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Friday January 27th, 2023

Enter Basil: Reshuffles, fireworks, frog marches mark arrival of Sri Lanka’s new finance minister

Finance Minister Basil Rajapaksa

ECONOMYNEXT – The priorities of the people are the priorities of the government, Sri Lanka’s newly sworn-in Finance Minister Basil Rajapaksa told reporters upon accepting his portfolio from his brother President Gotabaya Rajapaksa Thursday (08) morning.

“Though I may serve as a minister, the farmers, fisherfolk, labourers, professions, civil servants and others in this country should think that a colleague of theirs is the minister of finance,” he said.

Noting that Sri Lanka is in a grave situation, Rajapaksa made an open appeal to the media and all trade unions to help the government overcome the challenges the country is facing on multiple fronts in the ongoing COVID-19 crisis.

“We have faced more serious situations, however. We have overcome worse political challenges, mainly because of everyone who supported us,” he said.

“This is a difficult task. Let us all work together,” he added.

Rajapaksa also alluded to “unpleasant/bitter (අමිහිරි in Sinhala)” actions that might have to be taken, as a father would, though he did not elaborate.

“But those things will be done sincerely for the people,” he said.

News bulletins on broadcast media showed celebrations around the country organised by supporters of the government, with footage of firecrackers being lit in towns in various parts of the island and banners congratulating the new finance minister. Despite a COVID-19-related ban on protests and public meetings, small groups were seen shouting slogans in support of his appointment.

Rajapaksa then took oaths as a national list MP of the ruling Sri Lanka Podujana Peramuna (SLPP), a young party he helped found and whose meteoric rise over the last few years can at least in part be attributed to his organising and campaigning skills.

He held the Economic Development portfolio in the 2010-15 Mahinda Rajapaksa administration and backbencher MPs of the present government have repeatedly called for his entry to parliament so the crisis-riddled economy could be salvaged almost single-handedly, the way — the MPs claimed — he had done in the heyday of the Mahinda Rajapaksa era.

Despite speculation that the Finance Ministry will not be given to Basil Rajapaksa — that portfolio until Thursday being held by his brother and current Prime Minister Mahinda Rajapaksa — the president’s media division announced his appointment early in the day, preceded by a gazette notification announcing a newly created Economic Policies and Plan Implementation portfolio. This portfolio is now held by Prime Minister Rajapaksa, who was also sworn in before President Rajapaksa Thursday morning.

Thursday afternoon saw two more appointments before the president as the state ministry portfolios of Shasheendra Rajapaksa and Mohan de Silva were reshuffled. Sheeshandra, the son of the president’s brother Minister Chamal Rajapaksa, now holds possibly the longest ministry title in Sri Lanka’s history as State Minister of Promoting the Production & Regulating the Supply of Organic Fertilizer and Paddy & Grains, Organic Foods, Vegetables, Fruits, Chillies, Onion and Potato Cultivation Promoting, Seed Production and Advanced Technology Agriculture.

de Silva, meanwhile, was sworn in as State Minister of Coast Conservation and Low-Lying Lands Development.

Both state ministries were newly created, as published in another extraordinary gazette issued by the president Thursday amending the functions of a number of ministries.

According to the gazette, Selendiva Investments Ltd, a state-run firm controversially created to take over various state assets and act as the ‘investment arm’ of the government, will come under the purview of the State Ministry of Urban Development, Waste Disposal and Public Sanitation. The Marine Environment Protection Authority (MEPA), meanwhile, will be brought under Mohan de Silva’s State Ministry of Coast Conservation and Low-Lying Lands Development, while 10 institutions including the Public Utilities Commission of Sri Lanka (PUCSL) and the Department of Census & Statistics will come under the newly created Economic Policies and Plan Implementation Ministry.

