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Government tightens screws on private sector; reveals trillions in economic damage

11 Sep 2021

  • Shunning West and IMF, Govt. banks on import bans and Cabraal for recovery
  • Basil expects repatriation of $ 500 m under new financial secrecy law
  • Hopes that with 10 m vaccinated, the Covid demon can be tamed
  • Maj. Gen. Niunhella seizes over 1,750 tonnes of rice under emergency law
  • Opposition parties, civil society want UNHRC to hold Govt.’s feet to the fire
  Come tomorrow (13), Sri Lanka will once again be in the spotlight of the international community over its human rights record and progress made in addressing concerns raised in the United Nations Human Rights Council (UNHRC) Resolution 46/1 (A/HRC/RES/46/1) adopted in March this year. The resolution is aimed at promoting reconciliation, accountability, and human rights in Sri Lanka. UN High Commissioner for Human Rights Michelle Bachelet is to provide an oral update on Sri Lanka’s progress in addressing the issues highlighted in the March resolution when the 48th Session of the UNHRC kicks off tomorrow. However, while gearing to take on the UNHRC, the Government, led by President Gotabaya Rajapaksa and Prime Minister Mahinda Rajapaksa, is continuing to engage in several battles within the country. The internal battles range from the Covid-19 pandemic and the foreign reserves crisis to shortages of several essential commodities in the local market. The solution to the battle against Covid-19 has been identified as the accelerated Covid vaccination programme that reached a milestone of fully vaccinating over 10 million individuals last week. Also, the quarantine lockdown in place was extended till next Tuesday (21). The President had indicated to the Covid-19 Task Force that he wanted a plan on reopening the country from the 21st, indicating that the quarantine lockdown could end next week. As for the issue of the foreign reserves crisis, the recent inflows in the form of a Special Drawing Right (SDR) facility of the International Monetary Fund (IMF) and a swap deal with Bank of Bangladesh (BB) did not help resolve the crisis. With discussions on securing a long-term credit line for the Ceylon Petroleum Corporation (CPC) for fuel imports yet to reach fruition, pressure continues to mount on the country’s foreign reserves. The Energy Ministry is expected to finalise a credit line this month for the CPC from either the UAE, India, or China. The only immediate solution seems to be the imposition of further restrictions on imports. Apart from the ongoing import restrictions, imports of some essential commodities have been affected due to the inability of local banks to open Letters of Credit (LCs). The current shortage of LP gas and milk powder in the local market has been mainly attributed to the shortage of dollars in the country. LP gas and milk powder importers continue to languish without a proper solution to their issues. However, it is in this backdrop that the Monetary Board of the Central Bank of Sri Lanka (CBSL) announced on Thursday (9) the imposition of a 100% cash margin deposit requirement against the importation of “selected goods of non-essential/non-urgent nature” made under LCs and Documents against Acceptance (D/As) terms with licensed commercial banks and National Savings Bank (NSB). The CBSL had noted that the decision would be effective immediately. “The decision to impose the cash margin deposit requirement is expected to support the ongoing efforts to preserve the stability of the exchange rate and foreign currency market liquidity, particularly by discouraging excessive imports of speculative nature,” the CBSL said in a press release. Speaking to the media, CBSL Governor Prof. W.D. Lakshman stated that the list of 623 non-essential and non-urgent items would be periodically updated based on requirements. He added that in case items listed are essential for consumption or production, changes will be made accordingly. However, the announcement sparked many questions on the products identified as “non-essential”. The list of items included electronic goods like mobile phones, which are no longer a luxury item in the “new normal” where most interactions happen online. Nevertheless, the foreign reserves crisis has compelled such moves, and with the Government adamant not to seek IMF assistance to address the crisis, more import cuts seem to be on the cards. The Black Box learnt that several government ministers had expressed their disagreement with the manner in which the Government is looking at addressing the foreign reserves crisis, as explained to them in the governing side lobby in Parliament