An Echelon Media Company
Monday December 5th, 2022

Sri Lanka’s economic crisis protests see national unity

Pix by T.N.Nawas

ECONOMYNEXT – Sri Lanka’s main protest site against President Gotabaya Rajapaksa by his secretariat building has become a rare sight of national unity with all communities coming forward in a show of national unity in diversity.

With the introduction of the popular vote by the British, politicians, the urban intelligensia and sections of Sri Lanka’s clergy have fired linguistic, ethnic and religious hatred to win votes or pass legislation to elevate one group over another after independence.

Separately legislation was made to make naturalization almost impossible in another fit of nationalism, while making a large group of people who were born in the country stateless, critics say.

Before colonial rulers brought the popular vote and parliament, Sri Lanka was ruled by a feudal class who intermarried with their kin in India and who were largely indifferent to linguistic hate, much like the monarchies of the rest of Asia and the world.

The “Gota Go Home” campaign, demanding President Gotabaya Rajapaksa to resign is a rare phenomenon in the island nation of 22 million people.

Many protestors however do not necessarily have a deep understanding of political theory that place human lives above nationalism, inherent liberties people are born with or the armed violent coercive European style state that takes them away, but are driven by economic considerations, brought to a head by extraordinary levels of money printed by the central bank to keep rates down which created forex shortages.

The money was printed by economists backing the Sri Lanka Podujana Party who wanted to create a ‘production economy’ within ‘developmental state’.

“In the emerging developmental state, the central bank stands ready and is willing to join hands with fiscal and policy planning authorities to help open the vistas of prosperity for the benefit of the people,” Central Bank Governor W D Lakshman said delivering the 70th anniversary lecture of the agency.

“In this context, the Central Bank of Sri Lanka, with its 70 years history is being expected to play its role as an agent of development.”

Related

Sri Lanka central bank to work closely with finance ministry in developmental state: Governor

Instead providing economic and price stability under its governing law, the agency had earlier printed money under a ‘flexible inflation targeting’ creating two currency crises under ‘flexible inflation targeting’ fueling stagflation and helping bring President Rajapaksa to power. (Sri Lanka’s UNP pays the price for currency depreciation, REER targeting)

Flexible Exchange Rate Crisis

The forex shortages from the ‘flexible exchange rate’ which is neither a floating rate nor a fixed exchange rate has in turn triggered shortages of cooking gas, electricity, medicine and some foods like milk.

After two years of money printing, inflation hit 18.7 percent in March and food index is up 30.1 percent over the past year and 42.2 percent over two years.

“Budder-ter-kanna…(to fill the stomach),” chants a leader of one group of protestors. “Buth tikker nehe.. (there is no rice) answers his followers in chorus.

“Uyar gun-ner (to cook it),” the leader says. “Gasuth ne” (there is no gas) answers the group.

“Gedera in-ner (to stay at home),” starts the leader. “Light-uth ne” (there is no power) the protestors answer.

“Aye munter raver-ten-na,” (we will not be deceived by them again) chants a group in the Sinhalese language.

“Rata kun-ner-ter denneth ne (will not allow them to eat/consume the country)

The protest is within a stone’s throw of the country’s central bank which is responsible creating forex shortages by printing excess money to keep interest rates down.

In the two years to February 2022, the central bank had printed 2.13 trillion rupees, firing domestic credit and blowing the balance of payments apart.

The massive liquidity injections made under so-called Modern Monetary Theory during the tenure which makes it impossible to hold an exchange rate steady without losing reserves had been dubbed the ‘Lakshman shock’ by W A Wijewardene, a rare classical economist in the island full of Mercantilists.

The central bank operates an unstable soft-peg with the US dollar called a ‘flexible exchange rate’ which is neither a hard peg (consistent external anchor) nor a free floating rate (consistent domestic anchor), using shifting rules in a monetary regime called flexible inflation targeting, which had created three currency crises since 2015.

Newly appointed Central Bank Governor Nandalal Weerasinghe has hiked rates by a record 700 percent in a bid to protect the rupee by slowing economic activities and to reduce the inflation the agency would create in the coming months.

The central bank had had created high inflation and forex shortages for 72 years by printing money mis-using its ‘monetary policy independence’ granted by the parliament in 1950 through a law drawn up in the style of Argentina’s central bank to operate an unstable soft-pegged exchange rate regime.

From 1885 to 1950 the country had a hard peg (currency board) with no anchor conflicts which had steered the island through World Wars and a Great Depression.

The soft-pegged central bank brought increasingly draconian exchange controls from 1952 and an import control law was enacted in 1969 by an administration which printed money and created official parallel exchange rates, shortly before its ouster.

In the 1970s the two laws were extensively used in what is now called the ‘closed economy’ when shortages, rationing and black markets were widespread and profits were made by so-called import substitution oligarchs as now.

