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LG Polls in limbo while IMF Board gears to take up Sri Lanka deal next week

LG Polls in limbo while IMF Board gears to take up Sri Lanka deal next week

05 Mar 2023 | By Capt. Vasabha

  • IMF MD says positive message from China, board likely to take up SL on 20th
  • Govt. hopeful of receiving a positive letter from China on debt restructuring
  • EC to hold meeting with Treasury Secy., Govt. Printer, and Police on Tuesday
  • Treasury Secy. to inform EC of funding challenges, timeline likely to be given
  • Delimitation Committee receives month’s extension, final report by end March
  • Speaker says no legal provisions for him to intervene in releasing funds for polls
  • Premadasa and Opposition MPs ask Speaker to summon Treasury Secy. to House
  • Sagara opposes GL and Vijitha attendance at party leaders’, Sajith defends them
  • SLFP clashes intensify with Dayasiri claiming moves to oust him, eyes on Piyadasa
  • Vajira’s temp appointment as COPF Chair criticised as violation of democracy

The dawn of the month of March has posed several challenges to the Ranil Wickremesinghe Government, with the main focus being on reaching the Government’s set deadline of securing the International Monetary Fund’s (IMF) financial assistance package by this month.

The March timeframe was set by the Government last December following the delay in implementing the conditions set out by the fund. 

The ‘Black Box’ reliably learns that the documents related to Sri Lanka’s debt restructuring programme and other relevant details will be sent to the IMF this week.

The Executive Board of the IMF is to meet on the 20th of this month and Sri Lanka’s proposed assistance package is likely to be taken up at the meeting.

The statements issued by the IMF last week justified the Government’s tax reforms, stating they were needed to correct imbalances in tax revenue and expenditure. The new tax rate schedule for personal income tax helps to meet the set objectives and helps regain confidence of creditors, the IMF Mission to Sri Lanka stated.

The IMF also noted that the Central Bank of Sri Lanka’s (CBSL) decision to raise the policy rate was appropriate given its objective set under the inflation targeting framework. The fund further stated that it reflected the CBSL’s commitment to the inflation target and was an important part of the disinflation strategy in the Extended Fund Facility (EFF) programme.

Topped with President Wickremesinghe’s call last week with IMF Managing Director Kristalina Georgieva, it seems the Sri Lankan Government is on track to reaching the final stages of the IMF programme. Georgieva’s discussion with Wickremesinghe took place following her recent discussion with the Chinese Premier.

Highly-placed Government sources told ‘Black Box’ that the IMF MD had informed President Wickremesinghe that her discussion with the Chinese on Sri Lanka’s debt restructuring programme had been very positive and that the IMF could take China’s latest proposal into consideration.

Given these developments, the Wickremesinghe Government continues to express confidence in reaching a final agreement with the IMF on the proposed EFF this month.

However, the IMF’s annual spring meetings are to be held in Washington DC next month – April.

On a positive note, the Sri Lankan Rupee started to appreciate since Tuesday (28 February) on improved sentiments over the current and future foreign exchange conditions in the domestic market after the announcement that the International Finance Corporation (IFC) was willing to provide $ 400 million worth of swap facility for three commercial banks to support essential imports. The rupee was recorded at a middle rate of Rs. 346.17 against the US Dollar on Friday (3).

Push to restructure

The IMF on 25 February called for “timely and orderly processes” under a common framework with regard to Sri Lanka’s debt resolution. 

In a statement issued at the conclusion of the G20 Finance Ministers and Central Bank Governors (FMCBG) meeting under India’s presidency, IMF Managing Director Georgieva strongly endorsed efforts to strengthen the debt architecture and improve the speed and effectiveness of debt resolution, keeping in mind rising debt vulnerabilities in many countries.  

“It is now critical to complete Zambia’s debt restructuring, establish a Creditor Committee for Ghana, and advance work with Ethiopia. Nonetheless, more predictable, timely, and orderly processes are needed both for countries under the Credit Facility (CF) and for those not covered by it, including Sri Lanka and Suriname,” she said.

Recalling the statement of global growth slowdown in 2023, she also recalled from her previous blog that too many people in too many countries were struggling to make ends meet. Keeping this in mind, she said the international community had a responsibility to come together to find solutions for the most vulnerable members of the global family. “This calls for urgent action to strengthen international financial architecture, especially in the area of debt resolution and strengthening the global financial safety net,” she said.

Meanwhile, the G20 finance ministers and central bank governors who met in Bengaluru, India from 24-25 February said that they looked forward to a swift resolution to Sri Lanka’s debt situation.

India’s Minister of Finance Nirmala Sitharaman, reading the Chair Summary and Outcome Document of the G20 Finance Ministers and Central Bank Governors meeting, said that they recognised the urgency of addressing debt vulnerabilities in low and middle-income countries.

“Strengthening multilateral coordination by official bilateral and private creditors is needed to address the deteriorating debt situation and facilitate coordinated debt treatment for debt-distressed countries. We stand by all the commitments made in the ‘Common Framework for Debt Treatments beyond the DSSI,’ including those in the second and final paragraphs, as agreed on 13 November 2020 and step up the implementation of the Common Framework in a predictable, timely, orderly, and coordinated manner,” the document said.

China responds

Bloomberg reported last week that China’s Premier Li Keqiang had told the Head of the IMF that China was open to participating in multilateral efforts to help heavily-indebted nations “in a constructive manner,” as per China Central Television (CCTV). 