by State Minister of Money, Capital Markets, and State Enterprise Reforms Ajith Nivard Cabraal. Interestingly, the Government seems to believe that a change in the highest office at the CBSL would resolve the present financial crisis. The move to appoint State Minister Cabraal as CBSL Governor this week, following his resignation from Parliament tomorrow (13), is expected to address several key issues faced by the Government. Incumbent CBSL Governor Prof. Lakshman is to tender his resignation on Tuesday (14). Govt.’s hope The Government had also pinned much hope on seeing inflows to the country’s foreign reserves through the implementation of the Finance Bill that was passed with amendments in Parliament last week. Finance Minister Basil Rajapaksa, in his maiden speech at the current Parliament, explained the dire plight of the country’s economy. He said the country had lost around Rs. 1.6 trillion in state revenue due to the Covid-19 pandemic amidst the ongoing foreign reserves crisis. “The country is facing a serious foreign exchange crisis. The Government’s revenue has also come down drastically. We don’t expect to overcome a crisis of this magnitude on our own. We hope well-wishers and the Opposition will co-operate to solve this crisis,” Basil said. He explained that the Covid-19 pandemic had aggravated the country’s economic woes and the poor economic management over previous decades had led to the present crisis situation. “We know that our expenditure has always been higher than revenue. There has also been waste, corruption, and unnecessary expenditure over the years. We are making a sincere effort to address these issues,” he noted. He noted that the loss of revenue so far this year was around Rs. 1,500-1,600 billion, which was more than the amount that was estimated. According to the Finance Minister, income from the State’s three main revenue-generation sources – the Customs, Excise, and Inland Revenue Departments – had seen a drastic decline. However, the Government maintained last week that it is expecting it to add $ 500 million to the national economy through the new finance legislation that permits individuals to bring monies to the country without having to declare the source of funds. “We expect at least $ 500 million worth of monies to come in through this. With these funds, the country will be able to face some of the problems it is currently facing,” State Minister Cabraal informed Parliament. Cabraal noted that the Finance Bill would allow people to disclose hitherto undisclosed assets by incurring a tax of 1%, thus encouraging the legal declaration of such assets and boosting the economy. He said: “We have to ensure that there is an opportunity for those who haven’t declared such funds to be able to bring these into the system, and that the Government will be able to form one single economy, instead of having several parallel economies. Sometimes, those who are in these parallel economies need a little encouragement to come into the main system, and that is what we are providing.” Meanwhile, National People’s Power (NPP) MP Anura Kumara Dissanayake, who was among the Opposition members who opposed the Bill, claimed that if the Bill was adopted, it would allow those guilty of having amassed funds through illegal methods, including the theft of public funds, to be free from prosecution through the payment of a tax of just 1%. “People who earn an honest living will end up thinking ‘why don’t we also earn through illegitimate means?’ That is what will happen if this Bill is passed,” he charged. A series of petitions were filed before the Supreme Court against the Finance Bill. The Supreme Court, after considering submissions presented, had determined that 12 sections of the Bill would require amendment and one section of the Bill would need to be deleted for it to be passed in Parliament with a simple majority. Cabinet on essential goods Meanwhile, the Cabinet of Ministers last week focused on the issue of shortages of certain essential goods in the market, including rice and sugar. The meeting of the Cabinet of Ministers took place via Zoom last Monday (6) and lasted about one-and-a-half hours where 21 papers were taken up for discussion. At the outset of the weekly meeting, ministers had inquired into the wellbeing of Trade Minister Bandula Gunawardana, who had returned home last Sunday (5) after being treated for Covid-19. Finance Minister Rajapaksa had presented a cabinet paper that was not included in the original meeting agenda. The last-minute cabinet paper had sought cabinet approval for the signing of an agreement with New Fortress Energy Inc. of the US to sell the 40% stake held by the Treasury in