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Monday February 6th, 2023

Opinion: Strong Government must be disciplined and deliver development

The sun sets over the Parliament at Shri Jayewardenepura

ECONOMYNEXT – The government has announced that the draft 20th Amendment Bill will be presented to parliament today, Tuesday September 22. It will be the same version that caught the country by surprise when it first made its appearance to the public on September 3. The extreme nature of the proposed amendment, which has been the cause of much disquiet, is epitomized by the power it seeks to give the president to sack the prime minister and ministers at his discretion and to dissolve the parliament after a year of its election. Undoubtedly it was concerns within the ranks of those elected to parliament from within the government side itself that prompted Prime Minister Mahinda Rajapaksa to appoint a committee consisting of parliamentarians of stature to give their opinion on the proposed 20th Amendment and to suggest further amendments to it.

There are disturbing features about the draft 20th Amendment. The most significant is the overwhelming power it seeks to give the institution of the presidency by transferring the powers currently vested in other institutions to it. The proposed amendment immediately evoked protests from the opposition political parties and civil society and was soon followed by more subdued expressions of dissent from within the government itself. Government members have not openly criticized the erosion of parliamentary powers but instead, appear to have chosen the option of stating their objections to less significant clauses in the proposed 20th Amendment. One of these is the removal of the ban on dual citizens from contesting for political office and the removal of the oath against promoting separatism in the country.

Another troubling feature of the 20th Amendment is the unwillingness of anyone to claim the responsibility for its creation. It can be expected that those elected to parliament would not wish to take the responsibility for the proposed amendment which seeks to erode their own position. This has resulted in President Gotabaya Rajapaksa stepping forward to take responsibility as the head of the government along with the rest of the government as a collective group. The president may be feeling the burden of the heavy responsibility placed upon him by popular expectations. His frustrations are becoming more evident as he has begun pointing out the inefficiencies that exist not only the governmental system but also the wider society. These inefficiencies in the public service can be attributed to politicization during the past decades for which past administrations have to take equal responsibility.

POLITICALLY ASTUTE

The parliamentary committee appointed by the prime minister to look into the issues arising out of the draft amendment has not presented their conclusions to the general public or incorporated their ideas into the draft amendment. As a result, it will be the same draft that made its appearance on September 3 that has been presented to parliament. It appears that the government’s current position is that the 20th Amendment bill will be presented to parliament in its original formulation and changes to it, if any, will take place in the course of the parliamentary debate regarding it (during the Committee Stage). This could be politically astute, from the government’s perspective. From a political transformative perspective, it offers scope for parliamentarians to engage in a meaningful process of consultations to achieve sufficient consensus following an intellectual discourse.

There are, however, two consequences that flow from the direct presentation of the draft amendment to parliament without any changes. On the one hand, this will have the adverse effect of making it more difficult for those opposed to the draft amendment to take it before the courts of law. As they will have only a limited time frame of one week to file their cases in the courts, they will have to file their objections to the original version of the 20th Amendment and not to the subsequent changes that may take place as a result of the parliamentary process. A second consequence flowing from the strategy of seeking amendments to the draft 20th Amendment in parliament itself is that it will conceal the division within the government on the question of the amendment.

The government’s decision not to share the results of the deliberations of the prime minister’s committee with the general public could be due to the concern that the division of the government members into two camps will be seen. On the other hand, a debate in parliament will bring in the opposition political parties so that the lines of division would be more complex. For instance, the opposition parliamentarians would not wish the president to have the power to dissolve the parliament after the passage of one year, which is likely to be shared by government members also. On the other hand, the opposition is also likely to bring up other issues such as the need to safeguard the independence of institutions such as the courts of law and the auditor general’s office.

STRONG GOVERNMENT

The 20th Amendment is a reaction to the problems in the 19th Amendment which showed the possibility of deadlock within the executive branch of government when the president and parliamentary majority were of two minds. President Gotabaya Rajapaksa is reported to have informed the cabinet of ministers that without the changes proposed in the draft 20th Amendment it was difficult to run the country. However, the parliament was also elected by the people and has a five-year mandate and the powers being withdrawn are so significant that they may require a referendum. Indeed, parliament is more representative of the plural and diverse nature of society and of the different ethnic and religious communities and needs to be empowered rather than being disempowered.

Among the extreme features of the proposed 20th Amendment is the power to be transferred to the president to appoint all judges and top state officials at his discretion and to exclude many government departments and government-owned entities from being centrally audited. The question is why an equally sovereign body that is parliament is denied this power. The fate of the strong government that was elected in 2010 in the aftermath of the end of the three-decade-long war, which pledged to develop the country, and of which much was expected, and which failed, must not happen again. The main flaw there was that power was centralized in the institution of the presidency at the expense of the others and corruption and abuse of power got out of control.

