• China’s PM and Exim and Development Banks meet IMF and World Bank Chiefs
• Both IMF and World Bank Chiefs encouraged by China’s debt restructuring talk
• Heads of India, US, Japan, Australia and UK missions meet RW, discuss solutions
• President to convene all party meeting on Tuesday, talks on way forward, solutions
• RW meets Basil, no pressure on Cabinet appointments talks about SLPP defectors
• New Cabinet appointment further delayed, objections from ministers over portfolios
• Prasanna organises party for SLPP MPs at Waters Edge, many MPs do not attend 
• Rajapaksas invited and special table assigned; Mahinda, Basil and Namal a no show 
• Gotabaya, Chamal and Shasheendra attend the party; Gotabaya walked to every table
• Clashes in SLFP intensify; Executive Council endorses CC action against dissident MPs

President Ranil Wickremesinghe and his Government last week managed to get not only its 2023 Budget passed in Parliament but also received Parliament approval for three pieces of legislation related to new taxes aimed at generating revenue for the State. 

However, one of the main components of Sri Lanka’s economic recovery – the International Monetary Fund (IMF) assistance package – has now been pushed towards 2023 with the Government hopeful of reaching an agreement with the Fund around March 2023.

It is learnt that Wickremesinghe had recently told two of his loyalists – United National Party (UNP) Chairman MP Vajira Abeywardena and President’s Parliamentary Affairs Secretary Ashu Marasinghe – that the country did not have an economy at the moment to plan and reform. 

The President had made this statement when Abeywardena and Marasinghe had asked him what his plan was for the country’s economy and how the reforms process would be carried out. Wickremesinghe had gone on to express these sentiments on several occasions, including at an Economic Forum last week, and even stated in Parliament that there was no option but to take “unpopular decisions”.

Economic progress is vital as the Government announced last week that a further electricity tariff hike was required. According to Power and Energy Minister Kanchana Wijesekera, Sri Lankan users are paying well below average for electricity consumption and he warned that unless tariffs were revised, the country could face prolonged power cuts. This forewarning opened up the difficulties that await the people and the business community next year.

However, the Minister has not stated how the Government plans to cut the wastage, high expenditure on areas other than power generation, inefficiencies, etc. It is no secret that the public has been continuously burdened for failures of successive governments as well as inefficiencies of some key State-Owned Enterprises (SOEs).

Despite the Wickremesinghe Government’s claim that its focus will be on renewable energy, certain elements in the CEB have so far stood firm in their opposition to the cleaner and cheaper energy alternative. During the President’s speech at the Economic Summit, he highlighted that renewable energy was the only way the country could solve its power crisis. However, whether the Government possesses the will to break the monopoly held by the CEB over the power sector and branch out into renewable energy remains to be seen.

Nevertheless, the main accusation for the ongoing economic crisis continues to be directed at the Rajapaksa regime, especially the previous Mahinda Rajapaksa regime, over its misgovernance and reckless undertaking of white elephant projects on high-interest loans from Chinese financial institutions. The political fallout of the economic crisis is greatly felt by the incumbent members of Parliament – especially those representing the Rajapaksa-led Sri Lanka Podujana Peramuna (SLPP).

However, the Wickremesinghe Government also seems to remain blind to the clarion call of the people for accountability for the ongoing economic crisis as well as political and economic reforms to ensure the country does not face a similar fate in the future. 

While Sri Lanka continues with its engagement with creditors to finalise a programme for Sri Lanka’s debt restructuring, foreign media last week reported that the Paris Club creditor nations had proposed a 10-year moratorium on Sri Lankan debt and another 15 years of debt restructuring as a formula to resolve the current financial crisis in the island nation. Hindustan Times reported that while the Paris Club was yet to formally reach out to India and China – two of Sri Lanka’s biggest creditors, with Beijing holding nearly 50% of external debt – Colombo on its part was yet to initiate a formal dialogue with the Xi Jinping regime.

While Sri Lanka owes some $ 800 million in structured debt to India, the Modi Government has provided emergency aid to the tune of $ 4 billion to the island nation to tide over its economic crisis. China, Chinese Exim, and China Development Bank hold billions of US Dollar debt with Sri Lanka, with the total external debt of the island nation touching nearly $ 40 billion.