the Yugadanavi Power Station in Kerawalapitiya. The deal is expected to bring in $ 300 million to the Treasury, which is indeed much-needed reinforcement at this juncture. Commencing the meeting, President Rajapaksa had explained to the Cabinet that the measures taken by the Government to address the shortage of sugar in the local market had been successful, and that there was now a steady flow of sugar being sold at controlled prices in the market. The President had noted that the same mechanism would be applied to address issues related to rice as well. After visiting warehouses that stored sugar in large quantities, authorities prepared a mechanism for the Government to purchase the stocks and sell them through Sathosa. However, Trade Minister Gunawardana had explained that Sathosa would have to maintain imported rice stocks to ensure a smooth flow in the local market, as large-scale rice mill owners would not agree to sell at prices lower than their purchase prices. The Minister had also noted that there were no statistics with regard to paddy purchases by the private sector, especially on the paddy quantities purchased by large-scale millers. After listening to Gunawardana’s statement, the President had said that if the Consumer Affairs Authority (CAA) is unable to address the rice issue and crack down on large-scale millers to ensure steady prices in the local market, directives would be issued to the Commissioner General of Essential Services (CGES). The President had also asked that the CAA extend its support to the CGES. Following the decision at the cabinet meeting, the CGES was tasked with visiting several large-scale mills in the Polonnaruwa District. CGES Maj. Gen. M.S.P. Niunhella, during his visits in Polonnaruwa, had seized 1,000 MT of rice from the mill warehouses. Interestingly, the daily requirement of rice in the country is around 6,411 MT, according to Agriculture Ministry data. The rice stocks were seized by the CGES, as per Section 5 of the Public Security Ordinance, to implement and co-ordinate all activities related to the supply of essential goods. Following the raids, around 400,000 kg of rice were reportedly seized from Araliya Rice Mill owned by Dudley Sirisena, 100,000 kg from Nipuna Rice Mills owned by State Minister Siripala Gamlath, 175,000 kg from New Rathna Rice Mill, and 75,000 kg from Lathpandura Rice Mill. Meanwhile, Rathna Rice Mill had reportedly held around 40 million kg of paddy in their stores as of last Wednesday (8). The ESCG and officials from the CAA, during their Polonnaruwa visit, had to face protests held by members of the Buddhist clergy as well as several farmer groups in the area. It is learnt that the protests were initiated by one of the large-scale mill owners upon hearing of the raids being carried out at other mill warehouses. However, the ESCG had vowed legal action in future against persons who obstruct work being carried out under the emergency regulations. Emergency passed The emergency regulations, which were presented to address the current shortages of essential commodities by ensuring the supply of essential food items, were passed in Parliament last Monday (6) evening, with a majority of 81 votes, as 132 MPs voted in favour and 51 voted against. The MPs who voted in favour of the regulations included MPs of the All Ceylon Makkal Congress (ACMC) and the Sri Lanka Muslim Congress (SLMC), who had also voted in favour of the 20th Amendment to the Constitution. However, around 31 MPs including Ministers Wimal Weerawansa and Bandula Gunawardana as well as Opposition MPs Harin Fernando and Ranil Wickremesinghe were absent during the vote. Amidst criticism by Opposition MPs, Justice Minister Ali Sabry noted in Parliament that, as the CAA Act No. 9 of 2003, as amended, only enables setting a control price for goods and initiating legal action against traders who sell goods beyond those control prices, the only way to provide the people with essential food items without any shortage is to enforce emergency regulations on the provision of essential foods under the Public Security Ordinance. He further noted in Parliament that he was surprised by the Opposition’s allegations regarding President Rajapaksa’s decision to declare emergency regulations on the provision of essential foods. “We were asked as to why this could not be done under the CAA Act. The CAA Act can only be used to set a control price for goods, which we have already done. When a control price is set, the court can be informed if any trader sells goods in excess of that price. The perpetrators will then be given some punishment at the end of the relevant legal proceedings, or they will be fined,” Sabry