In the 1980s the economy was re-opened by the but continued money printing and depreciation in the to pursuit of competitive exchange rate continued to create economic hardships, widespread strikes and social unrest.

There were two insurrections in 1971 and 1988/89 led by Marxists Janatha Vimukthi Peramuna (JVP) who tried to take over the entire country, and a 30-year civil war waged by Tamil Tiger rebels from the early 1980s for a separate state.

Groups in the north also first became active in the 1970s, assassinating mainstream politicians. All three were controlled with equally harsh military action.

Multi-Festivals

The protestors in 2022 are peacefully demanding changes to the way the country is governed and want more young people to come to office.

The tech-savvy youth voluntarily gathered, self helped with the food and water supply, found ways to continue the protest despite a New Year celebrated by ethnic majority Sinhalese and minority Tamils, Easter week celebrated by Catholics, and Ramadan fasting observed by Muslims.

The protest has now started to attract popular artists, celebrities, sports stars and elders to the demonstration while forcing many others to openly repent for backing Gotabaya Rajapaksa in the November 2019 polls.

Buddhist Monks, Catholic and Islamic priests, and Hindu devotees all came together for the protest.

Buddhist monks chanting “pirith” to bless the protesters, Catholic priests questioned Rajapaksa’s long delay of 2019 Easter Sunday attack probe, Muslims held their iftar or break fasting and prayers at the protest – expressing a rare unity in diversity.

“This generation is faster, more driven and are determined to have a change,” an elder protester who voluntarily came to the protest told Economy Next.

“The issue we face now is that the people within the boundaries of the government are more laid back to their views and don’t seem to understand the pace of the new generation. So obviously the protests will be long lasting.”

The political savvy among them are calling for constitutional change, involving the abolishing of the executive presidency which had destroyed a once independent public service by ending an independent civil service commission.

Sri Lanka Podujana Party using its two third majority had ended a constitutional council set up by a 19th amendment to the constitution which sought to go someway in setting up an independent judiciary and public officers, though nothing had been done to appoint permanent secretaries to ministries.

Social Media

Thousands of protesters have now established small tents at the protest site, medical facilities, a library to read, a people’s parliament to express the views of all and portable washrooms.

Food is given away freely to support those who are there for the cause. The sentiment around the camp is “we won’t go home till Gota goes home”.

They named the protest site as “Gota Go village”. They also have established a “Gota shop” to collect food and water for the protesters. The collection is coordinated through social media.

Political analysts see the latest protest as the biggest apolitical movement against the government in the last 74 years since independence.

Many protesters are making use of a nine-day holiday this week to show their dissent, undeterred by the Government’s sealing off of the historic Galle Face Grounds “for repairs”.

Some are continuously staying, while others participate “in shifts” due to time constraints. Many are braving the sun and rain to keep the protest going.

“I feel fortunate about the opportunity to come and contribute to this historic moment,” said Hiranthi Lakshika, a 38 year old woman told Economy Next.

” People are suffering, but these leaders are continuing with misappropriation. I think people have understood something. That is why people have gathered here regardless of their ethnicities any religion for the first time in the history.”

“Despite all these problems, there is no plan for revival and there are hardly any brains in the government to think of any revival.

“Sri Lanka is not poor. We are very rich in terms of the country’s location. These politicians have repeatedly raped this country and many youths have already left this country. If all join hands, we can develop this country.”

“Rajapaksas have proven us repeatedly that they are corrupt and they have no concerns for the public. So Gotabaya and Rajapaksa family should leave. There is no compromise on that. If they don’t leave, you will find how these youths will force them to leave.”

In addition to money printing, a key policy error of the current administration was a fertilizer ban backed by the Government Medical Officers Association which had said ancient Sri Lankan lived for over 100 years before agro-chemicals came.

“Gotabaya has destroyed out agricultural economy. He has pushed this country back my many years,” said W Priyantha, a 42-year old farmer who has come from Ratnapura.

“He also has appointed all corrupt ministers and the country is suffering.”

Farmers were the first to protest against the administration last year during the fertilizer ban, long before the urban middle class started to protest.

Braving the elements

Protestors brave the sun and rain to stay in the protest site which has now been named GotaGoHome gama.

“I was there only for a few hours today, and I was exhausted. The heat was unbearable,” T N Nawas, who comes into Galle Face every day since the protest started.

“I can’t imagine what it’s like for the people who are there the whole day.

“People were protesting under umbrellas and holding their placards as shades. The weather is just extreme, it’s extremely hot during the day and it suddenly starts to rain with massive lightning bolts.”

Protesters share news, thoughts, and anecdotes via WhatsApp, TikTok, FaceBook, Instagram, and Twitter among many other social media platforms keeping in touch with the rest of the country.