Strong governments in which one institution dominates all others and in which there are no checks and balances rarely deliver good results to the people so that they enjoy the benefits of development and the protection of human rights. Strong governments that deliver both, of which there are many examples in the world and particularly in the Western world but now also in the eastern countries such as Japan and South Korea, operate under the rule of law, with checks and balances and take severe action against those found engaging in corrupt practices. They are an outcome of disciplined systems of government which deliver constructive results to the people over the longer term. Recent examples of South Korea and Malaysia are cases in point. (Colombo September 22, 2020)

Dr Jehan Perera is Executive Director at the National Peace Council

(Edited by Arjuna Ranawana)

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Sri Lanka to address SME tax problems at first opportunity: State Minister

ECONOMYNEXT – Problems faced by Sri Lanka’s small and medium enterprises from recent tax changes will be addressed at the first opportunity, State Minister for Finance Ranjith Siyambalapitiya said.

Business chambers had raised questions about hikes in Value Added Tax, Corporate Income Tax and the Social Security Contribution Levy (SSCL) that’s been imposed.

It should be explored on how to amend the Inland Revenue Act, Siyamabalapitiya said, adding that the future months should be considered as a period where the country is being stabilized.

Both the VAT and SSCL are effectively paid by customers, but the SSCL is a cascading tax that makes running businesses difficult.

In Sri Lanka SMEs make up a large part of the economy, accounting for 80 per cent of all businesses according to according to the island’s National Human Resources and Employment Policy.

(Colombo/ Feb 05/2023)

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Sri Lanka revenues Rs158.7bn in Jan 2023 up 51-pct

ECONOMYNEXT – Sri Lanka’s government revenues were 158.7 billion rupees in January 2023 but expenditure and debt service remained high, Cabinet spokesman Minister Bandula Gunawardana said.

In January 2022 total revenues were Rs104.5 billion according to central bank data.

Sri Lanka’s tax revenues have risen sharply amid an inflationary blow off which had boosted nominal GDP while President Ranil Wickremesinghe has also raised taxes.

Departing from a previous strategy advocated by the IMF expanding the state and not cutting expenses, called revenue based fiscal consolidation, he is attempting to do classical fiscal consolidation with spending restraint.

President Ranil Wickremesinghe has presented a note to cabinet requesting state expenditure to be controlled, Gunawardana told reporters.

State Salaries cost 87.4 billion rupees.

Pensions and income supplements (Samurdhi program) were29.5 billion rupees.

Other expenses were 10.8 billion rupees.

Capital spending was   21 billion rupees.

Debt service was 377.6 billion rupees for January which has to be done with borrowings from Treasury bills, bonds and a central bank provisional advance of 100 billion rupees, Gunawardana said.

Interest costs were not separately given. (Colombo/Feb05/2023)

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Sri Lanka’s Ceylon Tea prices down for second week

ECONOMYNEXT – Sri Lanka’s Ceylon Tea prices fell for the second week at an auction on January 31, with teas from all elevations seeing a decline, data showed.

“In retrospect, the decline in prices would be a price correction owing to the overall product quality and less interest from some key importers due to the arrival of cargo at destinations ahead of schedule,” Forbes and Walker tea brokers said.

The weekly sale average fell from 1475.79 rupees to 1465.40 rupees from a week ago, according to data from Ceylon Tea Brokers.

The tea prices are down for two weeks in a row.

High Growns

The High Grown sale average was down by 20.90 rupees to 1380.23 rupees, Ceylon Tea Brokers said.

High grown BOP and BOPF was down about 100 rupees.

“Ex-Estate offerings which totalled 0.75 M/Kg saw a slight decline in quality over the previous week” Forbes and Walker said.

OP/OPA’s in general were steady to marginally down.

Low Growns

In Low Grown Teas, FBOP 1 was down by 100 rupees and FBOP was down by 50 rupees while PEK was up by 150 rupees.

The Low Growns sale average was down by 8.55 rupees to 1547.93 rupees.

A few select Best BOP1s along with Below Best varieties maintained.

OP1                     Select Best OP1’s were steady, whilst improved/clean Below Best varieties maintained.   Others and poorer sorts were easier.

PEKOE                 Well- made PEK/PEK1s in general were steady, whilst others and poorer sorts were down.

Leafy and Semi Leafy catalogues met with fair demand,” Forbes and Walker brokers said.

“However, the Small Leaf and Premium catalogues continued to decline.

“Shippers to Iran were very selective, whilst shippers to Türkiye and Russia were fairly active.”

This week  2.2 million Kilograms of Low Growns were sold.

Medium Growns

Medium Grown BOP and BOPF fell by around 100 rupees

The Medium Growns sale average was down by 33.40 rupees to 1199.4 rupees.

“Medium CTC teas in the higher price bracket witnessed a similar trend, whilst teas at the lower end were somewhat maintained subject to quality,” Forbes and Walker brokers said.

“Improved activity from the local trade and perhaps South Africa helped to stabilize prices to some extent.”

OP/OPA grades were steady while PEKOE/PEKOE1 were firm, while some gained 50-100 rupees at times.

Well-made FBOP/FBOPF1’s were down by 50-100 rupees per kg and more at times.

(Colombo/Feb 5/2023)

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