explained. “If anyone tries to make profit by not selling goods and keeping them, the Government can take over such goods and distribute them to the people at a reasonable price under these emergency regulations. So, who is the ultimate beneficiary of this? It is the people,” he further noted. However, Tamil National Alliance (TNA) MP M.A. Sumanthiran, noting that many have condemned the proposed legislation as a pathway to militarisation, claimed that it might or might not be the intention of the President, but the fear of the past “states of emergency” lingered in the minds of the public who do not want to go back to those fearful periods. Sumanthiran observed that if the country was to move forward, emergency decisions as such cannot always be made; instead, firm and logical decisions needed to be made to help improve the current state the economy is in. Commitment to HR However, the Government is also gearing to face the UNHRC, with the Ministry of Foreign Affairs (MFA) already having made necessary preparations listing out the progress made by the Government in the form of a 14-page document that was shared with member countries of the Core Group on Sri Lanka as well as other diplomatic missions in Colombo. A member of the diplomatic community, referring to the MFA’s document, noted that most of the progress highlighted by the Government had been initiatives from the former Government, except the release of land in June/July this year. According to diplomats in Colombo, although the Prevention of Terrorism (Temporary Provisions) Act (PTA) review committees continue to meet and the Office on Missing Persons (OMP), the Office of Reparations (OR), and the Office of National Unity and Reconciliation (ONUR) continue to operate, any solid actions taken by them are yet to be properly determined. The MFA document to the diplomats noted that Sri Lanka will continue to fulfil its ongoing reporting obligations under the nine core UN Human Rights Treaties. The Government noted that preparations are underway for the submission of a number of reports/reviews of these treaties, including the review of Sri Lanka’s Sixth Periodic Report under the International Covenant on Civil and Political Rights (ICCPR), which is tentatively scheduled to be held in March 2022, and the submission of Sri Lanka’s Ninth Periodic Report under the Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW). “Sri Lanka has completed its process to destroy all stockpiled landmines a year ahead of the scheduled deadline, as per the Anti-Personnel Mine Ban Convention, marking another milestone in our efforts towards improving greater security and its humanitarian objective. This affirms GoSL’s commitment not to use these indiscriminate weapons in future, and reflects the Government’s confidence for a peaceful Sri Lanka, with a focus on reconciliation,” the document stated. It further added: “In addition to these measures at the national level, we have also kept true to our pledge to remain engaged with the Human Rights Council’s mechanisms. Accordingly, in the past year (2020), we have expressed agreement to receive visits to Sri Lanka by two Special Procedure Mandate Holders, namely the Special Rapporteur on the right to education and the Special Rapporteur on contemporary forms of slavery, including its causes and consequences. We are currently in dialogue with these mandates to finalise dates of their visits which are being impacted by the ongoing pandemic lockdown in Sri Lanka.” Focus on PTA A joint communication issued by the UN Special Rapporteurs has, meanwhile, recommended the review of the PTA to bring it in line with international human rights standards. Seven UN Special Rapporteurs including the Special Rapporteur on the independence of judges and lawyers – Special Rapporteur on the promotion and protection of the right to freedom of opinion and expression, and Special Rapporteur on minority issues – were signatories to the joint communication. The seven UN Special Rapporteurs, including Mary Lawlor, the Special Rapporteur on the situation of human rights defenders, had expressed deep concern at Attorney-at-Law Hejaaz Hizbullah’s detention, which they believe may have been used as a means to prevent him from further engaging with ongoing human rights cases in relation to rising hate speech, violence, and discrimination against the Muslim minority community in Sri Lanka. The MFA, in its communiqué to the diplomatic community in Colombo, had stated that the Government had received recommendations that the PTA should be reformed in line with the laws against the prevention of terrorism in other countries. Special attention had been paid to Provisions 9, 11, and 13 