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Thursday September 1st, 2022

20th Amendment: End to Sri Lanka’s Democracy: Shouldn’t it be Resisted? – Uyangoda

Opposition Samagi Jana Balavegaya activists protest against 20th Amendment

ECONOMYNEXT – The debate on the proposed 20th Amendment to Sri Lanka’s 1978 Constitution is gathering momentum. The proposal, which has been published in the Government Gazette, is indeed a constitutional bombshell, literally. Its provisions are very destructive in their objectives as well as consequences. Perhaps, the management gurus and media moguls who advise President Gotabaya Rajapaksa may have successfully converted him to the somewhat naïve and politically dangerous doctrine of ‘creative destruction.’

Objectives

Even a hurried reading of the draft 20th Amendment tells the reader that its framers are motivated by the following two immediate political objectives:

• Creation of a new office of ‘executive presidency’ and granting to the holder of that office unfettered and unchecked powers over the Cabinet, the legislature, the judiciary, the political system and society. The office of the President will once again be, as it was in 1978 and 2009, the central institution of state power which will stand above, and superior to, everything, and everybody, else in our society and polity.

• Assigning and securing to one ruling family the monopoly of political power in Sri Lanka.

Consequences:

There are many negative consequences of the proposed 20th Amendment if it is passed into law by Sri Lanka’s parliament. Some are short-term and others are both medium and long-term. It has the most destructive potential to create conditions for:

• Bringing an effective end to Sri Lanka’s much-venerated parliamentary democracy and liberal democratic traditions and institutions.

• Creating a political system in Sri Lanka similar to the one we have had under the pre-1931 colonial state, thereby ignoring and erasing all the achievements and advances the Sri Lankan people have made in term of political progress since 1931. The framers of the 20th Amendment and its well-wishers have also closed their eyes to the bloodbath which the J. R. Jayewardene project of despotic constitutionalism caused soon after the enactment of 1978 Constitution.

• Making it difficult, if not impossible, to dislodge the incumbent ruling family or whomsoever who occupies the office of President, from power by peaceful and electoral means.

• Depriving the people of Sri Lanka their sovereign right to change governments and remove rulers who violate their trust by peaceful means available within the framework of open, competitive, multi-party and electoral democracy.

• Granting constitutional sanctity to the arbitrary exercise of political power by the Executive, with only very restricted, if not non-existent, opportunities for society to exercise any control within the framework of Rule of Law which has so far been the cornerstone of Sri Lanka’s constitutionalism.

• Eventually establishing a one-party state in Sri Lanka in line with the much dreaded South-East Asian developmentalist state model.

• Making liberty and freedoms of citizens vulnerable to arbitrary executive action in a situation in which new law reforms would seek to severely restrict (a) freedom of thought, (b) freedom of expression, (c) freedom of association, and (d) right to dissent and disagree.

• Facilitating a swift transition from a weak democracy to an autocratic and tyrannical system of government.

With those consequences, Sri Lankan citizens will have to watch a rather tragic situation in which:
(a) Parliamentary democracy is used to facilitate its own negation, that is, ending parliamentary democracy itself, (b) One hundred and fifty or so Members of Parliament would be asked to sign their symbolic death warrant collectively by voting for the new constitutional amendment as envisaged by the proposed draft.

That is why the proposed 20th Amendment is politically and constitutionally so destructive. It will destroy the most precious political legacy of Sri Lanka’s modernity and progress, parliamentary democracy and rule of law, and create in its place a post-democratic leviathan.

That is why the proposed 20 Amendment should be critiqued, opposed and resisted. That is also why President Gotabaya Rajapaksa should be asked by all his critics that he also has a duty to exercise some degree of political sanity and prudence in his capacity as Sri Lanka’s ruler. (Colombo September 20, 2020)

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Sri Lanka seeks to meet creditors armed with IMF deal

ECONOMYNEXT – Sri Lanka will meet creditors over the next few weeks to update them on the economic development and a reform package agreed with the International Monetary Fund, the Finance Ministry said.

Sri Lanka and the IMF has announced a staff level program for 2.9 billion US dollar extended fund facility.