Even as celebrations were taking place across the island, over 40 people were arrested on Thursday for engaging in protests that had little to do with the new ministerial appointments. A majority of these arrests were made at a protest held near parliament in Sri Jayawrdenapura, Kotte, against the proposed Kotelawala Defence University (KDU) bill.

News footage showed protestors, including older women, being frog-marched into police buses amid shrieks of protest from fellow activsits.

Thirty-one people including Sri Lanka Teachers’ Union General Secretary Joseph Stalin were arrested near the parliament roundabout. The protest was jointly organised by the Inter-University Students Federation (IUSF), the Sri Lanka Teachers’ Union and the Frontline Socialist Party.

The KDU bill, first presented in 2018 under the previous government, has been controversial, with left-leaning opposition parties including the Jantha Vimukthi Peramuna (JVP) alleging that it will pave the way for militarisation of higher education in Sri Lanka.

A Buddhist monk that was marched into one of the buses claimed that he and the protestors had been attacked. “If there are attempts to stop us, that won’t happen. No matter if Basil or whoever comes, this will not be stopped,” the monk said.

News footage also showed tense situations outside the Colombo magistrate court Thursday evening as police and bailed-out protestors who were to be sent to quarantine were seen shoving each other. At least one protestor was heard claiming he had been attacked. Another claimed they were being packed off to quarantine by force.

Meanwhile, the main opposition Samagi Jana Balavegaya (SJB) held a protest near parliament Thursday morning against what it called the government’s suppression of the people’s right to protest.

Sri Lanka banned protests and public meetings until further notice on Tuesday (06) to prevent large gatherings and the further spread of COVID-19.

Responding to allegations that police were suppressing protests against the government using quarantine regulations, Public Security Minister Sarath Weerasekara told parliament Thursday afternoon that the arrests were in accordance with guidelines issued by Health Services Director General Dr Asela Gunawardena in an effort to contain the spread of the virus.

It was not at all politically motivated, he said.  (Colombo/July09/2021)

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Sri Lanka shares fall at market close on profit taking

ECONOMYNEXT – Sri Lanka shares fell on Thursday as profit taking entered the market mainly on financial and diversified sectors, brokers said.

The main All Share Price Index (ASPI) fell 0.13 percent or 11.50 points to close at 8,926.56.

“The market was trading on dull trade mainly due to profit taking,” an analyst said.

“Also we saw investors taking a sideline as quarterly reports started to come”.

The earnings in the first quarter of 2023 are expected to be negative with revised up taxes and an imminent electricity tariff hike.

Earnings in the second quarter are expected to be more positive with the anticipation of IMF loan and possible reduction in the market interest rates as the tax revenue has started to generate funds.

The central bank’s policy decision was expected and investors have been eying on IMF deal with hopes of rapid economic recovery from the current unprecedented economic crisis, however since the market gained in the last sessions profit taking has come about, analysts said.

The market has been on a rising trend on the hopes of a faster IMF deal. However, the central bank government said the IMF deal is likely in the quarter or in the first month of the second quarter.

The most liquid index S&P SL20 fell  0.33 percent or 9.21 points to 2,798.

LOLC had seen some attention by investors as the firm disposed 90,256,750 shares held with Agstar PLC at 15-17.50 rupees a share.

The market witnessed a turnover of 1.2 billion rupees, lower than the month’s daily average of 1.9 billion rupees.

Expolanka dragging the market down closed 2.36 percent down at 186.7 rupees a share. Sampath bank fell 1.41 percent to close at 42 rupees a share while Royal Ceramic Lanka closed 2.59 percent dwn at 30.1 rupees a share.

(Colombo/Jan26/2023)

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Sri Lanka bonds yields steady at close

ECONOMYNEXT – Sri Lanka bond yields were steady at close on Thursday, dealers said, while a guidance peg for interbank transactions by the Central Bank remained steady.

A bond maturing on 01.05.2024 closed at 31.00/20 percent unchanged from the last close.

A bond maturing on 15.05.2026 closed at 26.60/90 percent, up from 28.50/70 percent on Wednesday.

