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Sunday March 26th, 2023

PC polls postponement partly due to Right-Wing pressure

FILE PHOTO – President Gotabaya Rajapaksa offers a gift to the Mahanayake of the Malwatte Chapter Thibbotuwawe Sri Siddhartha Sumangala Thero

ECONOMYNEXT – Sri Lanka’s decision to indefinitely postpone Provincial Council (PC) elections controversially was made due to sustained pressure from Sinhala Nationalist organisations who argue that the government had pledged to do away with the PCs during the election campaign.

On Tuesday, Environment Minister Mahinda Amaraweera told reporters the leaders of the political parties in the governing Sri Lanka Nidahas Podujana Peramuna had decided to put off the polls due to the pandemic and also on “a request made by the Maha Sangha (Buddhists Monks).”

The party leaders’ meeting took place a day after the Collective of Nationalist Organisations (ජාතික සංවිධාන එකමුතුව) met key members of the Asgiriya and Malwatte Chapters in Kandy on Sunday.

A representative of the Collective, Dr Malwane Chandrarathana Thero told reporters that the PCs which were “forced on us by India as a solution for the separatist movements” had not succeeded in that endeavour.

He added that the government has promised to formulate a new constitution within a year of coming to power which would offer an alternative means of devolving power.

“We are waiting to see what the government’s policy on this issue is,” the Thero who heads the Sinhala Department at the Kelaniya University said.

The leading prelates at the two influential sects agreed with the Collective.

The Anunayake of the Malwatte Chapter Dimbulkumbure Wimaladhamma Thero said that this was a time to deal with the health crisis and not waste public funds on elections. “The people are in need of relief,” he said.

The Registrar of the Asgiriya Chapter Dr Medagama Dhammananda agreed, saying that all efforts should be made to repair the damage done to society by the pandemic.

Both prelates signed off on the letter brought by the collective carrying their demands which was then handed over to the government.

However, the government of India which considers the PCs a lasting development that it gave the minority Tamils as part of efforts to stop the separatist war has constantly urged successive Sri Lankan governments not to abolish the devolved Councils.

State Minister Dayasiri Jayasekara warned the country that it should not abolish the PCs without “consulting India. Otherwise we may face problems internationally,” he told reporters today, December 30.

“I agree that there should be changes in the way we hold the elections, but we must hold them,” the General Secretary of the Sri Lanka Freedom Party (SLFP) the second biggest party in the alliance said.

This development comes a day after the National Peace Council announced that in a series of consultations it did on Constitutional Reform, Civil Society representatives had agreed that the PC system be “enhanced and strengthened.”

The PC elections cannot anyway be held in a hurry as an essential delimitation Bill awaits Parliamentary ratification. Currently, there is no law available to hold the elections.

The original law enacted as part of the Indo-Lanka Accord of 1987 was formulated in 1988 but due to issues that arose from it, the last government prosed changes.

These changes were included in a new PC Elections Bill No 17 of 2017 but Parliamentarians on both sides disagreed with the provisions.

Today, Wednesday 30, State Minister Susil Premjayantha told reporters that the elections were held up by the pandemic as well as legal issues.

He told a press conference at the SLPP headquarters in Battaramulla that as the last government had brought in amendments to the PC laws through a two-thirds majority in Parliament any changes to the law also needed that number of votes.

At the time a committee presided over by Prime Minister Ranil Wickremesinghe was appointed to look into the issues but no solution was reached until his government was booted out earlier this year.

Although the then National Elections Commission continued to urge the government to hold the PC elections the administration waffled and failed to go to the polls.

At the time the SLPP which was in opposition said that the government was avoiding the poll as it knew it would lose.

Elections to the Northern and Eastern PCs were held during the last Rajapaksa administration for the first time since they were established. (Colombo, December 30, 2020)

Reported by Arjuna Ranawana

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Sri Lanka seeks to settle India ACU debt, credit lines over 5-years

ECONOMYNEXT – Sri Lanka has requested India to settle payments due to the country under the Asian Clearing Union mechanism and credit lines given in 2022 over 5 years, Indrajit Coomaraswamy, an advisor the island’s government said.

Sri Lanka is negotiating with India to settle the money over a 5-year period, Coomaraswamy, a former central bank governor told an online forum hosted by the Central Bank.

“Our request from the Indians is to settle it over five years,” he said. “That I think is still in the early stages of negotiation. The same with the one billion line of credit.”

Sri Lanka’s central bank owed the ACU 2.0 billion US dollars to the Asian Clearing Union according to a year end debt statement, issued by the Finance Ministry.

Sri Lanka owned India, 1,621 million dollars according to ACU data by year end, excluding interest.

India has given a 1 billion US dollar credit line to Sri Lanka as well a credit line for petroleum.

Sri Lanka in March 2024 has paid 121 million US dollar out of a 331 million US dollar IMF tranche to settle an Indian credit line.

Indian credits were given after the country defaulted in April 2022 as budget support/import when most other bilateral lenders halted giving money. (Colombo/Mar26/2023)

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Sri Lanka coconut auction prices up 1.16-pct

ECONOMYNEXT- Sri Lanka’s coconut auction prices went up by 1.16 percent from a week ago at an auction on Thursday, data showed.

The average price for 1,000 nuts grew to 83,219.45 from 82,260.58 a week earlier at the weekly auction conducted by Sri Lanka’s Coconut Development Authority on March 23.

The highest price was 92,500 rupees for 1,000 nuts up from the previous week’s 90,600 rupees, while the lowest was 76,500 also up from 70,000 rupees.

The auction offered 900,010 coconuts and 583,291 nuts were sold. (Colombo/Mar 26/2023)

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Sri Lanka in talks for billion dollar equivalent Indian rupee swap

ECONOMYNEXT – Sri Lanka is in talks with India for a billion US dollar equivalent Indian rupee central bank swap, to facilitate trade, Indrajit Coomaraswamy, ad advisor to the government said.

“The amount is still uncertain it could be up to the equivalent of a billion US dollars,” Coomaraswamy told an online forum hosted by Sri Lanka’s central bank.

The money will be used to facilate India Sri Lanka trade, he said.

India has been trying to popularize the use of Indian rupees for external trade and also encouraged Sri Lanka banks to set up Indian rupee VOSTRO accounts.

However the first step in popularizing a currency for external trade is to get domestic agents, especially exporters, to accept their own currency for trade, like in the case of the US or EU, analysts say.

India’s billion US dollar credit to Sri Lanka given during the 2022 crisis is settled in Indian rupees (transaction need).

However the Indian government itself has chosen to denominate it in US currency for debt purposes (future value).

In most South Asian nations, receivers of remittances are willing to accept domestic currencies, leading to active VOSTRO account transactions.

Sri Lanka is expected to repay a 400 million US dollar swap with the Reserve Bank of India next year under an International Monetary Fund backed program for external stability and debt re-structuring.

Central bank swap proceeds sold to banks, which are then sterilized with inflationary open market operations, can trigger forex shortages and currency crises, analysts warn.

Sri Lanka went to the International Monetary Fund after two years of inflationary monetary operations by the central bank’s issue department (money printed to suppress interest rates) triggered the biggest currency crisis in its history and external sovereign default.

Sri Lanka had gone to the IMF 16 times with similar external troubles except for the April 2003 extended fund facility under Central Bank Governor A S Jayewardene which was a purely reform-oriented program with the World Bank (PRGF/PRSP) program at a time when he was collecting reserves with deflationary monetary policy and perhaps the lowest inflation since the Bretton Woods collapsed. (Colombo/Mar26/2023)

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