• Macron and Hayashi focus on debt restructuring, express support to expedite
• Japan expresses readiness to recommence development work after debt talks
• Following discussion on connectivity with India, RW notes importance to China
• Govt. working on key development projects with India, including restarting ETCA
• MR attends Chinese event at Shangri-La Colombo, avoids all-party meet on 13A
• Basil talks 13A with SLPPers, willing to support RW but says no mandate for 13A
• Ready to implement 13A says RW; SLPP and Opposition divided on devolution
• RW asks MPs to either implement 13A fully or repeal it fully from Constitution
• TNA says power devolution and holding delayed PC Polls are one issue not two
• Udaya to present new 22A Bill to remove Police powers from 13A and Constitution
• SLPP woes increase with dissidents’ new alliance; Lanza plays role in discussions
• GR’s Private Secretary, former Basil loyalist visit new alliance office in Rajagiriya

 Sri Lanka is once again focused on developing international relations given the recent interactions President Ranil Wickremesinghe has been engaged in with global leaders.

The first was Wickremesinghe’s meeting with Indian Prime Minister Narendra Modi during his recent visit to India. The next was with French President Emmanuel Macron on Friday (28) night during the latter’s brief stay in Colombo on his return trip to France from a tour in Papua New Guinea.

However, one of the focal points in the discussions between the Sri Lankan leaders and the French and Japanese leaders who visited Sri Lanka last week was the urgent need to finalise Sri Lanka’s debt restructuring programme.

Macron became the first French President to engage with a Sri Lankan president in Sri Lanka.

While Foreign Minister Ali Sabry had welcomed Macron to the country, President Wickremesinghe was also at the airport to welcome the French President.

The two leaders had engaged in a discussion for nearly one hour and 15 minutes before Macron had left Sri Lanka for France.

As the fourth-largest creditor to Sri Lanka, France has pledged its assistance in the debt restructuring process, aiming for a positive outcome for the country.

During the meeting with Wickremesinghe, Macron had pledged to work to expedite Sri Lanka’s debt restructuring process. The French President had also said that he would personally intervene to push for the Chinese to also join the main talks on debt restructuring.

In a tweet following the discussions, President Macron stated: “Sri Lanka and France are two nations in the Indian Ocean sharing the same goal: an open, inclusive and prosperous Indo-Pacific. In Colombo we confirmed it: strong as in our 75 years of diplomatic relations, we would open a new era to our partnership.”

The next key visit of an international leader was the visit of Japanese Foreign Minister Yoshimasa Hayashi who undertook a two-day official visit to Sri Lanka from Friday (28) till yesterday (29). This marked the first ministerial visit from Tokyo to Colombo since 2019, especially since diplomatic relations soured between the two nations following the previous administration’s decision to unilaterally cancel the Japanese-funded Light Rail Transit (LRT) project.

Hayashi’s visit comes following President Wickremesinghe’s recent visit to Japan where Sri Lanka’s relations with Japan were put back on track.

The Japanese Foreign Minister had also focused on proceeding with Sri Lanka’s debt restructuring and the development cooperation Japan will extend once the debt has been restructured.

Ambassador of Japan to Sri Lanka Mizukoshi Hideaki had also recently emphasised the importance of Sri Lanka completing the International Monetary Fund (IMF) reforms and finalising debt restructuring negotiations for the economic recovery of the country.

“These things will result in better sovereign credit ratings, access to international capital markets,” the Ambassador highlighted while addressing the recently-concluded 44th Annual General Meeting of the Sri Lanka-Japan Business Council.

Discussing links with China

Meanwhile, President Wickremesinghe had discussed connectivity with Asia during a recent discussion with a Chinese delegation. Chinese Communist Party (CCP) Senior Central Committee Member Yuan Jiajun had last week called on the President on a courtesy call during his visit to Sri Lanka.

During the discussion, the President had reportedly focused on the country’s connectivity with Asia. This was in the backdrop of Wickremesinghe’s recent discussions in New Delhi, where focus was paid to developing connectivity between India and Sri Lanka. The Indian side had also discussed the building of a land bridge connecting Sri Lanka and India. President Wickremesinghe had told the Indian side that the proposal would be put before the Sri Lankan Parliament for a final decision.

