• President to thank Japan for support, LRT cancelled by GR to be discussed
• RW to meet Singapore Premier and other ministers on the way to Japan
• IMF expects debt restructuring process to conclude before this September
• ‘Prophet’ Jerome’s saga added burden on Govt.; no tax file, IRD tells RW 
• Tamil parties say no more talking, demand action and holding of PC Polls
• Namal denies reports; says MR will return to office only by people’s choice
• Govt. facing numbers game over motion to remove PUCSL Chair; SLPP split
• Group of SLPP seniors complain over ‘unfair’ treatment, speaks with MR
• SJB declares Sajith as party’s Prez candidate, senior members defect to UNP
• Champika to launch new political party – United Republican Front – tomorrow

President Ranil Wickremesinghe is scheduled to visit Singapore and Japan this week in what seem like further attempts to continue strengthening the country’s foreign relations. He is scheduled to leave the country tomorrow (22).

During the visits, the President is expected to meet the Prime Ministers of Singapore and Japan, along with other relevant ministers in Japan.

It is learnt that Japan, which played an integral role in securing International Monetary Fund (IMF) support for Sri Lanka, will be personally thanked by the President while extending an invitation for the Japanese Government to once again re-engage with the country’s economy through new investments.

Several projects, including the Light Rail Transit (LRT) project – which faced much controversy following the Gotabaya Rajapaksa (GR) administration unilaterally cancelling it – are expected to be on the agenda of discussions.

It is also learnt that President Wickremesinghe will be addressing the Nikkei Forum, where he will be outlining his visions for the future of Asia in the changing landscape of global geopolitics.

Meanwhile, the Government is moving forward with work related to the debt restructuring programme while the IMF has stated that it expects Sri Lanka to complete the process by the first review of the IMF’s $ 3 billion Extended Fund Facility (EFF) programme, which is scheduled for September-October. 

“The authorities are making good faith negotiations with all the creditors. The negotiations are going quite well. In terms of a timeline, it’s expected that the restructuring exercise will be completed by the first review of the programme, which is in September-October,” IMF Asia Pacific Department Director Krishna Srinivasan has stated.

Sri Lanka is seeking a $ 17 billion debt reduction from its creditors through the restructuring process, with $ 7 billion out of this amount to be received from multilateral agencies like the IMF, World Bank, and Asian Development Bank (ADB).

Also, Conservative member of the UK Parliament Dr. Matthew Offord had recently moved a motion on the economic situation of Sri Lanka and how the UK could assist proactively.

“We are fortunate that the UK is already heavily involved in, and a large contributor to, many of the organisations assisting in Sri Lanka, such as the UN Central Emergency Response Fund and the World Bank. As a permanent member of the Paris Club, the UK will be heavily involved in the debt restructuring process. I hope the UK can support an early agreement on bilateral restructuring, which would release resources to revive the Sri Lankan economy,” he said.

“The UK must play a constructive role on the Executive Board of the International Monetary Fund during the full implementation of the Extended Fund Facility, particularly during the biannual reviews,” he said.

The ongoing work of the Government was reflected on several occasions last week when President Wickremesinghe explained that the Government could look at addressing the demands of trade unions on payments and salaries only after September once the debt restructuring process was finalised and the country was no longer declared a bankrupt nation. This was made clear to university lecturers who met with the President last week to demand payments.

The Government is also focused on meeting the revenue targets set by the IMF and State Finance Minister Ranjith Siyambalapitiya has stated that the Government is implementing a programme to expand the tax base instead of repeatedly increasing tax levies.

He had told the media that the Government would take the necessary steps to gradually reduce the tax percentages in the future.

Meanwhile, the Institute for Health Policy’s (IHP) consumer confidence indices have shown a significant improvement in April by recording the highest levels seen since the end of 2021. 

Although all three indices continue to remain at pessimistic levels, the recent IMF agreement seems to have been associated with positive improvements in consumer confidence. 

The Index of Consumer Sentiment (ICS), the broadest measure of the public’s view on their personal economic status and the national economy, increased by nine points to 26 points, according to reports.  