China’s move

A Chinese Foreign Ministry spokesperson told the media on Tuesday (6) that Beijing was hopeful that the multilateral agencies would work closely with the Chinese authorities to help ease Sri Lanka’s ongoing economic burdens. While not mentioning debt restructuring, the open call for support for Sri Lanka by China is to date the loudest show of support from the second largest economy in the world.

These comments came ahead of a planned visit last week by IMF Managing Director Kristalina Georgieva. Accordingly, talks were expected to focus on China’s role in debt restructuring for several developing nations including Sri Lanka.

Meanwhile, the two main Chinese banks that are in the forefront of Sri Lanka’s debt restructuring talks – China Exim Bank and China Development Bank – both held discussions with World Bank Group President David Malpass and IMF’s Georgieva.

“Presidents of China Exim Bank and China Development Bank co-hosted a working dinner on Thu for visiting President of World Bank Group & Managing Director of IMF. They had a positive discussion on int'l economic situation and the debt of developing countries including #SriLanka,” the Chinese Embassy in Colombo tweeted. 

The embassy further stated that all parties had expressed their willingness to give their fullest support to their respective advantages in the future and continue to strengthen coordination and cooperation in related fields on international development and debt issues of developing countries.

Malpass stated after the meeting that it was a positive one. “Positive talks w/ @IMFNews, China Exim Bank & China Development Bank heads on debt crises in a growing number of developing countries. We discussed common goals of growth, trade & investment & agreed to tackle barriers in sovereign debt reduction toward long-term sustainability,” he tweeted.

Meanwhile, Chinese Premier Li Keqiang on Thursday (8) had met with IMF Managing Director Kristalina Georgieva in Huangshan City, Anhui Province, pledging to strengthen macro-policy coordination, according to Xinhua.

Li had noted at the meeting that China had kept a sound cooperative relationship with the IMF for many years and that China would continue to strengthen macro-policy coordination with all parties, including the IMF, to tackle debt, climate change, and other global challenges and make greater contributions to promoting global economic recovery and sustainable development.

Georgieva, who was in China for the seventh ‘1+6’ Roundtable, had reportedly said that the IMF placed great importance on relations with China and commended the Chinese side for recalibrating its Covid response policies, which she believes will help boost economic growth.

Following the meetings Georgieva had said that the talks with the Chinese were very positive.

The Chinese Prime Minister also met with Malpass on Thursday as well.

More discussions

President Wickremesinghe was last week seen driving forward his economic recovery plan. On Monday (5), speaking at the opening of the Sri Lanka Economic Summit organised by the Ceylon Chamber of Commerce (CCC), the President informed the audience that he had no plan to rebuild the existing economy, but was rather focused on building a new economy that would ensure the country would not fall back into old practices that led to the crisis in the first place.

In a frankly-worded speech, the President stressed that the country as a whole would have to take tough decisions which would benefit the economy and the citizens in the long run. While the speech was not an early Christmas present to the business community, it highlighted that the President had an end goal in mind which would not just be a return to status quo. 

Following the summit, the President took the Government’s economic recovery plan directly to the multilateral financial organisations. 

In closed-door roundtable discussions with the IMF, World Bank (WB), Asian Development Bank (ADB), and the Asian Infrastructure Investment Bank (AIIB), the President led the talks focused on the Government’s rebuilding efforts. These discussions happened to coincide with the World Bank’s announcement that Sri Lanka had been approved to be eligible for concessionary loans from the International Development Association (IDA). Traditionally earmarked for low-income countries, Sri Lanka was no longer eligible for them due to the country being classified as middle income. However, the Government’s policy of pursuing a ‘reverse graduation’ will now entitle the country to access these loans. 

During the roundtable discussion, the President and his team briefed the invitees in detail on the measures being undertaken by the Government to ensure economic recovery. Questions were raised on the Government’s ability to secure the support of both India and China in the debt restructuring efforts. However, the President’s assurances that both countries were supportive of Sri Lanka’s efforts were backed-up by public displays of support by both countries’ diplomatic arms. 

International support

Separately India also displayed a show of support for Sri Lanka’s economic recovery efforts when the Indian High Commissioner to Sri Lanka visited the President following the roundtable discussions with the donor agencies. 

Interestingly, the Indian High Commissioner was not alone, but was in fact joined by several key foreign mission heads in Colombo – the US Ambassador, the British High Commissioner, the Japanese Ambassador, and the Australian High Commissioner.