“I’m constantly updating myself and other people on social media, and building an archive of sorts of historical events that people might not be aware of,” said 20-year-old Sarasi Lakpura from Nugegoda.

She is unable to take part in the physical protests.

Rajapaksa’s ruling Sri Lanka PodujanaPeramuna (SLPP) ran an election campaign targeting Sinhala Buddhist majority and Catholics in the last two polls after the 2019 Easter Sunday attack by Islamist suicide bombers that killed at least 269 people mainly Catholics.

The SLPP also said choosing Rajapaksa was the only option to protect Sri Lanka’s sovereignty, national security, while promising justice to the victims of Easter Sunday’s carnage.

During their campaign Sri Lanka Podujana Party activists carried lion flags without the coloured strips representing minorities.

But the 2022 protestors wave the full national flag.

Pix by T.N. Nawas

Pix by T.N. Nawas

Some also drape themselves in it.

In recent months several persons linked to the Sri Lanka Podujana Party and others who were facing corruption charges were released with cases being withdrawn.

Last week lawyers protested in front of the Attorney General’s office demanding cases, which were withdrawn on technicalities be re-filed.

More Protests?

The current protesters are from urban middle and middle-class youth who are experiencing shortages and power cuts for the first time in their life. Most have never taken part in a protest in their lives.

They are protesting for a political system change to go back to their comfort zone.

However, with the economic crisis has started to trickle down gradually to the grass root levelsmore could join the “Go Gota Home” campaign soon.

Suffering at grass root levels is rising. However they cannot leave their job or livelihood to come and join the protests on a long term basis.

“If those people who are waiting in the kerosene lines join us, this whole situation will change drastically,” said protester Ravindra Wijesekera.

“They think in a different way. They won’t lay low and speak nicely. And if that happens it will be very hard for the government to control the situation,” he said.

To save the falling rupee the central bank has to now stop printing money and find money to pay the salaries of a bloated public sector by taxing people and businesses, under a planned International Monetary Fund program.

Though people now know that there were no shortages during earlier IMF programs or such steep currency falls, the coming tax hikes and to pay the public sector and high rates to sell domestic debt is likely to trigger a downturn in the private sector.

In a bid to reduce pressure on the domestic economy and release resources for a reasonable growth path eventually, the IMF has pushed the country to re-structure foreign debt.

Pix by T.N. Nawas

Many of the protesters are angry not just with the Rajapaksa family, but 225 parliamentarians in general who enjoy tax-free cars, pensions after five years for themselves and family members appointed as personal staff and subsidized luxury meals at parliament.

Suresh Udawatte is a committed protestor whose business is in shambles says as hardships increase more people will join the protests.

Udawatta serves shifts at the protest site to be a part of the “Go Gota Home” movement.

His sign reads, “Our children’s milk was stolen for the luxuries of your own children!”

The atmosphere at “Gota Go Village” is shown by its shiny new trilingual sign, and the feeling of community and energy that is there in the crowd, even as the protests continue well into the night.

“There’s a cohesive force that isn’t dying out until we have fulfilled our motives,” said a committed protestor asking not to be named holding a placard saying: “Sri Lanka is not Poor, we aren’t poor, we were robbed.” (Colombo/April 13/2022)

Leave a Comment

Your email address will not be published. Required fields are marked *

Leave a Comment

Leave a Comment

Cancel reply

Your email address will not be published. Required fields are marked *

Time right for elections, Sri Lanka Podujana Peramuna ready to face any poll: Basil

File photo: SLPP national organiser Basil Rajapaksa

ECONOMYNEXT — The time has come for an election in Sri Lanka and the ruling Sri Lanka Podujana Peramuna (SLPP) is ready to face any election, SLPP national organiser Basil Rajapaksa said, dismissing claims that the party has come to fear elections in the face of growing unpopularity and increased factionalisation.

Speaking to reporters at an event held in Colombo Monday December 05 morning to mark the fourth anniversary of the party’s media centre, Rajapaksa handwaved off assertions that the SLPP has splintered in the wake of the mass protests that ousted his brother and former President Gotabaya Rajapaksa.

“No, our party hasn’t fragmented, not the way this cake was cut,” he said, pointing to the cake that was cut to celebrate the media centre’s anniversary.

“There may be some [dissenters], but we are with the people,” said Rajapaksa.

Political analysts, however, note that the once mighty SLPP has indeed fractured to at least four or five distinct factions. One group, according to party sources, is with President Ranil Wickremesinghe who is keen to involve younger SLPP legislators in his economic reform agenda. The second is with former Media Minister Dullas Alahapperuma who launched an unsuccessful bid for the presidency and was roundly defeated by Wickremesinghe at the July 19 presidential vote in parliament. The third group now sits as independent MPs in parliament, while a fourth faction are with former President Mahinda Rajapaksa, the SLPP patriarch.