Domestic debt

Meanwhile, the IMF on Monday (15) had told the media that it was encouraging Sri Lanka to finalise its strategy on domestic debt, thereby resolving the uncertainty and resultant upward pressure on interest rates.

“We have taken note of this uncertainty that has elevated interest rates in the country. We are encouraging the authorities to come up with a strategy soon so that this uncertainty can be resolved, the interest rates can come down, and this can be part of a virtuous cycle to restore stability,” IMF Senior Mission Chief for Sri Lanka Peter Breuer had told the media along with Srinivasan.

Breuer and Srinivasan had reportedly stressed that whilst the IMF had determined that Sri Lanka’s debt level was unsustainable, it did not get involved in restructuring. “Our role is to ensure that whatever debt restructuring strategy the authorities decide on is consistent with the IMF programme,” Breuer had said.

“We don’t have any particular view on how the burden should be distributed across creditors, whether they’re external or domestic. Having said that, we do have a keen interest to ensure that the domestic economy and financial stability of the financial system continue to work and are stable. So those are the aspects that we will focus on in the discussion,” Breuer had further noted.

Meanwhile, Opposition Parliamentarian Dr. Harsha de Silva had noted that Sri Lanka’s Domestic Debt Optimisation (DDO) could cause capital adequacy issues for the local banks as a higher haircut on Government securities may reduce banks’ asset value.

The MP had told the media last week that a higher haircut of local debt through DDO could lead to a Restructuring Laffer Curve where net debt relief to the Government will start to reduce after a certain haircut percentage, turning the debt relief to debt cost.

According to the IMF, the Restructuring Laffer Curve shows that net debt relief accrued to the sovereign increases with the haircut but will start to reduce after a certain haircut value.

De Silva had noted that DDO was not a maximisation or a minimisation but a balance between them where it would not be fair for one party while it was fair for the other party. 

He had further noted that whatever the mode of haircut on Government securities, whether it was on the face value, coupon, or Net Present Value (NPV), after a certain point in the Laffer curve, shareholder equity shortfall on banks would increase.

He had explained that when the haircut was increased to a certain point, in the Laffer curve, the net debt relief to the Government would grow to a certain point and then start to decrease, leading to a debt cost to the Government.

“When considering assets in the banks such as investments in Government securities and other credit loans given to customers or even loans to the Government, when there is a haircut, the value of such assets will reduce, but the liabilities such as bank deposits will remain and not reduce and will have to be given back to the customers. Hence, the impact will be on the shareholder equity,” he had added. 

However, Central Bank of Sri Lanka (CBSL) Governor Dr. Nandalal Weerasinghe had recently stated that the CBSL had assured financial system stability as it had always been maintaining and had ensured that any kind of DDO would safeguard banking system stability as well as the protection of the public deposits.

The Prophet’s saga

While the country continues to witness much action on the political and economic fronts, the top echelons of the Government were given a rude awakening this past week with the recent comments made by the self-anointed ‘Prophet,’ Jerome Fernando.

In a video clip of Fernando’s sermon, he has been recorded commenting on Buddhism, Islam, and Hinduism. The comments had enraged many social media users, who have accused him of hate speech.

Last week President Wickremesinghe ordered that an investigation be carried out into Fernando. Shortly after news broke of the pending investigation, Fernando had left the country, being scheduled to attend events in both Singapore and Malaysia. Fernando later announced via social media that he would be returning to the country today (21).

However, the investigation, it is learnt, has opened the floodgates, with a host of other individuals filing complaints and cases against the self-proclaimed Prophet. It is now learnt that during a meeting last week the President had been informed by the Inland Revenue Department (IRD) that there was in fact no tax file belonging to Fernando.

While questions are now arising over the wealth of Fernando, who has been photographed wearing watches estimated to be worth hundreds of millions of rupees, it appears as though the Government will not be investigating Fernando’s financial dealings. 

In fact, more questions have been raised as to how the land on which his church has been built came to be utilised for this purpose. According to well-placed sources, the land was originally given out to another individual as part of a Board of Investment (BOI) project pre-2015.