However, India’s concerns over China had not been a topic of discussion during President Wickremesinghe’s recent visit to New Delhi.

Foreign Minister Sabry has stated that both India and Sri Lanka had agreed that the Indian Ocean should remain a peaceful region. “Both India and Sri Lanka should be sensitive to each other’s legitimate security concerns,” he had told the media in a news briefing about the President’s India visit.

When questioned if India’s specific security concerns over China had been discussed, the Foreign Minister had said no.

Indian connection

Be that as it may, President Wickremesinghe’s visit to India has served as a significant platform to strengthen cooperation and collaboration between the two nations on one side while also setting the course of bilateral relations on a new path.

The main outcome of the President’s visit to India was the development of connectivity between the two countries in several aspects.

One of the main projects in the works between the two countries is on power grid connectivity. A senior delegation representing Sri Lanka’s power sector has already visited India for discussions with the Power Grid Corporation of India and the technical report following the joint study is expected by this September, after which Sri Lanka and India will discuss the financial aspect. The transmission line will be bi-directional.

On the development of the Trincomalee industrial zone, the Indian side has noted the aim of developing the area as an energy and transport hub as well as an industrial zone. A framework Memorandum of Understanding (MoU) has been signed between Sri Lanka and India and a mechanism is to be set up with the participation of both sides to implement mutually-agreed projects.

The two Governments are also looking at a multi-product oil pipeline connecting Sri Lanka with East India, which is aimed at shielding Sri Lanka from fluctuating world market prices.

The Economic and Technology Cooperation Agreement (ETCA) between Sri Lanka and India, which has been stalled since 2018, is to be revived following an agreement reached between the two countries. The two sides are to first assess the situation before recommencing negotiations.

The proposed land bridge, which is referred to as a ‘connectivity corridor,’ is aimed at developing travel, trade, and cultural exchanges between the two countries. The setting up of digital payments through Indian Rupees in Sri Lanka has also been reached with the signing of an agreement between the Sri Lankan service provider and its Indian counterpart.

It is learnt that while discussions on developmental cooperation had been initiated by the Indian side with the main focus on key projects, the area of reconciliation had been included in the discussion on a request by Sri Lanka.

Opposition parties decide

One of the main outcomes of the recent Indo-Lanka discussion was the President’s move to move for the full implementation of the 13th Amendment to the Constitution.

President Wickremesinghe convened a meeting of all party representatives on Wednesday (26) to discuss the implementation of the 13th Amendment to the Constitution based on the document on ‘devolution and development’. The meeting had also formed the basis for the discussion on whether Police powers would be devolved to the provinces.

The President maintains that the 13th Amendment will be implemented sans Police powers and that any decision to devolve Police powers should be carried out with the consensus of all parties in Parliament. It is evident that the President is well aware of the challenges faced by the Government in securing a two-thirds majority in Parliament for a proposal on devolving Police powers.

As soon as word of the meeting was publicised, the Janatha Vimukthi Peramuna (JVP)-led National People’s Power (NPP) stated that the party would not attend the meeting, while the rest of the Opposition parties had discussions on whether or not they should attend the meeting. 

The view of some Opposition members was that the all-party meeting convened by the President seven months ago had not yielded any result and that the latest meeting being convened could also be a waste of time.

Samagi Jana Balawegaya (SJB) and Opposition Leader Sajith Premadasa decided that attending the meeting should be decided by the Executive Committee of the Joint Opposition Coalition. It was decided that the opinion of the Tamil parties should also be sought since issues faced by them were to be the focal point of the discussion.

Premadasa had then spoken to Tamil National Alliance (TNA) MP M.A. Sumanthiran. The TNA member had pointed out that the meeting was yet another ‘show’ being put up by the President and that the plan seemed to be for him to put all blame on the Opposition. However, Sumanthiran had said that the parties should not boycott the meeting.

Premadasa then announced that he would attend the meeting with an open mind, but would walk out if the discussion was carried out with an ulterior motive. Highlighting the importance of a clear programme for national reconciliation, Premadasa had stated that productive discussions could only be achieved through genuine goodwill. 

