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Thursday December 8th, 2022

They‘re back! Sri Lanka’s famous Parliamentary pugilists are returned by the voters

FAMOUS FIGHTERS – Sri Lanka’s Parliamentarians displayed their fighting skills in November 2018

ECONOMYNEXT – Many of us who watched Members of Parliament brawling like street thugs inside the well of the House of Parliament in November 2018, didn’t want any of them to be returned.

Well, a bit of that wish has come through, as 83 of the 225, almost one-third, were not returned but some of the stars of that drama are back, and we have voted them in.

Among the leading Parliamentary pugilists back in the House are Chilli powder throwing Prasanna Ranaweera and Bible-chucking Johnston Fernando.

The other star fighter, Butter-knife Palitha Thevarapperuma, is not in play this time because his constituents did not vote for him.

Wimal Weerawansha, who hefted a copy of the Constitution of Sri Lanka at an opponent in the melee and Fernando are Cabinet Ministers.

Dilum Amunugama who cut himself destroying government property, the Speaker’s Microphone, is a Minister of State.

Even the women parliamentarians joined in the protests, although they did not resort to violence.

The fighting, if you recall, was perpetrated when motions of No-Confidence against the then appointed Prime Minister Mahinda Rajapaksa were moved on three different occasions.

Speaker Karu Jayasuriya successfully held all three votes which Rajapaksa lost and President Maithripala Sirisena refused to accept.

The disruptions of the votes were delaying tactics for horse-trading to take place behind the scenes to entice UNP MPs to cross-over to support Rajapaksa.

On the second occasion the vote was taken, now SLPP State Minister Arundika Fernando illegally occupied the Speaker’s chair and Jayasuriya had to sit in a makeshift chair and be protected by a posse of Policemen.

The police were also attacked and several of them were injured.

Those violent MPs on both sides of the house should have been prosecuted for breaking the law in the revered chamber where the laws of this land are made.

No-one was punished, instead, we have rewarded them by giving them our preferential votes and electing most of them as legislators.

Those law-breakers are joined by more in this Parliament.

One is two-term MP and former Deputy Minister Premalal Jayasekara who is currently under a death sentence for a murder committed during the 2015 election campaign.

This is the first time in our history that a man on death row will take oaths as an MP.

The former Pradeshiya Sabha Chairman also known as “Choka Malli” has been permitted to be released to attend Parliament as he has filed an appeal against his sentence.

Jayasekara came second in the Ratnapura district with 142,037 preferential votes according to the Elections Commission.

He was sentenced to death by the Ratnapura High Court days before the elections for the murder of United National Party supporter Shantha Dodangoda during the 2015 Presidential Campaign.

Another first is Sivanesathurai Chandrakanthan who is in remand custody on a murder charge.

Chandrakanthan, who is better known by his LTTE nom de guerre “Pillayan” will be the first former militant leader to be elected to Sri Lanka’s Parliament.

He is tipped to be given a State Ministry.

This is heartening news that men who fought to form a separate state are now entering the Parliament of Sri Lanka through the democratic process.

The first LTTE leader to get a Parliamentary seat was Vinayagamurthi Muraleetharan or “Karuna Amman” who was an appointed member from the Sri Lanka Freedom Party.

Pillayan is in remand for allegedly murdering another MP, Joseph Pararajasingham, a three-term Tamil National Alliance MP, on Christmas Eve 2005 as he attended mass at St Mary’s Church in Batticaloa.

Pillayan is a popular figure in the East as he was Chief Minister of the Province.

Both will join the ranks of the government which won an unprecedented two-thirds majority in a proportional poll in the election.

Disappointment over our legislators has been mounting over the past few decades as criminal elements crept into politics.

There was a yearning for clean government which brought the change in 2015 with the election of the United National Front for Good Governance.

However, the administration that promised to punish the excesses and wrongdoings of the Rajapaksas and avoid corrupt practice failed to do that in any way.

The United National Party was duly punished for that by the voters and all those tainted by the Bonds Scam were booted out.

However, there was a widely held belief that all or most of the 225 would be voted out because they had connections to criminal elements in society.

But that has not happened and we the voters are responsible for that. (Colombo, August 20, 2020)

Reported by Arjuna Ranawana


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Sri Lanka in deep talent drain in latest currency crisis

ECONOMYNEXT – Sri Lanka businesses are facing a drain of talent, top business executives said as the country suffers the worst flexible exchange rate crisis in the history of its intermediate regime central bank and people lose hope.

“We are seeing a trend towards migrating,” Krishan Balendra, Chairman of Sri Lanka’s John Keells Holdings told an economic policy forum organized by the Ceylon Chamber of Commerce.

“We have seen an impact mainly on the tourist hotels side, quite an exodus of staff (migrating) to countries we have not seen in the past. 

“We have seen people go to Scotland, Ireland. It has usually been the Middle East and Maldives. Australia seems like a red hot labor market at the moment.”

Sri Lanka’s rupee collapsed from 200 to 360 to the US dollar after macro-economists printed money to suppress rates.

Sri Lanka operates a ‘flexible exchange rate’ where errors in targeting interest rates are compensated by currency depreciation especially after the 1980s.

Classical economists and analysts have called for the power to mis-target rates and operate dual anchor conflicting monetary regimes should be taken away to prevent future crisis.

Currency crises are problems associated with flexible exchange rate central banks which are absent in hard pegs and clean floats.

“Something new we are seeing is that older people, even those in their 50s, which was a surprise, are looking at migrating,” Balendra said.

Businesses are trying to retain talent as real wages collapse.

Balendra said as businesses they see some stability returning and based on past experience growth is likely to resume, and they were communicating with the workers.