Fernando, who announced he would be returning to Sri Lanka today, is expected to be summoned to the Criminal Investigation Department (CID) to record a statement over his recent comments.

With threats now being levelled against Fernando and his organisation, it is expected that Police security will be deployed near his church which is meeting today.

PC Polls

The Tamil political parties that met with President Wickremesinghe on Monday (15) at 5.30 p.m. had demanded the holding of the delayed Provincial Council (PC) Elections.

The focus of the discussion had been on devolution of power. The issues of lands, the proposed Anti-Terrorism Act, and the Truth and Reconciliation Commission were discussed at the previous meeting on 12 May.

The Tamil National Alliance (TNA) had noted during the discussion that there was no meaning in holding further discussions on resolving the issues faced by the people in the north and east without holding the delayed Provincial Council Elections.

TNA MP M.A. Sumanthiran said after the meeting that the Tamil parties had pointed out the need for a new constitution, which they noted had the consent of all parties. The Tamil parties had stated that there was already a draft constitution that could be taken forward.

“We have had several rounds of discussions. There’s no point in continuing in this manner. There now needs to be some concrete action to show there’s a sincere effort to address the issues,” Sumanthiran said.

Former Chief Minister of the Northern Province C.V. Wigneswaran had, among other things, proposed an interim administrative arrangement at the provincial level until elections are held. While the President suggested appointing a committee to study the proposal, the TNA squarely rejected the idea, its MPs said.

Numbers game

The Government meanwhile is focused on securing the required numbers in Parliament to remove Public Utilities Commission of Sri Lanka (PUCSL) Chairman Janaka Ratnayake, who has made many controversial public comments with regard to the country’s power and energy sector.

Power and Energy Minister Kanchana Wijesekera had presented a motion to Parliament pushing for the removal of the PUCSL Chairman and the parliamentary party leaders had on 11 May decided to debate the motion in the House on Wednesday (24). 

However, the debate and vote on the motion has posed a problem to the Government side due to the numbers game.

The main Opposition Samagi Jana Balawegaya (SJB) last week announced that the party would not vote in favour of the motion to remove Ratnayake since he had always stood by the consumers.

The ruling Sri Lanka Podujana Peramuna (SLPP) meanwhile is split on the party’s stance at the vote. SLPP General Secretary Sagara Kariyawasam has stated that the party will support the motion to remove the PUCSL Chair, while another group of SLPP MPs has objected to such a move.

A group of SLPP MPs had met with Party Leader Mahinda Rajapaksa (MR) as well as MP Namal Rajapaksa and informed that they were unable to vote against Ratnayake since the public had commended his stance. They had pointed out that Ratnayake had objected to the electricity tariff increase and had continuously been exposing the wrong decisions taken by the Government in relation to electricity tariffs.

It is learnt that while the Government currently holds around 120 seats in the House, several MPs are currently overseas. This has resulted in the Government cutting quite close to the 113 votes required to pass the motion to remove Ratnayake in the House.

The Chief Government Whip’s office has already taken measures to request the Government side MPs who are currently overseas to return to the country while also issuing notices underlined thrice (an indication of compulsory action) for all Government MPs to be in Parliament during the vote on the 24th.

The Government has also assigned Nimal Lanza to discuss with the minority political parties in Parliament to get their support for the motion. Minister Nimal Siripala de Silva has been assigned the task of getting the support of Sri Lanka Freedom Party (SLFP) MPs.

Disgruntled SLPPers

Meanwhile, a group of senior SLPP MPs has recently expressed their displeasure at what they have termed as ‘unfair treatment’ faced by them.

These sentiments were made public by former Minister, SLPP MP S.M. Chandrasena. He told the media last week at the SLPP Headquarters that despite the many hardships faced by a group of party seniors, they had opted to remain silent due to the greater good of the people.

He had noted that these seniors, who were district leaders of the party and had worked hard for the SLPP to obtain 6.9 million votes at the last elections and ensure a two-thirds majority in Parliament, were disgruntled due to the unfair treatment faced by them.

PM issue

The talk of reappointing former President MR as prime minister has caused yet another split in the SLPP.

