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Tuesday November 29th, 2022

The Friday Forum questions the call to hand over more powers to the President

ECONOMYNEXT – A group of eminent personalities are questioning the call for handing over more powers to the Presidency by abolishing the 19th Amendment to the Constitution which was passed by all parties in Parliament in 2015.

The group which calls itself the Friday Forum in a statement pointed out that For 30 years the people and political parties agreed that the office of the Executive Presidency of 1978 amassed to itself too much power undermining other public institutions like Parliament and the Courts.

“We have seen how during long years, these two institutions have been undermined. Up to 2019, we wanted to abolish the Executive Presidency and introduce a system of governance that gave authority to a Prime Minister and a Cabinet that were responsible to an elected Parliament. We also looked for Courts that were independent of the Executive,” it said.

The Forum agrees that the 19th Amendment has flaws and must be modified. But now we have a new discourse which is asking for a 2/3 majority to give MORE powers to the President, and indeed change completely the structures of governance, so that the President will exercise extensive powers.

“We must ask ourselves whether this new system with the concentration of power in one individual, is that the form of government we want to introduce through a 2/3 majority and Constitutional reform,” the statement said.

The Forum also said that this election is “a defining one, conducted at a time when the country is facing the double crisis of a debilitating debt burden, and an unprecedented economic and public health crisis. It is therefore important to reflect on our current situation, and cast our votes to help achieve the kind of governance that will hold our rulers accountable to us, and provide primacy of place to citizens’ well-being when they exercise their powers.”

The statement also pointed out that the country has not had a Parliament for the last 4 months “ and have no idea how funds have been spent, without authorisation by Parliament. We have witnessed how the principle that a person is innocent until proven guilty, has enabled many persons accused of serious crimes in our Courts, to obtain bail, stand for election, and hold high office in the government.”

The recent destruction of a cultural heritage site has been ignored by the Cabinet because holding anyone accountable will have political repercussions. Is it satisfactory that the public service and public institutions are no longer accountable, and ad hoc decisions determine important matters relating to the economy ( eg the MCC agreement), the environment- including the human /elephant conflict, public health issues, and the destruction of public property such as heritage sites,” the statement asked.

The Forum also pointed out that the military has moved out of its traditional role and is taking on all the responsibilities of civilian institutions on public administration, and even the Police. “ We have Military Task Forces which exercise significant powers and exclude the Prime Minister and Cabinet Ministers. They report directly to the President. We have governance according to gazette notifications that allow investigation of persons for spreading false information on Covid-19’.The army also has been made responsible for ‘de-radicalising’ those with ‘extremist ideas’ in their custody, under the Prevention of Terrorism law.  Others, including politicians who advocate violence against minorities in the community, continue to do so with impunity.”

It went on to say that the “administration of justice without fear or favour is in our collective interest. Do we not want governance that ensures the independence of the judiciary from political interference? Increasingly, we witness selective justice- some people prosecuted in the courts while no questions are asked about the conduct of others. They are not held accountable for their conduct, despite Commissions of Inquiry and prolonged investigations. Should we not vote for and demand, a strengthening, rather than undermining of institutions responsible for the administration of justice in our country?”

The statement was signed by  Prof. Savitri Goonesekere, Dr. Radhika Coomaswamy, Dr. A.C. Visvalingam, Mr. Tissa Jayatilaka, Prof. Ranjini Obeyesekere, Prof. Gameela Samarasinghe, Mr. Faiz-Ur Rahman, Prof. Arjuna Aluwihare, Dr. Geedreck Usvatte-aratchi, Bishop Duleep de Chickera, Prof. Camena Guneratne, Chandra Jayaratne, Rev. Dr. Jayasiri Peiris, Mr. Priyantha Gamage, Shanthi Dias, Daneshan Casie Chetty, Manouri Muttetuwegama and Prashan de Visser.

(Colombo, July 30, 2020)

Reported by Arjuna Ranawana

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A new Sri Lanka monetary law may have prevented 2019 tax cuts?

ECONOMYNEXT – A new monetary law planned in 2019, if it had been enacted may have prevented the steep tax cuts made in that year which was followed by unprecedented money printing, ex-Central Bank Governor Indrajit Coomaraswamy said.

The bill for the central bank law was ready in 2019 but the then administration ran out of parliamentary time to enact it, he said.

Economists backing the new administration slashed taxes in December 2019 and placed price controls on Treasuries auctions bought new and maturing securities, claiming that there was a ‘persistent output gap’.

Coomaraswamy said he keeps wondering whether “someone sitting in the Treasury would have implemented those tax cuts” if the law had been enacted.

“We would never know,” he told an investor forum organized by CT CLSA Securities, a Colombo-based brokerage.

The new law however will sill allow open market operations under a highly discretionary ‘flexible’ inflation targeting regime.

A reserve collecting central bank which injects money to push down interest rates as domestic credit recovers triggers forex shortages.

The currency is then depreciated to cover the policy error through what is known as a ‘flexible exchange rate’ which is neither a clean float nor a hard peg.

From 2015 to 2019 two currency crises were triggered mainly through open market operations amid public opposition to direct purchases of Treasury bills, analysts have shown.

Sri Lanka’s central bank generally triggers currency crises in the second or third year of the credit cycle by purchasing maturing bills from existing holders (monetizing the gross financing requirement) as private loan demand pick up and not necessarily to monetize current year deficits, critics have pointed out.

Past deficits can be monetized as long as open market operations are permitted through outright purchases of bill in the hands of banks and other holders.

In Latin America central banks trigger currency crises mainly by their failure to roll-over sterilization securities. (Colombo/Nov29/2022)

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Sri Lanka cabinet clears CEB re-structure proposal: Minister

ECONOMYNEXT – Sri Lanka’s cabinet has cleared proposals by a committee to re-structure state-run Ceylon Electricity Board, Power and Energy Minister Kanchana Wijeskera said.

“Cabinet approval was granted today to the recommendations proposed by the committee on Restructuring CEB,” he said in a message.

“The Electricity Reforms Bill will be drafted within a month to begin the unbundling process of CEB & work on a rapid timeline to get the approval of the Parliament needed.”

Sri Lanka’s Ceylon Electricity Board finances had been hit by failure to operate cost reflective tariffs and there are capacity shortfalls due to failure to implement planned generators in time. (Colombo/Nov28/2022)

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Sri Lanka new CB law to cabinet soon as IMF prior action

ECONOMYNEXT – Sri Lanka’s new central bank law will be submitted to the cabinet as a prior action of International Monetary Fund with clauses to improve governance and legalize ‘flexible’ inflation targeting, Central Bank Governor Nandalal Weerasinghe said.

Under the new law members of the monetary board will be appointed by the country’s Constitutional Council replacing the current system of the Finance Minister making appointments.

“It will be a bipartisan approach,” Governor Weerasinghe told an investor forum organized by CT CLSA Securities, Colombo-based brokerage.

“The central bank’s ability to finance the budget deficit will be taken out. Thirdly the flexible inflation targeting regime will be recognized in the law as the framework.”

The law will also make macro-prudential surveillance formally under the bank.

There will be two governing boards, one for the management of the agency and one to conduct monetary policy.

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