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Tuesday November 29th, 2022

Maldives opposition urges global community to help end crisis

AFP – Opposition leaders in the Maldives urged the international community Monday to pressure President Abdulla Yameen into obeying a court order to free political prisoners and "restore democracy" to the troubled honeymoon islands.

Yameen’s regime has so far refused to release nine jailed dissidents and reinstate opposition lawmakers as ordered by the Maldives’ top court in a shock ruling last week that has deepened turmoil in the atoll nation.

The Supreme Court on Sunday asked Yameen to comply with its order, saying the dissidents must be released because their trials were politically motivated and flawed.

But the strongman leader has remained defiant, suspending parliament, ordering the arrest of two returning opposition defectors and staging a rally late Sunday with hundreds of supporters in the capital Male.

In a letter addressed to the international community, Maldive opposition lawmakers appealed for external support in persuading Yameen to end the tense standoff with the country’s highest court.

"We request the international community, including India, Sri Lanka, the US, Britain, the EU… to do everything in their power to help return power to the people of the Maldives and restore democracy," the statement read.
Yameen has faced increasing pressure to respect Thursday’s landmark court ruling, with UN Secretary General Antonio Guterres at the weekend calling for "restraint" as the crisis escalated.

– Impeachment ‘illegal’ –

The United Nations, Australia, Britain, Canada, India and the United States welcomed the court’s decision as a move towards restoring democracy in the troubled Indian Ocean nation.
Yameen has faced previous unsuccessful opposition attempts to impeach him for alleged corruption.

But the court order, to restore the seats of 12 government MPs who defected to the opposition, would effectively reduce Yameen’s party to a minority.
Attorney General Mohamed Anil warned Sunday that any move to impeach the president would be "unconstitutional and illegal".

Two opposition lawmakers who returned to the Maldives since the court’s ruling were detained by police to face court on Monday.

One was freed by a criminal court in Male, while the other awaits a hearing.
Parliament, due to resume Monday, was suspended indefinitely at the weekend by Yameen, who has deployed troops to occupy the People’s Majlis since March last year.

Opposition parties rallied in Male on Sunday, but there was no repeat of the police clashes and tear gas that rocked the capital over the weekend.

The court’s ruling also opens the way for exiled former leader of the Maldives Mohamed Nasheed to run for president after the Supreme Court quashed his conviction for terrorism.

Nasheed — who was barred from contesting any election after a controversial 2015 conviction on a terrorism charge — has described Yameen’s refusal to obey the Supreme Court as a "coup".

Nasheed’s Maldivian Democratic Party said the court’s ruling "effectively ends President Yameen’s authoritarian rule".

Yameen’s crackdown on dissent has tarnished the Maldives’ image as an upmarket holiday paradise.
He has jailed almost all the political opposition since 2013, when he won a controversial run-off election against Nasheed.

 

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A new Sri Lanka monetary law may have prevented 2019 tax cuts?

ECONOMYNEXT – A new monetary law planned in 2019, if it had been enacted may have prevented the steep tax cuts made in that year which was followed by unprecedented money printing, ex-Central Bank Governor Indrajit Coomaraswamy said.

The bill for the central bank law was ready in 2019 but the then administration ran out of parliamentary time to enact it, he said.

Economists backing the new administration slashed taxes in December 2019 and placed price controls on Treasuries auctions bought new and maturing securities, claiming that there was a ‘persistent output gap’.

Coomaraswamy said he keeps wondering whether “someone sitting in the Treasury would have implemented those tax cuts” if the law had been enacted.

“We would never know,” he told an investor forum organized by CT CLSA Securities, a Colombo-based brokerage.

The new law however will sill allow open market operations under a highly discretionary ‘flexible’ inflation targeting regime.

A reserve collecting central bank which injects money to push down interest rates as domestic credit recovers triggers forex shortages.

The currency is then depreciated to cover the policy error through what is known as a ‘flexible exchange rate’ which is neither a clean float nor a hard peg.

From 2015 to 2019 two currency crises were triggered mainly through open market operations amid public opposition to direct purchases of Treasury bills, analysts have shown.

Sri Lanka’s central bank generally triggers currency crises in the second or third year of the credit cycle by purchasing maturing bills from existing holders (monetizing the gross financing requirement) as private loan demand pick up and not necessarily to monetize current year deficits, critics have pointed out.

Past deficits can be monetized as long as open market operations are permitted through outright purchases of bill in the hands of banks and other holders.

In Latin America central banks trigger currency crises mainly by their failure to roll-over sterilization securities. (Colombo/Nov29/2022)

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Sri Lanka cabinet clears CEB re-structure proposal: Minister

ECONOMYNEXT – Sri Lanka’s cabinet has cleared proposals by a committee to re-structure state-run Ceylon Electricity Board, Power and Energy Minister Kanchana Wijeskera said.

“Cabinet approval was granted today to the recommendations proposed by the committee on Restructuring CEB,” he said in a twitter.com message.

“The Electricity Reforms Bill will be drafted within a month to begin the unbundling process of CEB & work on a rapid timeline to get the approval of the Parliament needed.”

Sri Lanka’s Ceylon Electricity Board finances had been hit by failure to operate cost reflective tariffs and there are capacity shortfalls due to failure to implement planned generators in time. (Colombo/Nov28/2022)

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Sri Lanka new CB law to cabinet soon as IMF prior action

ECONOMYNEXT – Sri Lanka’s new central bank law will be submitted to the cabinet as a prior action of International Monetary Fund with clauses to improve governance and legalize ‘flexible’ inflation targeting, Central Bank Governor Nandalal Weerasinghe said.

Under the new law members of the monetary board will be appointed by the country’s Constitutional Council replacing the current system of the Finance Minister making appointments.

“It will be a bipartisan approach,” Governor Weerasinghe told an investor forum organized by CT CLSA Securities, Colombo-based brokerage.

“The central bank’s ability to finance the budget deficit will be taken out. Thirdly the flexible inflation targeting regime will be recognized in the law as the framework.”

The law will also make macro-prudential surveillance formally under the bank.

There will be two governing boards, one for the management of the agency and one to conduct monetary policy.

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