An Echelon Media Company
Tuesday May 30th, 2023

Sri Lanka’s “fascist threat” must be contained, says Acting President Wicrkremesinghe

ECONOMYNEXT – Sri Lanka is facing a “fascist threat” that needs to be contained, newly appointed Acting President and Prime Minister Ranil Wickremesinghe said, announcing a curfew and state of emergency after hundreds of protestors took control of the Prime Minister’s office.

In a video statement released Wednesday July 13 afternoon, Wickremesinghe said he has appointed a committee comprising military commanders and the police chief to enforce the curfew and state of emergency.

Citing intelligence reports, Wickremesinghe claimed that factions of Sri Lanka’s newly emergent anti-government protest movement – known as the aragalaya (or struggle) – had plotted to seize and occupy the president’s and prime minister’s official residences and offices as well as the parliament complex.

Last Saturday, July 09, tens of thousands of protestors congregated in Colombo Fort in an attempt to force the ouster of President Gotabaya Rajapaksa, who has now fled to the Maldives. At the time of writing, protestors are  occupying the PM’s office in addition to the President’s House, the PM’s official residence Temple Trees, and the Presidential Secretariat.

“We had received intelligence that even if the president left, sections of the aragalaya had planned to seize the PM’s office, to surround the air force commander’s house for providing the president an aircraft to fly to the Maldives, and to surround the houses of the army and navy commanders as well.

“The plan was to seize power. There was also a plan to surround parliament. The speaker had met with the chief of defence staff who had agreed to protect the parliament complex, so they didn’t get a chance to go there today,” said Wickremesinghe.

Wednesday’s group of protestors, numbering thousands, were met with stiff resistance by police but managed to break through barricades and storm the building.

“They have no reason at all to enter the prime minister’s office,” said Wickremesinghe.

“What they want is to prevent me as acting president together with the speaker from electing a new president. They want to elect their candidate,” he said.

Speaker Mahinda Yapa Abeywardena said earlier on Wednesday that the president will be sending his resignation letter within the day and that the election of a new president from the current parliament will go ahead as planned on July 20.

Wickremesinghe complained of the extraconstitutional methods that he said some protestors are resorting to.

“Some have said there is no point in consulting parliament or the country’s constitution but to do what they say instead. Parliament is what gives expression to people’s sovereignty and franchise. The country’s constitution cannot be torn up. Some even said we don’t need a constitution. That’s anti-constitutional,” he said.

“They’re attempting to spread fascism in this country. Some of our mainstream parties have joined this today,” he added.

Wickremesinghe said party leaders had already met by Wednesday afternoon to discuss the situation that would emerge upon the president’s resignation. He had already pledged to resign as PM when an all-party government is formed, he said, and it was agreed to reconvene on Friday July 15.

“Those who wished to be nominated agreed to speak to other MPs for their support. There was a democratic environment in the country,” he said.

The prime minister said he was advised by the security establishment to declare curfew and a state of emergency, which are now both under way, to contain the protests that sprang up earlier in the day and are still ongoing.

“We must eliminate this fascist threat. Ordinary citizens’ houses must be protected,” he said.

“They cannot be allowed to occupy the president’s house, Temple Trees, presidential secretariat and misplace the documents contained within them. So I have advised the defence establishment to enforce curfew and emergency and bring the situation back to normal.”

The committee has been given all the powers needed to carry out its mandate with no political interefence, said Wickremesinghe.

“I ask all of you, this is your future. It’s a time to protect the law and the peace, for you and for your children. I ask you to therefore fully cooperate with the forces and the police,” he said.


opposition leader Sajith Premadasa claimed authorities have launched a campaign of suppression on the people.

He asked whether President Rajapska had actually resigned or whether prime minister Wickremesinghe did not hear the call of the people.

“I am asking the young people to protest without causing harm,” he said. “Do not lay a hand on public or private property. I am asking dear security forces not to be pawns of an oppressive regime,” he said.

Ex-President Maithripala Sirisena said an unstable situation had emerged and the quickest way to solve it was for Wickremesinghe to resign without creating conflicts between the people and security forces.

“I am pleading in the name of God for Ranil Wickremesinghe to resign fast,” he said. (Colombo/Jul13/2022)

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 *

Sri Lanka rupee at 296.75/297.25 to dollar at open, bond yields steady

ECONOMYNEXT – Sri Lanka’s rupee opened at 297 /297.50 against the US dollar in the spot market on Monday, while bond yields were steady, dealers said.

The rupee closed at 296.75 /297.25 to the US dollar on Monday after opening around 296.50 /297.50 rupees.

A bond maturing on 01.09.2027 was quoted at 26.50/75 percent steady from Friday’s close at 26.50/65 percent.