of the PTA, and the MFA had stated that the Presidential Commission of Inquiry had made three key recommendations with regard to the implementation of the PTA in a more democratic manner. “The Commission highlighted the possibility to expedite the hearing of cases of those who are being detained for a minimum of three months or longer under Provision 9 of the PTA by filing indictments against them, and to confine the detainees to their own home or the residential area under special security instead of detaining them in prisons in line with Provision 11 of the PTA. “The Commission, in its interim report, proposed the importance of establishing an advisory board consisting of not less than three persons, to advise the President or the Minister in charge of Defence under Provision 13 of the PTA. The President has appointed retired Chief Justice Hon. Asoka de Silva Esquire as the Chairman of the Advisory Board in terms of Section 13 of the PTA and two other members of the Advisory Board on 24 August 2021. Any person who has been issued a detention order or a restriction order under the PTA, or any person representing him/her, can make representations to this Advisory Board. The Advisory Board may then advise the Minister on the order issued. This board, therefore, presents an opportunity for those detained or restricted under the PTA to request a review of the order,” the document noted. As for revisiting the PTA, the Government had stated that a cabinet subcommittee and a committee of officials to assist the cabinet subcommittee were appointed to revisit the PTA in order to address the gaps in existing counterterrorism legislation and ensure that Sri Lanka’s counterterror legislation and measures to safeguard national security balance with Sri Lanka’s international human rights undertakings amid international best practices in this regard. The subcommittee is to submit a report to the Cabinet within three months (24 September 2021). The MFA had maintained that with regard to the PTA, the Government is intensifying and expanding the consultation process by including all stakeholders such as civil society, professional associations such as the Bar Association of Sri Lanka (BASL), and academic institutions such as faculties of law in national universities. On the issue of pardons to convicted ex-LTTE (Liberation Tigers of Tamil Eelam) cadres, the Government had noted that action was taken to grant presidential pardons to 16 LTTE cadres convicted of serious crimes committed. “Furthermore, legal and administrative process has also been set in motion to release detainees who have been in judicial custody for extended periods of time, under charges relating to the PTA,” the Government added. Letter to EU and UN UN High Commissioner for Human Rights Bachelet and the Delegation of the European Union (EU) to Sri Lanka were last week sent a letter by the Committee for Protecting the Rights of Prisoners (CPRP), seeking support for the immediate repeal of the “repressive” PTA. The CPRP, in writing, had alleged that the Government had ignored the recommendations made by the Presidential Commission of Inquiry (PCoI) for Appraisal of the Findings of Previous Commissions and Committees on Human Rights and the Way Forward on the PTA reforms. “The PCoI had proposed to expedite the hearing of cases of those who are being detained for a minimum of three months or longer period under Provision 9 of the PTA by filing indictments against them, to confine the detainees to their own home or the residential area under special security instead of detaining them in prisons in line with Provision 11 of the PTA, and to establish an Advisory Board consisting of not less than three persons representing all ethnic groups, to advise the President or the Minister of Defence under Provision 13 of the PTA. As far as we know, the three recommendations of the interim report have been ignored. On 25 August, President Gotabaya Rajapaksa appointed the Advisory Board without considering the ethnic composition, with all three members being from the majority Sinhalese ethnic community,” the CPRP had stated in the letter. The CPRP had also alleged that the Advisory Board’s Chair, retired Chief Justice Asoka de Silva had, upon retirement, made a declaration of support in favour of current President Rajapaksa in a court case in the US. “To our knowledge, the retired Chief Justice had not followed the constitutional procedure in Article 110 (3) of the Constitution that compels a retired judge of the Supreme Court to obtain presidential approval before appearing, pleading, acting, or practising before any court, tribunal, or institution,” the CPRP had stated. According to the CPRP, the