The SLPP has addressed rumours being spread on MR’s reappointment as premier, with SLPP General Secretary Sagara Kariyawasam telling the media last week that no requests have been made to President Wickremesinghe to appoint MR as prime minister.

Refuting various reports on the matter, Kariyawasam had further stated that reports spreading about such a move were false. “Baseless news is being spread that there is a plan to bring in Mahinda Rajapaksa as the new prime minister and hence heavy security is in place in Colombo. Some politically-bankrupt people are spreading this news to gain cheap publicity,” he had said.

Meanwhile, SJB MP Mano Ganesan had said there was no issue in reappointing former President MR as the prime minister. Ganesan told the media that regardless of the appointments for the post, the President needed to take immediate action to dissolve Parliament and hold a Parliamentary Election.

“There is a huge rave in the country that Rajapaksa is requesting the premier post. We have no problem in appointing him as the premier, but dissolve Parliament immediately and hold an election for us. There is no issue; we will form a government. Then, you have the presidency and we have a government. The country can then know with whom the public mandate lies,” Ganesan said.

However, MR’s eldest son, MP Namal Rajapaksa, has said that MR had relinquished his post as Prime Minister due to the people’s request at the time and that he would once again assume office as premier only by the choice of the people.

NPP, SJB to gain

One of the discussions held about appointing a new prime minister, especially MR or another Rajapaksa to the post, resulted in several SLPP seniors pointing out that such a move would only provide a new platform for the Janatha Vimukthi Peramuna (JVP)-led National People’s Power (NPP) and SJB to relaunch a campaign targeting the public.

It is in such a backdrop that MR loyalist, MP Johnston Fernando had last week stated that there was no decision to push MR for the post of prime minister. He had further stated that there was no move for SLPP MPs to sit in the Opposition after they had supported the incumbent President to assume office.

Fernando had observed that the Government should look at getting SJB MPs to join the Government to further strengthen the Government.

Governors’ issue

The Governors of the Northern, Eastern, and Northwestern Provinces were removed by the President on Monday (15).

New Governors – Lakshman Yapa Abeywardena for the Northwestern Province, Senthil Thondaman for the Eastern Province, and P.S.M. Charles for the Northern Province – were appointed on Tuesday (16). It is also learnt that United National Party (UNP) member Navin Dissanayake is tipped to be appointed as Governor of the Sabaragamuwa Province.

The sacked Governors were Jeevan Thiagarajah (Northern Province), Anuradha Yahampath (Eastern Province), and Admiral of the Fleet Wasantha Karannagoda (Northwestern Province).

Meanwhile, amidst the controversy surrounding the decision of the Governors to not tender their resignation following a request made to that effect by the President’s Office, SLPP General Secretary Kariyawasam had said earlier that the President was vested with the powers to remove the Governors.

“There are various sentiments being publicised about governors. It is the President who has the powers to appoint and remove governors according to the country’s Constitution. Although we supported the President to assume office and govern the country, we had not attached any conditions on whom to appoint or remove. The President therefore has the powers to remove or appoint governors,” he had told a news conference last week.

Nevertheless, it is learnt that there has been a request from a section of the SLPP to the President not to replace five provincial Governors who had been appointed by former President GR on the recommendation of SLPP National Organiser Basil Rajapaksa.

Also, plans to remove the Western Province Governor had reportedly been put on hold following a request made by GR.

However, prior to the removal of three provincial Governors, the four Governors who had refused to tender their resignations had decided to legally challenge the President on the request for them to resign from their offices. One of the Governors had reportedly ruled out quitting when notified to do so by an Additional Secretary at the Presidential Secretariat.

Following legal consultations, the President had decided to use his Executive powers as the appointing authority to appoint new governors. However, the Governors who had refused to resign were of the view that they could not be removed due to constitutional provisions.

They had noted that Clause 154(b) of the Constitution states that even as an appointee by the president, a governor can be removed only by a resolution adopted by the respective Provincial Council on proven charges of corruption, misconduct, abuse of powers, or bribery.

They have reportedly obtained the opinion in this regard from former Chief Justice Sarath N. Silva, among other legal experts.