In a public display of support, the five diplomats met the President in the VIP waiting room of the Taj Samudra following the discussions. The President had taken the opportunity to brief the diplomats on the outcomes of the talks with the donors, while also stressing that an equitable solution would be proposed to all donor countries with regard to debt restructuring. 

As the country focuses on securing the IMF agreement by next year, the public displays of support by both India and China will certainly prove to be invaluable.

Meeting the parties

Meanwhile, in a bid to assure the international community that the Government is committed to addressing the issue of political reforms as well as resolve the longstanding issues of the Tamil people, President Wickremesinghe fixed a meeting of all parties for Tuesday (13).

Focus on new Cabinet

With the 2023 Budget matters coming to an end with the third reading vote last Thursday, focus in political circles has now turned towards the appointment of the proposed new Cabinet of Ministers.

President Wickremesinghe is now out of excuses to give the ruling SLPP for further delaying the appointment of the new Cabinet. 

Loyalists of Basil Rajapaksa called on him last week to speak to Wickremesinghe and discuss the composition of the new Cabinet. The SLPPers had also urged Basil to make yet another push to ensure that all names in the list submitted by Basil several months back would be included in the Cabinet. Wickremesinghe however has reiterated that he cannot appoint four members in Basil’s list.

It is learnt that between 12 to 14 new Cabinet ministers will be appointed – 10 to 12 from the SLPP, one from the Sri Lanka Freedom Party (SLFP), and one from the United National Party (UNP).

Meanwhile, it is learnt that several incumbent Cabinet ministers are not too pleased with changes to their current portfolios. One minister had proposed to a senior member of the President’s staff that the ministers who hold several portfolios should be given the choice of deciding which portfolio they prefer to be divest for newcomers to the Cabinet.

Another senior minister had told several of his confidants that he will not agree to being replaced by a member of the Opposition who is tipped to join the Government. The minister had further claimed that he would leave the Government and join the Opposition in the event he was removed from his current portfolio.

Basil’s endorsement

However, Basil last week commended President Wickremesinghe, saying that he had fulfilled his primary duty – which was to enable everyone, including the members of the SLPP, to move about with freedom in public and engage in politics.

“He fulfilled his primary duty. He gave us the opportunity to take to the streets and engage in politics. Our opinion is that all parties, be they from the Government or the Opposition, should be allowed to engage in politics freely. There are economic and other problems in the country; we hope that the President will resolve them too,” Basil said.

“A total of 6.9 million people voted and brought former President Gotabaya Rajapaksa to power, but he resigned. Then, under the Constitution, a president should have been elected by the Parliament. At that time, we decided to choose the most suitable person. I now feel that that choice was the right one,” he added.

Basil made this statement when he attended the celebration held at the SLPP Headquarters in Nelum Mawatha, Battaramulla, to mark the fourth anniversary of the SLPP Media Centre. SLPP MPs – including State Minister Lohan Ratwatte, SLPP General Secretary Sagara Kariyawasam, Rohitha Abeygunawardena, and Prof. Ranjith Bandara – also attended the event.

Basil also spoke of his involvement in active politics in the country. “I’m not in governance anymore. Governance [for me] has been banned by the 21st Amendment, so no, I’m not in governance, but I am in politics,” he noted.

RW’s advice

President Wickremesinghe meanwhile had given some advice to several SLPP MPs during a recent get-together of ruling party parliamentarians that was organised by Prime Minister Dinesh Gunawardena at Temple Trees. MPs and their spouses had been invited for the dinner.

The President had also attended the event and had spent time meeting with the SLPP MPs and their spouses. Given that no liquor was served at the dinner, a senior Government minister had organised a few bottles of liquor in one of his vehicles outside the hall for MPs who wished to have a ‘shot’.

Groups of MPs had started to make their way towards the Minister’s vehicle for libations. Seeing the movement of the MPs, Wickremesinghe had also followed them.

While engaged in a lighthearted conversation with the SLPP MPs, he (Wickremesinghe) had advised the MPs that the best way for them to overcome the current challenges faced by them in their constituencies was for them to speak the truth. The President had noted that the people needed to know the truth and that trying to sugarcoat the situation and covering things up had resulted in the people being unable to bear the difficulties faced by them at present. 

Wickremesinghe however had been elusive about the matter of holding elections next year. Instead, the President had told the SLPPers to focus on going to the electorates and re-forming their electoral committees.

