruling SLPP is looking at holding its rank and file together amidst several clear divisions within the party was evident with the move to replace the party’s former Chairman Prof. Peiris by a member of the Buddhist clergy.

The SLPP on 22 April unanimously appointed Senior Prof. Uthurawala Dhammarathana Thera as the party’s Chairman. The appointment was made at the party’s general meeting held at the Party Headquarters at Nelum Mawatha, Battaramulla, presided by its Leader MR.

Only the position of chairman changed, while all other office-bearers of the party were re-appointed.

Meanwhile, SLPP’s former Chairman Prof. Peiris claimed that the decisions made at the meeting were null and void and without validity.

The so-called general meeting (‘Maha Sabhawa’), which met on Saturday (22) morning, is not a duly constituted body at all. All decisions made at this purported meeting are null and void and lacking in any semblance of validity, he said in a statement.

Peiris added that the appropriate judicial proceedings would be instituted to declare these decisions invalid.

Meanwhile, dissident SLPP MP Charitha Herath stated that the SLPP was a specific group of people with a political ideology, not a gang of a several persons.

He told the media last week: “At the last elections, the people gave a mandate to the SLPP for its political programme opposed to the United National Party (UNP) and not to serve as a pair of crutches for the UNP. Those who betrayed that political ideology cannot have a general meeting,” he said.

“Secondly, the SLPP’s Constitution has been submitted to the Election Commission and ‘Maha Sabhas’ cannot take place under fake constitutions,” he said, adding that that was why Prof. Peiris wrote that the general meeting was null and void.

“Thirdly, a political party is not anyone’s backyard,” Herath said, adding that he hoped the SLPPers would not be left with any party in the end.

Maithri’s attempt

The SLFP led by former President Sirisena, it is learnt, is continuing with its attempt to get its breakaways who have joined the Government to return to the party.

Eight out of the 14 SLFP MPs have joined the Government and are holding Cabinet and State minister portfolios.

Sirisena had recently hosted a meeting at his official residence to discuss the return of the SLFP dissidents to the party.

Dissident MPs Nimal Siripala de Silva, Lasantha Alagiyawanna, Jagath Pushpakumara, and Chamara Sampath Dasanayake had also attended.

SLFP’s General Secretary Dayasiri Jayasekara and Senior Vice President Shan Wijayalal de Silva and MPs Sarathi Dushmantha Mithrapala and Angajan Ramanathan had also been present at the meeting.

During the discussion, the dissidents, it is learnt, had asked that they be reinstated in their suspended party positions.

This had been rejected by the SLFP due to their remaining with the Government and opposing the party policy.

Meanwhile, the SLFP Central Committee (CC) had recently met to discuss the party’s May Day rally. Dissident MP de Silva had been sent a letter informing of the meeting. However, the rest of the dissident MPs had not been informed of the meeting. 

De Silva had also not attended the meeting since he had to participate in a meeting attended by President Wickremesinghe in Badulla that day. 

Jayasekara has said that no decision had been taken yet to proceed with legal actions against anyone from the SLFP who has joined the Government.

“On Monday, a meeting was held at the SLFP Headquarters under the chairmanship of former President and incumbent MP Maithripala Sirisena. In that meeting, we paid special attention to matters such as the IMF agreement and the proposed Anti-Terrorism Bill. We did not take a decision on the people who support the Government of President Ranil Wickremesinghe. Some of those MPs have obtained court orders preventing us from taking legal actions against them. Therefore, we cannot make a decision on them until the completion of those legal issues,” he has noted.