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Saturday March 2nd, 2024

It’s going to be a bumpy 2020

A New Year dawns and as always, we begin to hope for a better and more successful twelve months. For us of the fourth estate, life continues attempting to make sense of the economic and political challenges the country will face.

The political drama begins on January 3 when President Gotabaya Rajapaksa delivers his policy statement in Parliament.

In the House will be the same people who were there over the past four years, except that Prime Minister Mahinda Rajapaksa and his 15 member Cabinet will be occupying the government benches.

Seated opposite the PM will be the new Leader of the Opposition Sajith Premadasa who was the New Democratic Front candidate at the November Presidential election.

What happens after the “Throne” speech will be interesting.

President Rajapaksa has the power to prorogue Parliament, shutting down the business of the House for another period as he did, soon after the elections.

However, under the 19th Amendment to the Constitution, such a second prorogation can be seen as “arbitrary” if there is no reason for this action and it could be challenged in court.

Anura Kumara Dissanayake being welcomed by crowds at his hometown of Thambuththegama/JVP Media

As Janatha Vimukthi Peramuna leader Anura Kumara Dissanayake pointed out the policy statement needs to be debated and the views and the concerns of the Members of Parliament aired. At a press conference held on Dec 26, he said the party has information that the President wants to prorogue on Friday the 3rd, and demanded that it not be done.

Shutting down Parliament will rob the chance for the Opposition to air its views, bring the clamour of the streets into the House and criticize the government.

At the same time, Parliament has to function in some form for the government to enact legislation, pass votes on account and introduce amendments to fulfil its manifesto.

The New Parliament and the struggle for nominations

Come February 28, President Rajapaksa has promised to dissolve parliament and a Parliamentary General election is expected to be called for the last week of April, probably the 25th of that month.

The SLPP will go all out to win a two-thirds majority in the House in order to bend the Constitution to its will and most importantly restore full Executive powers to the President.

That is why the two months of Parliament is crucial for all the opposition political parties as they can begin their campaign against the government in the House.

The opposition political parties will need all the help they can get to make a mark.

The principal opposition, the United National Party which got a sound thrashing in the Presidential elections because of rampant in-fighting appears to not have learnt its lessons and continues to turn on itself and is looking like a heap of scrap.

The challenger Sajith Premadasa and Prime Minister Ranil Wickremesinghe share a smile at Ranala during the presidential election campaign/PM’s Media

Party “reorganizing”, code for getting rid of former Prime Minister Ranil Wickremesinghe as the Party Leader, is going nowhere and although the party has announced that Premadasa will be its Prime Ministerial candidate, the Leader stubbornly clings to his post. Premadasa has publicly said he cannot lead the campaign without being the party leader.

The party cannot even hold a meeting it appears, as plans for a meeting of the MPs slated for Dec 30th at its headquarters in Kotte did not take place. Wickremesinghe and Premadasa were to meet also on Monday to sort out their differences, but that too did not happen.

In this state, surely the UNP cannot give the leadership to the opposition, not only to win the election which at this stage seems a daunting task, but even to build a strong Opposition in Parliament.

Another interesting issue to watch will be the nomination process for the Parliamentary elections.

In his first press conference held a month after he was elected President Rajapaksa said the public “looks at our traditional politicians with disgust.” It was a telling comment; his hard-core backers are hopeful new type of Parliamentarian who could command greater confidence in the public will be elected.

Therefore there will be a tussle between the “professional politicians” and the technocrats as well as ex-military men and women who formed the “Viyath Maga” group to get their names on the nomination lists.

There are early signs of this happening.  A Rajapaksa stalwart, Media Academic and former Media Secretary Dr Charitha Herath declined the post of Lake House Chairman, usually a plum state media job, to as he said on twitter to “serve in a bigger capacity.”

The President too seems to be wanting more of these professionals in Parliament, bringing a new element into governance. It will be somewhat like the Chinese model where technocrats are moved into political positions to make government more efficient.

But what of the traditional politicians? Will the Sri Lanka Podujana Peramuna strike a balance between the two groups? What we can certainly expect is a tussle between the two, and only time will tell, which of the two would emerge victorious.

And while that tussle takes place, the third force in the governing alliance, the Sri Lanka Freedom Party is bound to suffer. Its members who entertain the idea of entering Parliament will have to stand in line behind the SLPP as well as the Viyath Maga hopefuls.

The Tyrannosaurus Rex in the room

Beyond politics, the T-Rex in the room will be Sri Lanka’s huge international debt.  In the third quarter of this year, Sri Lanka has to pay back an instalment of a mind-boggling US$ 4.8 billion, the highest this country has paid in its history.

The government has already reduced value-added tax and income tax, cutting government revenues significantly. It may have to raise money through international bonds or other instruments. Fitch ratings has already downgraded Sri Lanka.

In their only Press Conference during the presidential campaign, the current Prime Minister when asked how they plan to pay off the debts, answered: “don’t worry we know how to get the money.” So, the elder Rajapaksa, who is also the Finance Minister will have to work some magic and deliver on the promises made.