“This agreement is a testimony to our commitment to carry out the necessary reforms to offer a better life to our fellow citizens,” President Ranil Wickremesinghe said.

“It paves the way for the provision of financial support from the IMF and other development partners that should help us to address current external imbalances.”

Creditors could contact financial advisors at lk.investors@lazard.com and legal advisors at srilanka@cliffordchance.com

Sri Lanka has been “working with legal and financial advisors on the debt restructuring strategy.

A presentation will be made to creditors to update them on the most recent economic developmetns and main areas of the reform package. (Colomo/Sept02/2022)

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Woman found shot dead in Sri Lanka main opposition party office in Kegalle

Crime scene. Caution

ECONOMYNEXT – A woman was found dead in Sri Lanka’s main opposition Samagi Jana Balawegaya (SJB)’s Kegalle district office, police said.

Sri Lanka’s Police Media Division said that the body was found inside a room at the SJB office in Kalugalla Mawatha, Kegalle, Thursday September 1 morning.

Police has yet to determine whether the woman was murdered or whether she had taken her own life.

The deceased was a 36-year-old employee working at the party office.

Sri Lanka has seen an apparent spike in reportings of shootings in recent weeks, with cases reported almost daily in August.

Police have attributed a majority of the shootings to underworld activity or drug trafficking. (Colombo/Sept1/2022)

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Sri Lanka should have market rupee rate, more taxes, lower inflation for IMF funds

ECONOMYNEXT – Sri Lanka has to prepare a 2023 budget, market determine the exchange rate to get funds while working with creditors in parallel to restructure debt, International Monetary Fund officials said.

“This is the beginning of a long road for Sri Lanka to emerge from the crisis,” Senior Mission Chief Peter Breuer told reporter in Colombo a 2.9 billion US dollar IMF deal was reached.

“It is important to continue on this path with determination. It is important to get support from all sections of society.”

Sri Lanka will have to negotiate with creditors to get assurances on restructuring and work on a series of prior actions in parallel.

These include a 2023 budget in line with the program.

Sri Lanka has allowed interest rates to go up and private credit has fallen sharply reducing outflows. However forex shortages still persist amid an inconsistent peg.

“An important pillar is to restore a market determined exchange rate,” Mission chief Masahiro Nozaki said.

“We believe it needs to be sequenced. The announcement of a comprehensive program will be important.”

Under the IMF program Sri Lanka is expected to show a primary surplus of 2.3 percent of GDP by 2024 correcting from an expected -4.0 percent in 2022.

Sri Lanka will have to make income tax more progressive and also charge wealth tax, to reduce the burden of adjustment on the poor, Nozaki said.

“Tax reforms under the program should be designed to be progressive,” he said. One way was to increase income tax rates and another was a wealth tax.

“Preparation will take time and that needs to be properly designed,” he said.

Sri Lanka will have present a 2023 budget consistent with the IMF program, which usually happens in November.

In parallel negotiations will have to be done with creditors. Without creditor assurances the staff level program will not go to the Board for disbursement.

“Delays in getting financial assurances will affect debt repayment capacity because Sri Lanka will not be able to grow,” Breuer said.

“The interest of everyone should be to get everyone to work together.”

Delays in getting creditor assurances would make the economic crisis deeper and delay a recovery.

The central bank will also have to get inflation under control.

“The disinflation strategy is critical under the program,” Nozaki said.

Sri Lanka’s inflation topped 60 percent in August after the soft-pegged rupee collapsed from 200 to 360 to the US dollar weighed down by a forced sale requirement after two years of money printing.

Sri Lanka’s rupee has collapsed from 4.70 to 360 to the US dollars since the soft-peg was set up in 1950. The ongoing 2020/2022 currency crisis is the worst in its history.

In Sri Lanka money is usually printed to keep rates down and buy maturing debt from past deficits to the balance sheet of the central bank. In 2020 price controls were imposed to cripple bond auctions after cutting taxes.

Later in the crisis after forex shortages are created large volumes of bill are bought with printed money to offset liquidity shortages from forex sales.

Currency crises are a problem associated with soft-pegs which are neither clean floats nor hard pegs (does not have a single consistent anchor) and are now generally called flexible exchange rates. (Colombo/Sept01/2022)

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