Sri Lanka’s rupee is appreciating amid negative private credit which has reduced outflows after the central bank hiked rates and stopped printing money. (Colombo/ May 29/2023)

Continue Reading

Sri Lanka rupee appreciation squeezes exporters

ECONOMYNEXT – Sri Lanka’s recent appreciation is starting to squeeze apparel exporters as their domestic costs including wages and energy, were hiked over recent months, when the rupee fell steeply, an industry official said.

Companies had raised salaries and emoluments at rates averaging 25 percent for workers while transport costs have also gone up but not has come down, Yohan Lawrence Director General of the Join Apparel Association Forum said.

Apparel factories in particular also provide transport and some meals for workers.

Electricity prices have also been hiked, based on the rupee which was weaker. A tariff cut is expected from June after the rupee appreciated and imported fuel prices fell.

Sri Lanka’s rupee collapsed in 2022 from 200 to 360 to the US dollar as interest rates were suppressed with liquidity injections and a failed attempt was made to float the rupee with surrender requirement in place.

From the second half of 2022, with higher interest rates and negative private credit, the central bank has avoided printing money under conditions which are generally accepted to be difficult, and is broadly running deflationary open market operations, triggering a balance of payments surplus and putting the rupee under upward pressure.

Central bank net credit to government which was 3,302 billion rupees in September in 2022, was down to 3,209 billion rupees by March 2023, part of which was due to rollovers, analysts say.

Market pricing of fuel and electricity by the Ministry of Energy and also spending controls and tax hikes buy have also helped contain domestic credit.

Sri Lanka also has mandatory conversion rules, imposed on exporters, which is a concern for exporters.

“We believe rupee should be at its natural level, but with forced conversions you won’t get the correct picture,” Lawrence said.

Sri Lanka has to release a plan to remove import controls, exchange controls and other restrictions imposed in the period where policy rates were suppressed with liquidity injections (so-called multiple currency practices and capital flow measures) by June under the IMF program.

Apparel exporters have also seen orders fall amid tighter conditions in Western markets.

The central bank has to peg (intervene actively in forex markets and create money) to meet reserve targets under an IMF program and cannot free float (avoid creating money through international operations) the rupee.

The newly created money has generally been absorbed in an overnight liquidity shortage.

There have also been foreign purchases of rupee Treasuries. Amid a contraction in credit, the inflows also do not turn into imports fast as the money if the money is spent.

By making purchases a little below what is allowed by the contraction in domestic credit, the rupee can be allowed to appreciate, analysts say.

The central bank has so far allowed the rupee to appreciate to around 300 to the US dollar from 360 levels under a transparent guidance peg up to February.

Except after the 2008/2009 currency crisis, Sri Lanka’s central bank has not previously allowed to the rupee to appreciate under IMF programs where the first year in particular sees balance of payments surpluses, before private credit and domestic investments picks up again.

One of the considerations used by third world central banks are Real Effective Exchange Rate indices.

The REER of the Sri Lanka rupee based on a basket of currencies calculated by the central bank was 61.12 points in February before the rupee was allowed to appreciate by lifting a surrender rule.

In March the index went up to 69.55 points, but remained steeply below 100. Real effective exchange rates are calculated also taking into account inflation in counterpart trading nations.

Sri Lanka’s inflation index had hardly risen since September amid rupee gains. Falling food prices can help contain pressure for further wage hikes, analysts say. (Colombo/May30/2023)

Continue Reading

Sri Lanka forum to discuss central bank independence vs sound money

ECONOMYNEXT – Central bank independence and sound money will be under discussion at a public event organized by the Sri Lanka chapter of the Bastiat Society today, May 30, as island is recovering from the worst episode of monetary instability since independence.

The forum will feature Lawrence H White, Professor of Economics at George Mason University in the US, and W A Wijewardene, former Deputy Central Bank Governor, of the Central Bank of Sri Lanka.

“The discussion will compare the current system against alternative systems and explore the relationship between such banking systems and sound money,” the organizers said.

White specializes in the theory and history of banking and money. He is the author of “The Clash of Economic Ideas” (2012), “The Theory of Monetary Institutions” (1999), “Free Banking in Britain” (2nd ed., 1995), and “Competition and Currency” (1989).

Wijewardene has been speaking on central bank independence in Sri Lanka long before it became a topic of wider discussion, but also on accountability.

In April, a Central Bank Independence and Other Matters, which includes a collection of his orations on the subject over the years as well a recent development was published.

The discussion comes as independent central banks in the West have created the worst inflation since the 1970s and early 1980s and are apparently unaccountable to parliaments and the public.

The early 1980s also saw the first wave of external debt crises in so-called soft-pegged countries in Latin America and Eastern Europe in particular as the US and UK tightened policy to end the Great Inflation.

The discussion will be held at 7.00 pm at the Lakmahal Community Library and those interested can register online, the organizers said. (Colombo/May30/2023)

Continue Reading