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Sunday June 16th, 2024

Sri Lanka JVP’s official visit triggers political, religious leaders to raise anti-Indian sentiment

ECONOMYNEXT – The visit of Sri Lanka’s Marxist Janatha Vimukthi Peramuna (JVP) leader to India on an official invitation has led to a new wave of anti-Indian sentiment with political and religious leaders raising concerns over the aim of the New Delhi ahead of the island nation’s presidential elections.

Prime Minister Narendra Modi’s Indian government in an unprecedented invited JVP leader Anura Kumara Dissanayaka for a five-day official visit which included meetings with Indian External Affairs Minister S. Jaishankar, National Security Adviser Ajit Doval, and Foreign Secretary Vinay Mohan among many others.

The JVP was involved in two armed uprisings against the Sri Lankan government in 1971 and 1987-89. The motive for both uprisings was to establish a socialist state. However, both insurgencies were defeated with annihilation of Marxists youth.

The party, which earlier had trained militants, is currently led by 55-year-old Dissanayaka who has been in the parliament for more than 23 years and once held cabinet minister portfolios for 14 months in 2004/5 period.

The JVP has strongly protested an Indian agreement with Sri Lanka and many Indian projects citing they are part of Indian expansionism and will lead to deprive opportunity for Sri Lankans.

“We feel there is some deal,” Walahahengunawewe Dhammaratana Thera, Chief Incumbent of Mihintale Raja Maha Viharaya told reporters on Wednesday.

“We ask Anura (JVP leader) if you questioned the Indian leaders over Sri Lanka being included in the Indian map as part of India, if you spoke against the power deals violating Sri Lanka’s sovereignty,” he questioned.

The JVP-led protests have halted many Indian investments in Sri Lanka while it has questioned India after securing lands, not using all the oil tanks in Sri Lanka’s strategic Trincomalee tanks farm which was once planned to be the oil hub of South Asia with the Indian help.

India has been increasingly investing in Sri Lanka’s energy sector. It has proposed direct oil and gas pipeline connectivity between the two countries while buying excess electricity if generated with the Indian renewable energy projects in Sri Lanka.

“What is the stance your party took over India keeping Trincomalee oil tanks?” Dhammaratana Thera questioned the JVP leader.

“What is the deal with Ajih Dowal who made Gotabaya Rajapaksa and Indian secret service puppets? Did you take or give an election bribe of $10 million from Indian businessmen? What did you speak about Adani’s renewable energy project which is looting?  What is the role played by the US ambassador on getting Indian money or backing for your next election?”

AHEAD OF POLLS

Anura Kumara Dissanayaka’s visit comes as Sri Lankan President Ranil Wickremesinghe has signaled to hold presidential polls in October this year and Parliamentary polls in early 2025.

Though the island nation does not have accurate surveys on the popularity of political parties, informal surveys show people may elect a JVP-led government. The JVP has been a populour party in the past Sri Lankan elections as well, but it failed to capitalize it to win the poll, analysts say.

Anil Hewaththa Neththikumara, a ruling Sri Lanka Podujana Peramuna trade unionist at the state-run Sri Lanka Telecom said the Indian invitation is ahead of a possible Indian deal with Sri Lanka Telecom.

Sri Lanka has chosen Jio Platforms Ltd of India and Gortune International Investment Holding Ltd of Amsterdam as the two pre-qualified bidders for Sri Lanka Telecom under the State Owned Enterprises Structuring programme.

“All know that JVP is the radical outfit which organizes protest campaigns.  An Indian firm is going to buy the Sri Lanka Telecom in the near future and this is just to make sure there is consensus over the deal and there are protests against that,” Neththikumara told reporters on Wednesday.

Analysts say Sri Lanka’s nationalist and leftist politicians have used anti-Indian sentiment to win votes when they face elections. Some of such moves have strained diplomatic relations with India in the past.
However, India helped when the island nation faced its worst ever economic crisis with a sovereign debt default in 2022.

Nationalist politician Udaya Gammanpila, leader of Pivithuru Hela Urumaya, welcomed the JVP move.

“JVP banned all Indian products except the Buddhism in the past. We appreciate the JVP’s change,” he said.

Wimal Weerawansa, another nationalist politician and leader of a JVP-breakaway party said the latest Indian invitation to the Marxist party is to sign the Economic and Technology Co-operation Agreement (ETCA) deal which is opposed by the majority of Sri Lankans. “As per information we have got, India is to sign an ETCA deal with Sri Lanka very soon. ETCA means opening both the Sri Lankan trade and labour market to India. That means depriving the opportunity for Sri Lankans,” Weerawansa told reporters.

“When they (India) want to make this (country) as a colony, they want to control all the political parties like kittens,” he said.

“I am not talking only about Anura Kumara Dissanayaka’s invitation. The next will be the Samagi Jana Balawegaya, the main opposition. What India wants is to give is a leg massage and keep (Sri Lanka) people happy and say don’t interfere on what they do.” (Colombo/Feb 08/2024)

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Sri Lanka state airport agency swimming in cash after sovereign default

ECONOMYNEXT – State-run Airport and Aviation Services (Sri Lanka) Ltd is swimming in cash after a sovereign default halted debt repayments allowing it to post a profit of 29.7 billion rupees with 10.4 billion rupees in interest income, official data showed.

In April 2022 Sri Lanka declared a sovereign default after printing large volumes of money over more than two years to enforce rate cuts and blowing the biggest hole in the balance of payments in the history of the island’s money printing central bank.

