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Saturday June 3rd, 2023

Battle between Sri Lanka’s main opposition SJB and popular JVP-led alliance hots up

ECONOMYNEXT – With the likelihood of an electoral collapse of the ruling Sri Lanka Podujana Peramuna (SLPP) still reasonably high, the country’s main opposition the Samagi Jana Balawegaya (SJB) and the leftist National People’s Power (NPP) appear to be engaged in a low-intensity turf war over the coveted “system change” mandate.

Though an election has yet to be announced — indeed, opposition parties across the board have expressed fears of an indefinite delay — the Janatha Vimukthi Peramuna (JVP)-led NPP has been busy organising well-planned and well-attended public events around the country.

The SJB in contrast has been slow to step up, with only a handful of pocket meetings and other events highlighted by the media, apart from the odd, half-hearted press conference.

The JVP fired the first salvo. Former JVP parliamentarian K D Lal Kantha speaking at an event on Monday October 31 said there are crooks not just in the government but in the opposition benches too.

“Some people think that crooks are only on the government side. No, they’re there in the opposition too. Those who were in government before, held ministries before or were in cabinets before are all in the opposition too,” he said.

“The opposition also considers the NPP a challenge.”

SJB general secretary and MP Ranjith Madduma Bandara claimed that the JVP is attacking his party because it fears its strength.

“Having seen our strength and our capacity for victory, the JVP has started to attack us. They attack us because we’re strong,” said Madduma Bandara.

“The people know who the thieves are, who robbed the banks and who set fire to office buildings and murdered people,” he added, in a thinly veiled reference to the JVP’s second insurrection in the late 1980s.

Since the ouster of ex-President Gotabaya Rajapaksa in July this year after a wave of youth-led protests amid a crashing economy, Sri Lanka’s political landscape has been thrown to disarray with no apparent challenger to the once-mighty SLPP.

Meanwhile, President Ranil Wickremesinghe, who took the reins from Rajapaksa in July, has all but given up on his plans for an all-party government.

The recently passed 21st amendment to the constitution retained the president’s power to dissolve parliament and call a general election anytime after two and a half years since August 2020. Both the SJB and the NPP as well as other opposition actors have expressed fears that the SLPP, whose support was essential to Wickremesinghe in securing his presidential bid, have obtained an assurance from the president that parliament would not be dissolved until 2024. However, there is no clear indication at present that this is the case.

On the other hand, there is speculation of plans by Wickremesinghe’s United National Party (UNP), which he has been leading for 28 years, to regroup and contest parliamentary elections sometime after March next year. If this transpires, it may entail a return of some SJB seniors who turned their back on Wickremesinghe when they rallied behind SJB and opposition leader Sajith Premadasa in the run-up to the 2020 parliamentary polls. A number of SLPP and Sri Lanka Freedom Party (SLFP) MPs are also whispered to join this surprise grand alliance.

Currently the UNP is represented in parliament by just one MP: Vajira Abeywardena, a staunch Wickremesinghe loyalist. UNP general secretary Palitha Range Bandara has also rubbished claims by the opposition that the president is a “prisoner” of the SLPP.

These developments notwithstanding, the SJB and the NPP are slowly but surely gearing for an election, whenever that may be. Political analysts say the NPP has the edge, given the role the party and its affiliates played in the Aragalaya (Struggle) protest that unseated the powerful Rajapaksa dynasty, and the JVP’s strong anti-corruption stance and, increasingly, its anti-austerity rhetoric that resonates well with the inflation-hit public.

The NPP’s detractors, however, have criticised it for “hijacking” what was essentially an organic people’s uprising and for claiming undue credit for the forced resignation of the former president. A notable incident that occurred on May 09, the day peaceful protestors were attacked by government-backed goons, was an unprovoked attack on Premadasa who visited the main agitation site in Colombo soon after news broke of the violence. A number of protestors were seen crowding around Premadasa and his entourage and attempting to hit him before his security personnel whisked him away. Incidentally, JVP and NPP leader Anura Kumara Dissanayake who also arrived at the protest site was unharmed and was seen engaged in spirited discussion with some of the protestors.

Over the months since Wickremesinghe’s ascent to power, Sri Lanka’s economy has shown some early signs of recovery and, with a staff-level agreement reached with the International Monetary Fund (IMF) for a 2.9 billion dollar bailout package, a semblance of normality and economic stability has returned to the island. Daily scheduled power outages have reduced in length and frequency and the mile-long queues for fuel and cooking gas have all but disappeared, bringing much relief to the people. Inflation, though it continues to batter low income earners, is also on a downward trend after a painful but necessary tightening of monetary policy by the central bank.

Against this backdrop, the Aragalaya has lost some steam — certainly helped by an unexpected and largely disproportionate government crackdown which drew loud condemnation here and abroad — and the opposition parties have had to shift their gears somewhat in preparation for elections. But only just, as, even now, there is no shortage of weapons they can throw at the government: from skyrocketing food prices, increased electricity bills, alleged human rights violations and, most recently, a hike in personal income tax.

Incredibly, the leftist JVP has been at the forefront of voices speaking against the progressive tax reforms, baffling even their harshest neoliberal critics. The SJB’s position on the tax hike is less clear. Though the party has previously spoken in favour of boosting government revenue, very much in line with their ‘social market economy’ ethos, they now seem to have adopted a confused “this is wrong but we’re not entirely sure why” stance, which critics say isn’t all that different from their position on much needed state sector reform. Premadasa himself was heard proposing recently that, before increasing taxes on dollar-earning sectors, the government “take the dollars back” from the rupee-millionaires who became dollar-millionaires after the 2019 tax cuts.