A bond maturing on 15.09.2027 closed at 28.60/85 percent, up from 28.50/60 percent at the last close.

The three months bill closed at 29.75/30.25 percent unchanged from the last close.

The Central Bank’s guidance peg for interbank US dollar transactions appreciated by another 2 cents to 362.14 rupees against the US dollar.

Commercial banks offered dollars for telegraphic transfers at 360.49 rupees on Thursday, data showed.  (Colombo/Jan 26/2022)

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Sri Lanka central bank workers protest tax hike as governor defends painful measures

ECONOMYNEXT – Employees of Sri Lanka’s Central Bank have joined a week-long “black protest” campaign organised by state sector unions against a sharp hike in personal income tax, even as Central Bank Governor Nandalal Weerasinghe said painful measures were needed for the country to recover from its worst currency crisis in decades.

President of the Central Bank Executive Association Jayadu Perera told EconomyNext on Friday January 26 that while the protesting CBSL staff were not opposed to paying taxes, they take issue with the unprecedented increase which came into effect in the new year.

Perera claimed that the tax he paid in December had increased six-seven fold.

“This is true for most public servants, and we cannot bear this burden,” he said.

“This is a very unfair tax since it is the professionals of this country that make all the sacrifices,” he added.

Perera complained that Sri Lanka’s ruling class maintain high living standards and enjoy all the luxuries while subjecting workers like him to an “extremely unfair and unjust” tax.

Opposition to Sri Lanka’s newly increased direct taxes has been rising, with a number of unions and professional associations taking to the streets demanding that the decision is reversed.

The government, however, defends the tax hike arguing that it is strapped for cash as Sri Lanka, still far from a complete recovery, is struggling to make even the most basic payments, to say nothing of the billions needed for public sector salaries.

Economists say Sri Lanka’s bloated public service is a burden for taxpayers in the best of times, and under the present circumstances, it is getting harder and harder to pay salaries and benefits.

Defenders of the tax hike say that the road to recovery is a painful one, and Central Bank chief Weerasinghe, meanwhile, told reporters at the monthly monetary policy review on Wednesday January 25 that the country would have to take certain painful measures to come out of the crisis.

Asked about the trade union action organised by his staff – with most employees dressed in black – Weerasinghe joked that he too was in black but said in a more serious vein that at CBSL, anyone was free to exercise their democratic right to protest.

He also stressed that taxation is not under the purview of the Central Bank whose primary obligation is monetary policy.

The CBSL staff, however, continues to protest.

“This tax increase was implemented without any discussion with workers who are the victims of this policy,” claimed Perera.

Acknowledging the country’s dire financial straits, he said: “But why must only the professionals make sacrifices? Why not the politicians?”

Another worker who did not wish to be named claimed that he was left with just 10,000 rupees after tax.

“This an intolerable burden laid upon our heads. We will continue this protest until they give us relief. Today we did it during the lunch break. In the future we will do more,” he said.

Other workers who shared these sentiments told EconomyNext that most of them have debt obligations of their own and once they have settled loans, interest and other bills, a large income tax is the last straw.

“We have our own personal commitments. All we say is that taxation should be fair, transparent and equitable. Show us the rulers that are being taxed the same way,” said one CBSL worker.

Sri Lanka’s new tax regime has both its defenders and detractors. Critics who are opposed to progressive taxation said it serves as a disincentive to industry and capital which can be invested in business. They argue that a flat rate of taxation is implemented where everyone is taxed at the same rate.

Others, however, contend that the new taxes only affect some 10-12 percent of the population and, given the country’s economic situation, is necessary, if not vital.

Critics of the protesting workers argue that most of the workers earn high salaries that most ordinary people can only dream of, and though there may be some cases where breadwinners could be taxed more equitably, overall, Sri Lanka’s tax rates remain low and are not unfair. (Colombo/Jan26/2023)

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