The Executive Committee of the Joint Opposition Coalition also arrived at three conditions that would form the base for their participation: that the President works in an honest and sincere manner, the Government presents its proposal to address the north and east issue before asking for the Opposition’s proposal, and for the Government to announce at the meeting that measures will be taken to hold Provincial Council Polls and other delayed elections.

SLPP decides

The ruling Sri Lanka Podujana Peramuna (SLPP) had also convened a meeting last week to decide the party’s stance on implementing the 13th Amendment.

A meeting had been convened at the SLPP office by the party’s National Organiser Basil Rajapaksa. During the discussion, it had been decided that President Wickremesinghe did not have the mandate to fully implement the 13th Amendment.

However, Basil had also explained at the meeting that the party should not take a hardline stance that President Wickremmesinghe should not receive the party’s support since he had failed to appoint several senior SLPPers to ministerial posts. Basil had noted that the focus should be on the need for the party to stand by the mandate given by 6.9 million voters.

Several SLPPers had pointed out that Wickremesinghe was serving as President to complete the term of former President Gotabaya Rajapaksa (GR) and that it was the mandate of the SLPP’s 6.9 million votes at the 2019 Presidential Election that was still at play. They had further noted that GR’s election manifesto had not made any reference to the implementation of the 13th Amendment.

Basil had further noted that there was a problem in discussing power devolution in a backdrop where the Provincial Council structure had faced a total breakdown with elections being delayed for several years.

SLPP General Secretary Sagara Kariyawasam was tasked with explaining this at the all-party meeting.

Discussion commences

A notable absentee at the meeting was former Prime Minister Mahinda Rajapaksa (MR). However, his son, SLPP MP Namal Rajapaksa had attended the meeting, but had left before it concluded.

Prime Minister Dinesh Gunawardena, Speaker Mahinda Yapa Abeywardana, Opposition Leader Premadasa, Sri Lanka Freedom Party (SLFP) Leader and former President Maithripala Sirisena, TNA Leader R. Sampanthan, Sumanthiran, and SLPP General Secretary Kariyawasam, as well as other legislators, including Dullas Alahapperuma, Wimal Weerawansa, Gevindu Kumaratunga, Vasudeva Nanayakkara, Udaya Gammanpila, Sarath Weerasekara, Ven. Athuraliye Rathana Thera, Weerasumana Weerasinghe, Anura Priyadarshana Yapa, C.V. Vigneswaran, Lakshman Kiriella, and a group of SLFP parliamentarians had participated at the meeting.

Once the meeting was called to order on Wednesday, President Wickremesinghe had said that the Provincial Councils must be made use of and noted that previously the District Councils had been far more productive than the Provincial Councils had been.

Wickremesinghe had then suggested that MPs be allowed to contest and sit in Provincial Councils as chief ministers to allow for greater collaboration between the two power planes. He had also drawn comparison to D.S. Senanayake and N.M. Perera, who had held positions both in Parliament and Municipal Councils.

SLFP Leader Sirisena had then addressed the gathering. It is learnt that the disjointed nature of his speech had resulted in the rest of the gathering looking confused and non-committal.

Opposition Leader Premadasa had then spoken. As planned previously, Premadasa had emphasised the need for the Government to be sincere in its efforts and for the Government to first present its proposal to resolve the ethnic issue. He had also pointed out that before talking about strengthening Provincial Councils, steps should be taken to immediately hold the delayed elections.

Premadasa had left the room after making his statement.

Vigneswaran had then noted that the 13th Amendment had to be implemented. He had also, however, noted that Provincial Council Elections needed to be held since there was no second or third tier leadership in the north and east.

Vigneswaran had noted that the 13th Amendment had been introduced without the involvement of the Tamil politicians of the time and that they would have asked for federalism if they had been involved. However, he had noted that since this agreement (13th Amendment) had been enacted between two sovereign nations, it had to be respected.

Vigneswaran had further stated that since Police powers was the issue, then the possibility of Police not being provided armaments could be explored as the Police could carry out its duties without firearms.

SLPP’s Kariyawasam had said that six presidents before Wickremesinghe had not fully implemented the 13th Amendment and had called on the President to understand why it had never been fully implemented previously.

TNA’s Sampanthan had said that the Government must go beyond the 13th Amendment and that India had continually urged the Government to pursue a full implementation of the amendment.