The SLPP is also looking at gearing up for polls, with Basil also stating last week that it was time to hold elections and that the SLPP was ready for it. He further denied that the SLPP has been divided. “No, our party hasn’t fragmented, not the way this cake was cut,” he said, adding, “There may be some [dissenters], but we are with the people.”

In a bid to send out a message of the SLPP’s stance on the impending Local Government Elections, Basil last week convened meetings with the party’s members in the Local Government bodies. The first meeting was with the Local Government members of the Kurunegala District.

The clear message given to the party’s Local Government members by Basil was that they (the SLPPers) had to be prepared to face an election while there still remained uncertainties on whether Local Government Polls would be held or not.  

The four divisions

Despite Basil’s claim that the SLPP is still intact and prepared to face an election, a look at the composition of MPs in the House at present indicates at least four groups of SLPP MPs, with three of these groups seated in opposition after declaring independence in the Chamber. 

One group that sits independently is currently exploring paths of rebuilding its nationalist vote base after seeing an erosion following Gotabaya’s resignation following mass protests while a second group of independent SLPPers are supportive of President Wickremesinghe and his plan. A third group of SLPP independents have rallied around MPs G.L. Peiris and Dullas Alahapperuma in the Opposition. Then there is also a fourth group that is yet independent, but has responded somewhat positively to overtures by the main Opposition SJB to join its fold.

Looking at the remaining SLPP MPs in the Government side, one can witness three factions among these members as well. One of the groups is supportive of Basil while another is supportive of Mahinda Rajapaksa. However, there is also a group that remains independent and does not belong to either the Basil or Mahinda camp.

Delaying polls?

While political parties continue to engage in political posturing in preparation to face Local Government Polls, the Election Commission last week stated that the holding of Local Government Elections next year will be announced at the end of this month.

The Government, which has given an assurance to a group of SLPPers that elections will not be held next year, had already put in place several mechanisms to delay the holding of Local Government Elections. These actions range from the proposal to amend the existing legislation on Local Government Elections to appointing a delimitation committee for local governments headed by former Election Commissioner Mahinda Deshapriya.

Another manoeuvre pushed by the Government was to propose the setting up of a new Gam Sabha system in place of the local governments.

However, the parliamentary Opposition last week claimed that the Government was once again making a fresh attempt at delaying Local Government Polls. This time around, the Opposition stated that the Government was pushing for the completion of the Constitutional Council in order to make fresh appointments to the independent commissions, including the Election Commission. In the event new members are to be appointed to the Election Commission, the new members of the Commission will seek more time to prepare for the polls.

RW-Basil meet

Amidst all these developments, President Wickremesinghe had met Basil and a few others for a discussion on the latest political developments. Issues ranging from the impending appointments to the new cabinet to Local Government Elections and the UNP’s position on accepting SLPP defectors to its fold had been discussed at the meeting.

It is learnt that while Basil had not placed much pressure on the new appointments to the Cabinet, he had requested Wickremesinghe to ensure that his actions would not result in a further split of the SLPP. Basil had also requested Wickremesinghe not to grant positions in the UNP to SLPP defectors. However, it is learnt that Wickremesinghe had remained non-committal to this request. 

Parties galore

Despite the many challenges faced by the country and its people, the governing party has been in a jolly mood, with news of party after party being reported. The parties for the SLPP MPs started with the dinner organised by Prime Minister Gunawardena at Temple Trees recently.

A second get-together of SLPP MPs and their spouses was organised last week and held at Waters Edge in Battaramulla by Minister Prasanna Ranatunga. The gathering was initially planned in a star-class hotel in Colombo but was later changed to the Battaramulla venue.

Ranatunga had also taken steps to invite members of the Rajapaksa family engaged in politics and had reserved a separate table for them. Former President Gotabaya Rajapaksa, former Minister Chamal Rajapaksa, and Shasheendra Rajapaksa had attended the party, while the other Rajapaksas – Mahinda, Basil, and Namal Rajapksa – had not attended. President Wickremesinghe had also been allotted a seat at the table reserved for the Rajapaksas.

Minister Susil Premajayantha had been assigned to supply liquor to the VVIP table.

It had also been noted that Gotabaya had walked from table to table at the event to meet with the SLPPers and engaged in a lighthearted chat with them.

The party had also seen SLPP MPs singing and dancing. The first song at the event had been sung by Mahindananda Aluthgamage.