It seems the JVP and the SJB are starting to battle it out for dominance in the opposition space, which has expanded considerably since the uprising. It also seems each is trying to out-populism the other, resorting to popular slogans that critics say are not only lacking in nuance but also contradict their own ideology. Since the success of the Aragalaya, the popular imagination has been captured by the possibility of a corruption-free, efficient state that is accountable to the people and is run by non-establishment figures who put the public interest first. A lofty ambition if ever there was one. While no one will fault the people for daring to dream, political analysts warn that this new reality may incentivise opposition parties to abandon reason and propose simplistic, social media-friendly solutions to complex problems that require the kind of foresight that was woefully absent in the past three years — solutions that may see a return to the very policies that nearly destroyed Sri Lanka’s economy for years to come. (Colombo/Nov01/2022)

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Sri Lanka to ramp up weekend fuel deliveries after petrol price cut

More deaths reported at Sri Lanka fuel queues

ECONOMYNEXT – Sri Lanka’s state-run Ceylon Petroleum Corporation will be operating on the weekend to complete all fuel deliveries to end vehicle queues forming outside fuel stations after the price revision earlier in the week, Energy Minister Kanchana Wijesekera said.

“Instructions have been given to CPC and Ceylon Petroleum Storage Terminals to continue fuel deliveries on Saturday and Sunday this week to supply sufficient stocks to all fuel stations,” Minister Wijesekera said in a TWITTER.COM MESSAGE

“To reduce expenses on overtime, CPC and CPSTL have not been operating on Sundays and public holidays in the last 4 months,” Wijesekera said.

“Non-placement of orders by fuel stations from last Saturday, anticipating a price reduction, not maintaining minimum stocks, immediate increase in demand by consumers after the price revision, and quota increase have created shortages in the fuel stations.”

The Minister in April 2023 said all fuel stations would be required to maintain a minimum of 50 percent of stock tank capacity.

“I have asked CPC to review and suspend the license of fuel stations that had not maintained minimum stocks.” (Colombo/ June 02/ 2023)

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Sri Lanka bonds yield up at close, rupee at 291.75/292.50 against the US dollar

ECONOMYNEXT – Sri Lanka’s bonds closed steady on Friday, dealers said, following the central bank’s decision to cut its main policy rate by 250 basis points.

The Spot US dollar closed at 291.75/292.50 rupees, dealers said.

The rupee opened at 290.25/75 to the US dollar Thursday and closed at 292.50/295.50 to the US dollar.

A bond maturing on 15.09.2027 closed at 24.70/90 percent up from 24.50/90 percent a day earlier, dealers said.

A bond maturing on 15.05.2026 closed at 25.75/26.25 percent up from 25.00/26.00 percent a day earlier.

A bond maturing on 01.05.2025 closed at 27.00/30 percent, up from 26.30/27.00 per cent at last close.

A bond maturing on 01.07.2032 closed at 20.25/21.00 percent, up from 20.00/40 per cent at last close.
(Colombo/ June 02/2023)

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Sri Lanka’s shares edge up on positive macroeconomic sentiments

ECONOMYNEXT – Sri Lanka’s shares closed higher in trade on Friday, over positive macro-sentiments encouraging investors to redeem their interest towards buying, an analyst said.

The main All Share Price Index was up 0.72 percent or 62.19 points to 8,753.80,  while the most liquid index S&P SL20 was up 0.68 percent or 16.87 points to 2,487.29.

Sri Lanka’s inflation in the 12-months to May 2023 has eased to 25.2 percent from 35.3 percent a month earlier according to a revised Colombo Consumer Price Index calculated by the state statistics office.

Prior to the Monetary Policy investors were quite optimistic that inflation is to lower and interest rates will decrease and since exp, an analyst said.

Sri Lanka Central Bank is waiting for the government proposal on the domestic debt restructuring (DDR), the central bank governor Nandalal Weerasinghe said amid uncertainty over DDR and speculations over instability in the banking sector.

“On debt restructuring, the borrower is the ministry of finance’s treasury. Certainly we will announce what the strategy will be. We are waiting for a government proposal,” Weerasinghe said.

Sri Lanka’s investors are waiting on assurances to be made on debt restructuring and optimization, Central Bank Governor Nandalal Weerasinghe said, “It is up to the government to clear the uncertainty, because from our side we have done that part.”

The central bank cut the key policy rates by 250 basis points to spur a faltering economic growth as inflation was decelerating faster than it projected.

The speculation of DDR has hit the market and the risk premium has kept the market lending rates well above the central bank’s policy rates. The government has yet to present its plans on DDR.

Weerasinghe said the central bank has done its best to reduce the risk premium through bringing down the market lending rates while keeping the policy rates unchanged.

Sri Lanka’s President Ranil Wickremesinghe has discussed progress of International Monetary Fund program and debt restructuring during a visit of Deputy Managing Director Kenji Okamura, statement said.

“The discussion primarily focused on the progress of the IMF program between Sri Lanka and the IMF,” a statement from President’s office said.

“Attention was also paid to the on-going debt restructuring negotiations.”

However Officials from IMF have said Sri Lanka has to focus on expanding taxes.

“We discussed the importance of fiscal measures, in particular revenue measures, for a return to macroeconomic stability,” Deputy Managing Director Kenji Okamura said in a statement.

The finance ministry this week issued rules requiring everyone above 18 year of age to register to pay income tax.

“I was encouraged by the authorities’ commitment to negotiate a debt strategy in a timely and transparent manner.

The market generated a revenue of 738 million rupees, while the daily average was 1 billion rupees.

Top gainers in trade were Vallibel One, LOLC Finance and Browns Investment. (Colombo/June02/2023)

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