SLPP dissident and Freedom People’s Council Co-Leader Alahapperuma had noted that no president had ever been given a blank cheque to do what they want, especially with regard to the 13th Amendment.

Weerawansa had also said that Wickremesinghe had not been given a public mandate to decide on the 13th Amendment.

Kumaratunga had noted that President Wickremesinghe had never consulted any Sinhalese MPs when drafting the reconciliation plan. He had further noted that after 2019, 6.9 million people had voted Wickremesinghe and the United National Party (UNP) out and that it was a rejection of their (Wickremesinghe and the UNP) plans, including devolution of powers.

President Wickremesinghe had maintained that millions of rupees were being wasted due the failure to fully implement the 13th Amendment as functions continued to overlap with the Central Government. 

Wickremesinghe had noted that he proposed the full implementation of the 13th Amendment and that since Police powers were a cause of disagreement, it should be discussed separately. He had reiterated that a final decision had to be made with regard to the 13th Amendment to prevent the waste of public funds.

Sumanthiran had once again noted that MR had promised to go beyond the 13th Amendment and that it was even pledged to the Indian Government at the time. He had also asked G.L. Peiris, who was also present at the meeting, to explain to the gathering what had happened during the respective visit by MR to India since Peiris had been Foreign Affairs Minister at the time.

Peiris had responded by saying there was no point in discussing power devolution when there were no Provincial Councils in place to devolve the powers to.

Onus on Parliament

However, the discussion, after dragging for over two hours, had failed to reach a consensus and a visibly-frustrated Wickremesinghe had further stated that he had to take a stand and fully implement the 13th Amendment since seven presidents before him had failed to address the issue and fully implement what was in the Constitution.

The President had then placed the onus on Parliament by saying that Parliament representatives needed to make a decision – whether the 13th Amendment should be implemented in full sans Police powers or whether the 13th Amendment should be repealed in its entirety. “Either the 13th Amendment should be fully implemented, or, if there’s no agreement on it, then it should be fully repealed,” he had said, adding that the failure to be fully committed to this matter had resulted in this waste of public funds and inefficiency.

Wickremesinghe had also charged that power devolution and holding Provincial Council Elections were two different matters. He had then asked the participants to discuss further and decide if they wanted to first clear the issue of power devolution and implement the 13th Amendment in full or wanted to hold Provincial Council Elections and continue with the ambiguity around the powers vested with the councils.

Sumanthiran had responded saying that they were not two issues as pointed out by the President and that they were one.

“This is all I can do. I cannot do anything if you are not willing to,” President Wickremesinghe had said in a frustrated tone. He had walked away from the meeting after making this statement, bringing it to an end in an abrupt manner.

Udaya’s 22A

Pivithuru Hela Urumaya (PHU) Leader MP Gammanpila meanwhile stated last week that he would be presenting a new constitutional amendment seeking an amendment to the 13th Amendment where Police powers would be removed from the Provincial Councils.

Gammanpila had told the media last week that the bill on the new constitutional amendment would be presented to defeat President Wickremesinghe’s efforts to make the minority community happy in order to get their votes at the upcoming Presidential Election.

He had noted that the proposed bill had been drafted by a group of President’s Counsels and senior attorneys and that it would be named as the 22nd Amendment to the Constitution.

According to Gammanpila, it is necessary to decide whether the MPs stand with the position taken by seven Executive presidents that Police powers should not be given to Provincial Councils or whether they supported separatism for the sake of privileges.

Mahindananda’s new role

Amidst the divisions in opinions created within the Government and Opposition over the full implementation of the 13th Amendment, it seems to have dawned on President Wickremesinghe that things on the local political front are not going to move as planned by him.

The President had recently informed his officials of the need to create more awareness among the public about the work being carried out by the Government so far amidst challenging conditions.

Several confidants of the President had then pointed out that the Government’s message was not being properly communicated to the people even by the State media. One of the main reasons for this issue that was pointed out by these presidential loyalists was the fact that the minister handling media was paying more attention to other portfolios held by him.

It is in such a backdrop that SLPP MP Mahindananda Aluthgamage has been given the task of ensuring that the Government’s message is properly communicated to the public via mainstream and social media.