Interest earnings of Airport and Aviation Services also shot up to 10.4 billion rupees in 2023 from 6.1 billion in 2022 and 3.3 billion rupees in 2021 before the sovereign default.

Under the terms of the default or ‘debt suspension’, state agencies like the Airport and Aviation Services, and Sri Lanka Port Authority were also not required to service loans, even if they had the cash to repay loans.

AASL’s finance income shot up in 2023 “mainly because the company has invested surplus cash saved by not servicing the foreign loans obtained by the company due to the temporary debt moratorium policy of the country,” the Finance Ministry said in a report.

Sri Lanka’s rupee and foreign currency interest rates also shot up in 2022 and 2023 as rate cuts enforced by money printing were lifted to clear anchor conflicts.

After inflationary rate cuts kill confidence in a currency triggering capital flight and parallel exchange rates, excessively high rates are needed to kill domestic credit and stabilize the currency.

Countries with such flawed operating frameworks in central banks tend to have chronic high nominal interest rates in any case.

AASL’s rupee revenues went up to 48.8 billion rupees in 2023 from 32.2 billion rupees in 2022 as passenger movements increased to 7.5 million from 5.5 million with a recovery in tourism and local traffic.

Sri Lanka’s currency crisis hit in 2022 just as the island was recovering from Coronavirus pandemic triggering fuel shortages and power cuts as money printing triggered forex shortages.

From 2022 March the rupee collapsed from 200 to 370 levels an attempt to float the rupee was failed by a surrender rule (a type of buy-side pegging which pushes the exchange rate down).

In 2023, after hiking rates to kill credit, the surrender rule was removed, leading to a currency appreciation.

The airport agency also made an exchange gain of 6.1 billion rupees in 2023 against an exchange loss of 10.5 billion rupees in 2022 the rupee appreciated. (Colombo/June16/2024)

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Sri Lanka car import relaxing roadmap given to IMF: State Minister

ECONOMYNEXT – Sri Lanka has submitted a roadmap on relaxing vehicle imports to the International Monetary Fund, State Minister of Finance Ranjith Siymabalapitiya said as the country recovers from the worst currency crises in the history of its central bank.

The import relaxation will allow vehicles for public transport, goods transport, then motor cycles and cars use by private individuals and after that, luxury cars, Minister Siyambalapitiya said.

Luxury cars however attract the highest taxes for each dollar spent on imports.

Economic analysts have characterized vehicle import controls as a ‘cascading policy error’ that follows inflationary rate cuts, which then deprive taxes to the state and triggers more money printing and more forex shortages, requiring even higher corrective interest rates and a contraction of economic activities to save the rupee.

According to the latest IMF report car import controls may have led to revenue losses of 0.7 to 0.9 percent of GDP.

Sri Lanka started controlling imports few years after a central bank was set up in 1950 and also tightened exchange controls progressively, so that macroeconomists using post-1920 spurious monetary doctrines taught at Anglophone universities could print money through various mechanisms to suppress rates.

Sri Lanka is working with the IMF as a guide on many issues and the roadmap was submitted to the agency on June 14, Minister Siyambalapitiya said.

The IMF in an economic report released last week the plan was expected to be submitted by June 15.

Whatever the IMF’s faults, which some wags have called ‘progressive Saltwaterism’, the agency does not advocate import controls as solution to balance of payments problems, despite a Mercantilist fixation with the current account deficit in countries with reserve collecting central banks, analysts say.

Import controls have the same effect as import substation on the balance of payments, which is none, classical economists have pointed out and is now mainly a problem associated with macro economists and economic bureaucrats of so-called basket case countries.

Any pressure on the currency or missed reserves targets in the IMF program has come in the past only if the central bank printed money to suppress rates as credit growth picked up from car imports.

Sri Lanka had 3,000 items under import controls when rates were suppressed with printed money from 2020 to 2022 but eventually ended up with the worst currency crisis triggered by macro economists in the history of the country and eventual external default.

A committee made up of the Department of Trade and Fiscal Policy of the Finance Ministry, the Department of Registration of Motor Vehicles, the Central Bank and two associations representing vehicle imports were appointed to come up with the roadmap, he said. (Colombo/June15/2024)

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Chitrasiri Committee presents draft constitution for Sri Lanka Cricket

ECONOMYNEXT – A draft constitution for Sri Lanka Cricket, the governing body for cricket in the island, prepared by a committee headed by retired Supreme Court judge K T Chitrasiri, was presented to President Ranil Wickremesinghe today (15).

The Sri Lanka team were ignominiously knocked out of the Men’s T20 World Cup tournament this week, sparking renewed criticism of the team and the governing body.

Last November, a cabinet sub-committee was appointed to address challenges faced by Sri Lanka Cricket and provide recommendations after consecutive losses became a hot topic in parliament.

After parliament decided to remove the administrators of the sport, the International Cricket Council (ICC) Board suspended Sri Lanka Cricket’s membership.

Based on the sub-committee’s recommendations in its report, the Cabinet then appointed an expert committee to draft a new constitution for Sri Lanka Cricket.

The committee headed by judge K T Chitrasiri includes President’s Counsel Harsha Amarasekara, Attorney-at-Law Dr Aritha Wickramanayake and Chairman of the Sri Lanka Chamber of Commerce Duminda Hulangamuwa.

Deputy Solicitor General Manohara Jayasinghe, and Shamila Krishanthi, Assistant Draftsman representing the Legal Draftsman’s Department, and Loshini Peiris, Additional Secretary to the President were also on the committee. (Colombo/Jun14/2024)

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