President Gotabaya Rajapaksa congratulates his brother Mahinda after the latter was sworn in as Prime Minister/PMD

There are signs that the government is preparing the ground for some austerity measures.

At least two Ministers, Bandula Gunewardene and Mahinda Amaraweera have talked of “tightening belts.” Two Monks, Mururththetuwe Ananda Thero and Omalpe Sobhitha Thero, both close supporters of the Prime Minister, have asked Buddhists to donate money to the government.

In fact stories of how the Buddhists in Thailand opened the collection boxes in the temples and donated money when the Thai King made such an appeal, has been doing the rounds.

As the President has stated, expectations of the electorate that brought him to power are high; reforming government services to deliver a more efficient service, safeguarding national security and providing a good life for all.

Will it be as easy as he and his supporters think? The challenges are many, and he will have to learn to be both politician and manager, and not step on too many toes!

As for the Millenium Challenge Compact (MCC) deal with the USA, which the Rajapaksa camp used to scare voters to win more votes, it is now more than a possibility that it will be signed. And will Arjuna Mahendran of Bond scam fame be brought to trial? Probably not; after all, he is said to have disappeared!

All this points to a pretty tumultuous 2020, so hang on to your hats, it promises to be quite a bumpy ride!

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Sri Lanka eyes SOE law by May 2024 for better governance

ECONOMYNEXT – Sri Lanka is planning to pass a Public Commercial Business (PCB) Act improve governance of state-owned enterprise by May 2024 as part of an anti-corruption efforts following an International Monetary Fund assessment.

Sri Lanka’s state enterprises have been used by politicians to give ‘jobs of the boys’, appropriate vehicles for personal use, fill board of directors and key positions with henchmen and relatives, according to critics.

Meanwhile macro-economists working for the state also used them to give off-budget subsides or made energy utilities in particular borrow through supplier’s credits and state banks after forex shortages are triggered through inflationary rate cuts.

The government has taken billons of dollars of loans given to Ceylon Petroleum Corporation from state banks.

There have also been high profile procurement scandals connected to SOEs.

An SOE Reform Policy was approved by Sri Lanka’s cabinet of ministers in May 2023.

The Public Commercial Business (PCB) Act has now been drafted.

A holding company to own the SOEs will be incorporated and an Advisory Committee and Board of Directors will be appointed after the PCB law is approved, the statement said. (Colombo/Mar01/2024)

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Sri Lanka rupee closes at 308.80/90 to the US dollar

ECONOMYNEXT – Sri Lanka’s rupee closed at 308.80/90 to the US dollar Friday, from 309.50/70 on Thursday, dealers said.

Bond yields were broadly steady.

A bond maturing on 01.02.2026 closed at 10.65/75 percent up from 10.50/70 percent.

A bond maturing on 15.09.2027 closed at 11.90/12.05 percent from 11.90/12.10 percent.

A bond maturing on 01.07.2028 closed at 12.15/35 percent down from 12.20/25 percent.

A bond maturing on 15.07.2029 closed at 12.25/40 percent up from 12.30/45 percent.

A bond maturing on 15.05.2030 closed at 12.30/45 percent down from 12.35/50 percent.

A bond maturing on 01.07.2032 closed at 12.50/13.00 percent from 12.55/13.00 percent. (Colombo/Mar1/2024)

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Sri Lanka stocks close up 0.37-pct, Expo to de-list

ECONOMYNEXT – The Colombo Stock Exchange closed up 0.37 percent on Friday, and SG Holdings, the parent company of Expolanka Holdings Plc, said it was taking the company private.

Expolanka is the largest listed company on the Colombo Stock Exchange.

“Expolanka Holdings PLC has, at the Board Meeting held on 1st March 2024, considered a request from its principal shareholder and resolved to initiate the de-listing of the Company’s shares from the Official List of the Colombo Stock Exchange subject to obtaining necessary shareholder approval and regulatory approvals,” the company said in a stock exchange filing.

As per arrangements with SG Holdings Global Pte Ltd, the Company’s majority shareholder, it will purchase its shares from shareholders who may wish to divest their shareholding in the Company at a purchase price of Rs 185.00 per share. The share closed up at 150.50.

The broader All Share Index closed up 0.37 percent, or 39.47 points, at 10,691; while the S&P SL20 Index closed down 0.64 percent, or 19.59 points, at 3,037.

Turnover stayed above the 1 billion mark for the sixth consecutive day, registering 1.4 billion.

Crossings in Melstarcorp Plc (135mn) up at 89.50, Hatton National Bank Plc (64mn) up at 158.00, Hemas Holdings Plc (53mn) up at 75.00 and Central Finance Company Plc (26mn) up at 103.50, added significantly to the day’s turnover.

“The upward trend is continuing, with more retail buying also coming in, the number of trades was more than 10,000 today,” a market participant said. “Investors are looking for undervalued stocks and buying in quantities.” (Colombo/Mar1/2024).

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