Collecting signatures

Meanwhile, a group of ruling SLPP parliamentarians has started a campaign to collect signatures to a letter to be handed over to President Wickremesinghe expressing concerns over the Government’s new social welfare programme – Aswesuma.

The SLPPers are requesting the President to temporarily halt the programme until it is properly evaluated and issues of people being subjected to unfair treatment are resolved.

Collecting signatures to the letter had commenced during the last parliamentary session. SLPP MP Jagath Kumara had said that around 50 parliamentarians had placed their signatures on the letter. According to Kumara, Opposition parliamentarians are also planning on signing the letter and it is to be handed over to the President after gathering the signatures of 70 parliamentarians.

Bankruptcy probe

Controversy meanwhile continues to surround the Parliamentary Select Committee (PSC) appointed to probe the country’s bankruptcy.

Speaker Mahinda Yapa Abeywardana has said that Opposition parliamentarians who were appointed as members of the PSC are responsible for investigating the causes of the country’s economic bankruptcy and have potentially facilitated misconduct by boycotting the committee.

Abeywardana had told the media that there was no impediment for the PSC to continue its proceedings. “It can go ahead. It is up to them (PSC members) to decide whether to participate in the PSC or not. I don’t know what decision will be made by the PSC Chairman, but there is no issue for the PSC to carry out its tasks.”

Abeywardana had observed that it was meaningless for Opposition MPs to boycott it. “If they [Opposition MPs] feel that the Chairman or any other member of the PSC is acting partially, refusing to accept any submission, or hiding any facts, they should have attended it and pointed out such issues. That is the right thing to do. It is when they fail to attend that the PSC can do whatever they like. If there is any potential misconduct of the PSC, the Opposition MPs have encouraged it by not attending it.”

Another boycott

However, the SJB has reiterated that it will not participate in the proposed PSC to investigate alleged violations of parliamentarians’ privileges by the Election Commission.

On 17 July, the appointment of a PSC to look into the incidents of the commission allegedly violating MPs’ privileges had been proposed, after which it had been decided to present a motion to the Parliament for the same.

“When members will be appointed for the proposed PSC, there will be SJB MPs also among them, but our group of MPs will not be participating in it,” SJB General Secretary Ranjith Madduma Bandara has told the media.

However, Speaker Abeywardana has said that there is no preparation to appoint a PSC to look into the alleged violation of parliamentarians’ privileges by the Election Commission, despite a proposal to the same having been presented to Parliament.

Ketagoda’s conundrum

On the issue of the tenure of the currently-defunct Local Government bodies, the private member’s motion presented by SLPP MP Jayantha Ketagoda has faced a stumbling block with the Attorney General’s presentation to court.

The Attorney General on Monday (24) informed the Supreme Court that a two-thirds majority in the Parliament and a referendum are required if the Local Government bodies are to be reconvened as per the bill presented by Ketagoda.

It has been observed that certain provisions of the private member’s motion submitted by Ketagoda to reconvene dissolved Local Government bodies are in violation of the Constitution.

SLPP backing

Meanwhile, Chief Government Whip Minister Prasanna Ranatunga has said that it will be the candidate who has the support of the SLPP who will win at the next Presidential Election.

He had told a public gathering in Attanagalla last week that the SLPP would also be able to form the next government since the party has been revived from the setbacks faced due to last year’s Aragalaya protest movement.

Ranatunga had further claimed that any individual who attacked or harassed the SLPP would be seriously dealt with. “This can be taken as either an advice or a threat,” he had added.

However, Cabinet Spokesman Minister Bandula Gunawardena had stated on Tuesday (25) that Sri Lanka had outstanding foreign loans of $ 36 million to be settled until 2048 and that anyone who wished to come to power during that period was bound to pay the loans and must have plans to do so.

“Sri Lanka has outstanding foreign loans amounting to $ 36 million. Only 37% of the total loan amount is maturing during the next five years; 51% of that is maturing between the next six years and 20 years; 12% is maturing even after 20 years. So anyone planning to take over the country is bound to pay the loans due during their tenure,” the Minister had added.

New woes for SLPP

Meanwhile, the SLPP is now facing a new set of woes with the move by a group of dissident SLPP parliamentarians to open an office premises in Lake Drive in Rajagiriya recently to form a new electoral alliance. The office space in Rajagiriya had been previously occupied by the Liberal Party, according to reports.