There is another group that remains loyal to Basil Rajapaksa, though all but one SLPP legislator voted for the 21st amendment to the constitution that prohibited dual citizens from entering parliament. Rajapaksa, a dual citizen with US passport, recently returned to the island after a private visit to his second home.

The former finance minister, who resigned after a wave of protests that demanded his departure along with that of his presidential brother, for their alleged role in Sri Lanka’s prevailing currency crisis, the worst in decades, was in a jovial mood at the anniversary event on Monday and was seen heartily indulging reporters who were throwing loaded question after loaded question at him.

Asked about future plans of the SLPP, Rajapaksa quipped that they couldn’t be revealed to the media at this stage.

“However, time has come for an election. It’s difficult to say how it will be at present, but as a party, we’re ready to face any election,” he said.

Rajapaksa’s apparent confidence in facing an election is in direct contrast to speculation that the SLPP is banking on President Wickremesinghe’s refusal to dissolve parliament anytime soon. Opposition lawmakers have accused Wickremesinghe of providing sanctuary and promising security to the deeply unpopular party by not calling early elections.

“We have won every election we faced so far. We are thankful to the Sri Lankan people for that. If we were unable to meet their expectations 100 percent, we regret that. We will correct any shortcomings and will work to fulfill the people’s aspirations,” said Rajapaksa.

Asked if he is going to remain in active politics despite the blanket ban on dual citizens, the former minister said, again with a chuckle: “Active politics… well, I’m not in governance anymore. Governance [for me] has been banned by the 21st amendment. So no, I’m not in governance, but I am in politics,” he said.

Pressed about possibly entering parliament again, he said: “How can I?”

Nor is Rajapaksa saddened by the development, he claimed. “No, I’m happy about it,” he said.

The former two-time finance minister, noted for his clash of views with Wickremesinghe when the latter was invited by then President Gotabaya Rajapaksa for a round of discussions on economic recovery, was cautiously complimentary when asked about the new president. It was the SLPP’s backing that guaranteed Wickremesinghe his lifelong ambition.

“I think that selection was the correct one. We have maintained from the start that all of us in government or opposition must be able to freely engage in politics,” he said, referring to assurances that the president has purportedly given SLPP parliamentarians that they will not face the kind of retaliatory mob violence that engulfed the nation on May 09 after alleged SLPP goons attacked peaceful anti-government protestors in Colombo.

A reporter asked if Rajapaksa believes the incumbent president is capable of taking the country on the right path to recovery?

“The first task was accomplished, by allowing us to engage in politics and to get on the streets. There are economic and other issues, and we have high hopes that they will be resolved,” he said. (Colombo/Dec05/2022)

Continue Reading

Sri Lanka proposed power tariff not to recover past losses: Minister

ECONOMYNEXT – The government has not proposed a power tariff increase to recover past losses, Minister of Power and Energy Kanchana Wijesekera in response to a statement attributed the head of the power regulator commission.

“The proposal that was presented was for an automatic cost reflective tariff mechanism to be implemented to supply uninterrupted power & to recover the current cost of power supply,” Minister Wijesekera said in twitter.com message.

“Govt has not proposed to recover past loses of CEB from a tariff revision…”

The cabinet of ministers had given the nod tariff revisions twice a year to prevent large losses from building up as in the past.

The Public Utilities Commission has disputed costs protected for the power utility saying the petroleum utility was keeping large margins in selling fuel.

The government in a budget for 2022 also proposed to tax surcharge to recover losses.

The regulator also disputed power demand forecasts.

Also read; Sri Lanka regulator disputes CEB costs, demand projections for 2023

The PUCSL cannot increase tariffs to recover past losses, Chairman Janaka Ratnayake said. (Colombo/Dec05/2022)

Continue Reading

Sri Lanka’s shares gain in mid market trade

ECONOMYNEXT – Sri Lanka’s shares edged up in mid day trade on Monday (05), continuing the positive run for seven straight sessions on news over a possible debt restructuring from Paris Club, analysts said.

All Share Price Index gained by 0.69% or 60.10 points to 8,829, while the most liquid shares gained by 0.96% or 26.59 points to 2,801.

“The market was pushed up over the news of a potential 10 year debt moratorium,” analysts said.

The Paris Club group of creditor nations has proposed a 10-year debt moratorium on Sri Lankan debt and 15 years of debt restructuring as a formula to resolve the island nation’s prevailing currency crisis. 

Related – Paris Club proposes 10-year moratorium in 15-year Sri Lanka debt re-structure: report

The market generated a revenue of 2.1 billion rupees.

Top gainers during 1130 hours were Expolanka, Browns Investment and LOLC.  (Colombo/Dec05/2022)

 

Continue Reading