The President’s Office meanwhile had consulted the Attorney General and other legal experts on the matter as well. The President had been informed that even the governors cannot act as per their discretion and should abide by the presidential orders as per Clause 154f(2) of the Constitution.

Presidential Secretariat sources said the decision to remove the Governors would not be reversed for any reason.

Yahampath, who was appointed as the Eastern Province Governor by then President GR, had told the media that she had not received any notification from the Presidential Secretariat in writing. However, she said that she had received a telephone call from the Presidential Secretariat asking her to step down. 

In response to a query as to whether they would resign as per the Presidential Secretariat’s directive, she had stated: “I initially thought that I should resign, especially because the Governors should work cordially with the President and the Presidential Secretariat, but there should also be a unanimous decision as some other Governors are also linked to this matter. We cannot make decisions regarding these matters alone. Therefore, we decided that we would continue to hold office.”

She had further noted that it would cause a misconception that they (Governors) had committed some wrongdoing if they resigned. “If we resign, it would seem as if we have accepted some allegation. We are confident that we have done nothing wrong. A misunderstanding might have caused this matter,” Yahampath had added prior to her removal from office.

Sajith to the fore

Meanwhile, the Working Committee of the SJB last week unanimously decided to name Party Leader Sajith Premadasa as the party’s presidential candidate at the next Presidential Election. 

The decision was taken at a Working Committee meeting held on Monday (15) evening.

Premadasa also stated on Monday that the Opposition would provide its support for the Government’s proposal to hold the Presidential Elections prior to the specified time frame in 2024.

Premadasa had however stated that attempts by the Government to hold the Presidential Elections at its own convenience and according to time frames convenient to it was a violation of democracy.

He had further pointed out that it was wrong to plan the Presidential Elections based on the directives of the President or those supporting him.

Premadasa had also assured that the Opposition would extend its support to bring in the necessary regulations to hold the Presidential Elections soon. 

Meanwhile, Justice Minister President’s Counsel Dr. Wijeyadasa Rajapakshe last week said that being a President who was elected by the Parliament, incumbent President Wickremesinghe could seek a Supreme Court interpretation regarding the possibility of calling Presidential Elections before the stipulated date, as he is not capable of calling an early election as per the provisions in the Constitution.

Referring to reports that President Wickremesinghe was looking into the possibility of amending the Constitution in order to call for an early Presidential Election, Rajapakshe had also said that in his capacity as the Minister in charge of constitutional reforms, he was not aware of such a decision being taken by the President.

SJB defections

While the SJB declared Party Leader Premadasa as the party’s presidential candidate, an SJB Parliamentarian and a former MP in the SJB expressed their displeasure at the party leadership while expressing confidence in working with the UNP.

SJB MP Vadivel Suresh has stated that he intended to continue his future political activities with Minister Harin Fernando. He had expressed these views while speaking at a public gathering in Badulla along with Fernando.

Meanwhile, former UNP Minister P. Harrison, who contested the last General Election under the SJB and lost, had also said that he would be resigning from his position of Vice Chairman of the SJB and also resigning from all other positions held by him in the party.

Harrison, addressing the media last week, was critical of Opposition Leader Premadasa for not accepting the challenge of establishing a government during the economic crisis.

“There was a time when a politician could not come in public and hold a meeting, but Wickremesinghe has changed everything and brought about stability,” he had stated, adding, “Around 20 senior SJBers will join the President shortly.”

Meanwhile, when questioned by the media last week on whether he had plans to leave the party and join Wickremesinghe, SJB National Organiser Tissa Attanayake had said that he had no intention of joining Wickremesinghe since he was now the Leader of the SLPP.

Patali’s new party

A new political party under the name ‘United Republican Front’ is to be launched tomorrow (22), as stated by Opposition MP Patali Champika Ranawaka.

He had further stated that the new political party would be launched to coincide with Sri Lanka’s Republic Day, marked on 22 May. 

Ranawaka had stated that the country had become bankrupt due to the actions of old political parties and an old political system and it was therefore essential to provide a platform for a new group.

He had expressed hope that the public would support the new political party.