The new alliance is tipped to be led by SLPP MP Anura Priyadarshana Yapa and MP Nimal Lanza is said to play a key role in its formation. Yapa, Lanza, and Sudharshani Fernandopulle had visited the office space later in the day following the opening (20 July).

Interestingly, former President GR’s Private Secretary Sugeeshwara Bandara and SLPP National Organiser Basil Rajapaksa’s close associate S. Amerasinghe (former JVPer) had also been present at the opening of the new office premises.

A group of SLPP electoral organisers had attended the opening and Bandara and Amerasinghe had addressed the gathering. They had explained the future plans of the new collective. GR’s aide Bandara is tipped to contest under the new alliance from the Colombo District at the next General Election.

It is learnt that on the evening of 20 July, several senior SLPPers had criticised Lanza over the opening of a new political office. State Minister Indika Anuruddha and former MP Sarana Gunawardena had expressed their concern and displeasure over the opening of a new office by dissident SLPPers.

It is further learnt that SLPP MP Nipuna Ranawaka had raised the issue with his uncle, former President GR, during a discussion the day after the opening of the Rajagiriya office. Ranawaka had reportedly informed GR that SLPP MP Namal Rajapaksa was concerned over the role played by Amerasinghe and Bandara in the opening of a new office.

However, several political parties including individuals representing several political parties have initiated discussions with Lanza about the new alliance and expressed interest in joining it to form a broad electoral alliance.

Given the increasing interest in the new alliance, the SLPP dissidents’ group that has initiated the alliance is looking at holding its first rally next January with the participation of all parties and individuals who join it.

MR’s presence

Meanwhile, SLPP Leader, former Prime Minister Mahinda Rajapaksa, who has been keeping a low profile, was last week seen at an event at Shangri-La Hotel in Colombo. The event was the 96th celebration of the Chinese Liberation Army.

Heads of the country’s defence establishment and heads of Sri Lanka’s military were also present at the event. Defence Secretary Kamal Gunaratne, Chief of Defence Staff General Shavendra Silva, and Army Commander Lt. General Vikum Liyanage were seen conversing with MR at the event.

Achieving targets

Sri Lanka has room to overperform and achieve debt sustainability much earlier than expected by the IMF, Central Bank of Sri Lanka (CBSL) Governor Dr. Nandalal Weerasinghe said.

Speaking at a forum organised by the Chartered Financial Analysts (CFA) Society in Sri Lanka on 21 July, he said that although the IMF’s debt sustainability was based on an average growth of 3% in the medium to long term, Sri Lanka had the capacity to grow at 4-5% average easily.

“If we are able to overperform with higher growth and stable inflation, our outcome will be much better than what we think and in restoring debt sustainability, we don’t have to wait for 10 years, we can reach it in five years if we perform better,” he said. 

The Governor had also said that in his view, Domestic Debt Optimisation (DDO) and restoring debt sustainability would be a much more conservative path if Sri Lanka did it right.

Meanwhile, the Government’s debt restructuring plan is likely to reduce investment and liquidity risks for domestic insurers, Fitch Ratings said.

According to the ratings agency, it expects pressure on insurers’ investment and capital profiles to ease as the proposed plan will not have a direct impact on the local currency Government debt holdings of insurers, banks, and Non-Banking Financial Institutions (NBFIs).

Currency woes

The Sri Lankan Rupee has turned into Asia’s worst-performing currency from being the best in the first half of the year, according to Bloomberg News.

The report states that the rupee is poised to extend losses amid headwinds from interest rate cuts and the loosening of import controls.

The currency has tumbled more than 6% this month as it fell for the 14th day on Monday, on track for its longest daily losing streak in almost five years – a stark reversal from its stellar performance in the first six months of this year when the rupee was Asia’s top performer with a 19% advance.

“The trade balance will go more negative and more rate cuts may come as inflation is cooling rapidly,” said Natixis SA Economist Haoxin Mu. Mu forecasts a further 8% depreciation in the rupee to about Rs. 355 per dollar by the end of the year.

According to Governor Weerasinghe, the rupee volatility is due to banks covering positions.