Wickremesinghe however had left the party early since he had another event – the celebrations organised to mark former Chief Justice Ashoka de Silva completing 50 years at the bar – to attend. The party also resulted in the main Opposition SJB and the Government side exchanging words. 

SJB MP Thushara Indunil questioned how the Government side was engaged in lavish expenditure on parties treating its MPs in the midst of an economic crisis where many families are unable to fend for themselves.

“There was a party at Temple Trees last week; now there is a party at Waters Edge. People are unable to feed themselves and children are suffering from malnutrition. Who is giving these monies for the Government MPs to hold parties in this manner? This needs to be looked at,” Indunil questioned in the House.

Angered by the SJB MP’s statement, State Minister Piyal Nishantha responded by saying that the SJB MP should have posed the question to the House after the party concluded to find out whether State funds had been utilised and from where the funds for it had originated. Nishantha also asked the Opposition legislator to refrain from carrying out a mud-slinging campaign.

Indunil noted that it was not about mud-slinging and compared the party to Nero when Rome was on fire.

SLFP clash intensifies

The clash between the dissident SLFP MPs and the group led by Party Leader Maithripala Sirisena continues unabated, with the SLFP office bearers – currently consisting of pro-Sirisena members – reiterating the party’s decision to act against the dissident MPs.

Following the SLFP Central Committee (CC) decision to remove the dissident MPs from their posts in the party as well as suspend their party memberships, Sirisena also moved to receive the endorsement of the party’s Executive Council to the CC decision to act against the dissident MPs.

SLFP General Secretary Dayasiri Jayasekara said after the meeting of the party’s Executive Council that the CC decision was further endorsed by the council and that the action against dissident party MPs decided at the CC would be implemented without any exceptions.

Jayasekera noted that the move was in line with the party’s Constitution. It is evident that Sirisena and Co. do not want to leave any loopholes that could be beneficial to the dissidents in a court of law.

The SLFP General Secretary also claimed last week that the party accepted that the decision to support former President Gotabaya Rajapaksa at the 2019 Presidential Election was wrong. Jayasekara has further noted that three-fourths of the SLFP organisers were opposed to the SLFP supporting Gotabaya. However, he has added that the party decided to support Gotabaya following a request made by him and a few others.

Meanwhile, the letters informing of the disciplinary action initiated against the SLFP MPs who have joined the Government and accepted portfolios have been received by the MPs.

Dashing coconuts

A group of SLFP activists staged a protest in front of Bandaranaike Samadhi in Horagolla on 3 December against Party Leader Sirisena and General Secretary Jayasekara. They dashed coconuts against the two over the expulsion of Chandrika Bandaranaike Kumaratunga from the party.

Kumaratunga has also stated that she would never leave the SLFP and would remain an SLFPer until her dying day. Issuing a statement, she had pointed out that she was born and bred politically in the SLFP and had come under attack on behalf of the party and would die as a SLFPer as well.

Kumaratunga has further stated that she will engage in politics as per the Bandaranaike vision which she values, while at the same time giving guidance to any other party. The former SLFP Leader claimed that the SLFP was in a woeful state due to its present policies since its leaders had betrayed the party for opportunistic, petty gains.

Meanwhile, the SLFP dissidents have consulted legal advice to initiate action against the SLFP leadership with regard to the recent controversy over the appointment of a new general secretary to the SLFP-led United People’s Freedom Alliance (UPFA).

Minister Mahinda Amaraweera, who was recently removed by the SLFP CC from the post of UPFA General Secretary, recently threatened legal action against the SLFP leadership over the violation of the UPFA Constitution as well as calling for a meeting with alliance partners, which was deemed illegal. 

SLPP policies

Meanwhile, the SLPP defectors – the Nidahasa People’s Council led by MPs G.L. Peiris and Dullas Alahapperuma – also hit out at the SLPP’s legitimacy.

Peiris told a media conference last week that he remained the Chairman of the SLPP and that the real policies of the SLPP were with the Nidahasa group of MPs, who are currently functioning independently in Parliament. “The SLPP is following a different policy. I’m the Chairman of the Party and the proper policies are with us,” he said.

Peiris further noted that the SLPP formed the body of the current anatomy of the Government while the UNP formed the head. “This is an abnormality,” he claimed.

The Nidahasa group is currently engaged in a programme to get SLPPers at the grassroots into its fold.