PTA bypasses judicial supervision and discretion, international human rights standards, and principles of natural justice, and results in the mental and physical wellbeing of detainees being affected due to torture. “Earlier this year, Kulathunga Hettiarchchige Malcom Tiron (prisoner No. 5,329) was released due to lack of evidence, after about 13 years in detention (arrested in 2008) and a trial of approximately nine years (indicted in 2012). There have been other reports of persons being released as not guilty after up to 15 years in detention. We welcome the recent presidential pardon for 16 Tamil PTA detainees, but we note that they are detainees who had been sentenced for a few years and were due to complete their sentences in a few weeks or months, while others who are serving longer sentences appear not to have been considered for pardons,” the CPRP had added. Thus, the CPRP had also highlighted the controversial cases of PTA detainees, including minority rights advocate and lawyer Hizbullah, young Muslim poet Ahnaf Jazeem, Tamil journalist Murugupillai Kokulathasan, and Sinhalese journalist Keerthi Ratnayake. Meanwhile, the EU Parliament earlier this year called on the Government to repeal the PTA. The EU Commission was also asked to consider the temporary withdrawal of the Generalised Scheme of Preferences Plus (GSP+) from Sri Lanka unless the PTA issues were addressed. Another letter to Bachelet UN High Commissioner Bachelet last week received yet another letter from Sri Lanka. This letter was by five Tamil political parties led by Thamil Makkal Thesiya Kuttani (TMTK) MP C.V. Wigneswaran. The focus of the letter was the recent emergency regulations declared by the Government of Sri Lanka to cope with the supply of essential food items. “The state of emergency declared by the GoSL invoking the provisions of the Public Security Ordinance, ostensibly to deal with the supply and distribution of foods and essential items, could lead to military rule, as experienced by this country many times in the past. Unless it is allowed to lapse at the end of one month, without seeking parliamentary approval for its extension beyond that period, it could easily end up with violations of human rights including the freedoms of speech and assembly,” the letter had noted. The letter had also expressed concerns over the allegations levelled against the Government for providing continued impunity for wartime violations, land-grabbing in areas where Tamils live, and growing militarisation. “Under the guise of development projects, Government-driven Sinhalese Buddhist settlements are growing in traditionally Tamil areas with the intent of changing the demography and denying the Tamil people access to their lands. Several government authorities including the Mahaweli Authority, the Archaeology Department, the Forest Department, and the Wildlife Conservation Department are deployed in this initiative,” the letter had further observed.  The letter had stated that 617 acres of land at Vadduvakal, Mullivaikkal East, and Mullaitivu, belonging to local people, are to be acquired to expand the Vadduvakal Gotabaya Naval Base, according to letters sent by the Survey Department. Also, another 44 acres of land at Kokkilai East, Mullaitivu, belonging to the public, were acquired by Lanka Mineral Sands Ltd., an arm of the Government, despite protests by the people. Furthermore, the Tamil political parties had also highlighted concerns about the tasks carried out by the Archaeological Task Force, appointed by the President last year. “In March 2021, military personnel and Archaeology Department officers jointly attempted to take over a Tamil historical site called Nilavarai Well, situated within the administrative area of the Valikamam East Pradeshiya Sabha (PS) and install some Buddhist monuments. This move was thwarted by protests from area locals and the PS Chairman Nirosh Thiyagaraja. This issue was inquired at the Atchuvely Police Station and Thiyagaraja was grilled for four hours and later brought to court by the government authorities on the allegation that he caused an obstruction to public servants in the performance of their duties. Later, he was released on bail,” the letter had alleged. Another issue raised in the letter was recent appointments of ex-military officers to the Office on Missing Persons (OMP). The letter had been signed by the TPA, the Tamil Eelam Liberation Organisation (TELO), the Democratic People’s Liberation Front (DPLF), the Eelam People’s Revolutionary Liberation Front (EPRLF), the Tamil National Party (TTK), and Illankai Tamil Arasu Kadchi (ITAK) MP S. Noharathalingam.

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