“We have a degree of conviction that the economy should get better, its the stability phase now and it will get better going forward so without the way our businesses are placed we should see good growth,” Balendra said.

“We can’t chase compensation that’s just not practical and we are not trying to do that especially if people are looking to immigrate but what we can do is show the career opportunities in the backdrop of the situation that people would rather stay here because its home.” 

Sri Lanka unit of Heineken says it is also trying to convince workers not to leave, with more success.

“We are all facing the effects of brain drain and it’s not just the lower levels… What we are doing is a balance of daring and caring,” Maud Meijboom-van Wel – Managing Director / CEO, Heineken Lanka Ltd told the forum.

“Why I say daring is, you have to be clear in what you can promise people, when you make promises you have to walk the talk. So with the key talents and everyone you need to have the career and talent conversations.

“I am a bit lucky because I am running a multinational company so my career path goes beyond Sri Lanka so I can say if you acquire certain skills here, then you can move out of here and then come back too, that is a bit easier for me but it starts with having a real open conversation with walking the talk – dare and care.” (Colombo/Dec7/2022)


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Despite losses, Sri Lanka to resume “park & ride” transport after complaints  

ECONOMYNEXT –  Sri Lanka’s state-run Transport Board will resume its loss-making City Bus service from January 15, 2022 Cabinet Spokesman Bandula Gunawardena said, after the service abruptly discontinued with the state-run firm’s director board citing losses.

The City Bus service was introduced in 2021, under the government of former President Gotabaya Rajapaksa, from Makubura to Pettah and Bambalapitiya.

The service was started to reduce the number of automobiles travelling to and from Colombo and suburbs by providing a comfortable, convenient and safe public bus transportation for passengers and riders who use cars and motorcycles as their means of transportation.

During the time period in which the service was initiated, there were 800 hundred vehicles that would be parked and would use the system, Gunawardena, who is also the Transport Minister, said.

The service was later collapsed due to inconsistencies in scheduling and it was completely stopped after

“Without informing the Secretary or the Minister of the relevant Ministry, the Board of Directors have come to a conclusion that this is loss making route and must be halted,” Gunawardena said.

“The users of the City Bus service brought to our notice and therefore I gave the Secretary to the Ministry of Transport the approval to start the City Bus service from January 15.”

“If we stop all loss making transport services then massive inconveniences will occur to the people in far parts of the island.”

The chairman of the state run Ceylon Transport Board has been asked to handover the resignation letter by the Minister Gunawardana citing that the head has failed to implement a policy decision approved by the government. (Colombo/ Dec 06/2022)

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Sri Lanka may see rates falling next year: President

ECONOMYNEXT – Sri Lanka’s interest rates are high and hurting small businesses in particular but interest rates are required to maintain stability, President Ranil Wickremesinghe said.

“One is, all of you want to know what’s going to happen to the interest rates?,” President Wickremesinghe told an economic policy forum organized by the Ceylon Chamber of Commerce.

“I wish I know. The governor has told me that the inflation has peaked. It’s coming down. You all understandably want some relief with the interest rates to carry business on.”

“I understand that and appreciate the viewpoint. It’s not easy to carry business on with such high interest rates. On the other hand, the Central Bank also has to handle the economy. So maybe sometimes early next year we will have a meeting of minds of both these propositions.”

Sri Lanka’s interest rates are currently at around 30 percent but not because the central bank is keeping it up. The central bank’s overnight policy rate is only 15.5 percent but the requirement to finance the budget deficit and roll over debt is keeping rates up.

Rates are also high due to a flaw in the International Monetary Fund’s debt workout framework where there is no early clarity on a whether or not domestic debt will be re-structured.

After previous currency crises, rates come down after an IMF deal is approved and foreign loans resume and confidence in the currency is re-stabilished following a float.

This time however there has been no clear float, though the external sector is largely stable and foreign funding is delayed until a debt re-structure deal is made.

Sri Lanka’s external troubles usually come because the bureaucrats do not believe market rates are correct when credit demand picks up and mis-uses monetary tools given in 1950 by the parliament to suppress rates, blowing the balance of payments apart.

The result of suppressed rates by the central bank are steep spikes in rates to stop the resulting currency crisis.

A reserve collecting central bank has little or no leeway to control interest rates (monetary policy independence) without creating external troubles, which is generally expressed as the ‘impossible trinity of monetary policy objectives’.

However, it has not prevented officials from trying repeatedly to suppress rates, perhaps expecting different results.

After suppressed rates – supposedly to help businesses – trigger currency crises, the normalization combined with a currency collapse leads to impoverishment of the population.

The impoverishment through depreciation leads to a consumption shock, which also leads to revenue losses in businesses.

The suppressed rates then lead to bad loans.

In the 2020/2022 currency crisis the sovereign default has also led to more problems at banks. Several state enterprises also cannot pay back loans.

“…[T]he bad debt that is being carried by the banks is mainly from the private sector or the government sector,” President Wickremesinghe said.

“Keep the government sector aside. We’re dealing with it. How do you handle it? Look, one of our major areas of are the small and medium industries. You can’t allow them to collapse, but they’re in a bad way.”

Classical economists and analysts have called for new laws to block the ability to central bank to suppress rates in the first place so that currency crises and depreciation does not take place in the first place.

Then politicians like Wickremesinghe do not have to take drastic and unpopular measures to fix crises and there will be stability like in East Asia.

Sri Lanka had stability until 1950 when the central bank was created by abolishing an East Asia style currency board. The currency board kept the country relatively stable through two World Wars and a Great Depression.

In 1948 after the war (WWII) was over “we stood second to Japan” Wickremesinghe said.

“But we started destroying it from the sixties and the seventies,” he said. :We started rebuilding an economy, which was affected by a (civil) war, and thereafter the way we went, is best not described here.”

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