“China is willing to take part in resolving relevant countries’ debt issues,” Li had said in a phone call Wednesday (1) with IMF Managing Director Georgieva, according to CCTV. “China maintains that all sides should take joint action and share an equitable burden,” he had said.

However, it is learnt that the Sri Lankan Government is hopeful of receiving another letter from China on Sri Lanka’s debt restructuring programme where China is expected to provide more clarity on its assistance for the country.

LG Polls

Meanwhile, political circles were set alight once again on Friday evening when the Supreme Court issued an interim order instructing the Finance Ministry Secretary not to withhold funds for the upcoming Local Government Elections.

The Election Commission (EC) is to hold a meeting on Tuesday (7) with the Finance Ministry Secretary, Government Printer, and the Police Department to make a final decision on the new date to hold the Local Government Elections. 

When inquiries were made about the releasing of funds to hold polls, a highly-placed Government source explained that the Finance Ministry Secretary would explain to the Election Commission the challenges in sourcing the necessary funds for elections at the current time and would give a timeframe by when the Treasury could begin dispersing funds to the commission.

As for the Police Department, the source said that the revised budget for election duties would have to be submitted to the commission by the Police.

However, the delaying of the Local Government Elections continues to be a contentious issue in the local political scene, with Opposition political parties breathing fire on the Wickremesinghe Government.

With the final delimitation report to be made available before the end of March, nominations that have been accepted for the Local Government Elections will have to be cancelled, said Delimitation Committee Chairman Mahinda Deshapriya.

Once handed over to the Government, a review committee will go through the report to rectify any shortcomings, he said.

Meanwhile, the printing of ballot papers for the Local Government Elections has been put off indefinitely due to the uncertainty over the election date as well as the non-availability of funding and Police protection.

However, the Government Printing Department has stated that if all the requirements were met, the printing of ballot papers for the Local Government Elections could be concluded within 30 days.

According to the Government, a sum of Rs. 135 million will have to be allocated monthly to pay salaries of Local Government members after the polls in addition to the estimated Rs. 12 billion for the local polls.

The Election Commission was also informed of the many administrative issues faced by the district returning officers due to the postponement of Local Government Elections. These issues were discussed during a meeting held via Zoom between the district election officers and the Election Commission on Tuesday (28 February).

One of the main issues highlighted was the difficulty in holding the land kachcheris. Election Commission Chairman Nimal Punchihewa has however said that the Land Commission had agreed to permit the kachcheris to operate without the participation of politicians and those who had given nominations to contest at the polls.

The Election Commission Chairman has also explained to the officials that there is no truth to statements being made to the effect that the Local Government Elections were called without a proper plan.

Speaker Mahinda Yapa Abeywardena meanwhile on Monday (27 February) responding to the letter sent by the Election Commission asking him to intervene to get the Treasury to release funds to hold the Local Government Elections has pointed out that there are no legal provisions for him to intervene in releasing funds for the polls as requested by the commission, but has stated that the matter should be decided by the party leaders.

“That has to be decided by the party leaders. There are no legal provisions for me to get involved and give legal instructions on how they should disperse their money. The duty of Parliament has been done and after that the dispersing of the money is part of the Treasury’s job. They must do it depending on the income that has been collected by them at that time. That is the position and beyond that if anything has to happen, it has to be in accordance with the parliamentarians’ wishes. The authority is with the Parliament, not one or two MPs. Not even the Speaker has anything to do with that. The MPs have to decide,” the Speaker has told the media.

Pressure on polls

The United States (US) Senate Committee on Foreign Relations on Wednesday (1) called on the Government of Sri Lanka (GoSL) to hold a “free and fair” election while urging not to further delay the poll.

Taking to Twitter on the matter, Senate Committee Chairman Senator Bob Menendez has noted that any effort to take away the voice of the people of Sri Lanka is undeniably undemocratic and a direct violation of Sri Lankans’ rights. “I urge the GoSL to hold a free and fair local election without further delay,” he added.

Samagi Jana Balawegaya (SJB) MP Dr. Harsha de Silva, while addressing a media briefing, said on Wednesday (1): “The main party of the IMF is the US. The support of the US is needed to do everything including obtaining the IMF bailout. Therefore, the Government is saying that this election will be held and that this election cannot change the Government. Menendez has said that any effort to take away the voice of the people of Sri Lanka is undeniably undemocratic and a direct violation of Sri Lankans’ rights. America doesn’t have to say this but it is a democratic right.”

Opposition meets Speaker

Meanwhile, a group of Opposition legislators led by Opposition and SJB Leader Sajith Premadasa on Tuesday (28 February) met with Speaker Abeywardena to discuss several issues including the holding of Local Government Elections and getting the Government to release the required funds to hold the polls.

Premadasa had assigned his Parliamentary Affairs Secretary to coordinate with the Opposition parties to attend the meeting with the Speaker. Members of the Opposition other than the Janatha Vimukthi Peramuna (JVP)-led National People’s Power (NPP) had attended the meeting.

Prior to the meeting with the Speaker, several Opposition party representatives had met Premadasa at his office in the Parliamentary Complex. Three matters were taken up for discussion and the first one was the moving of a motion in Parliament urging the Government to release the funds that have been allocated for the holding of elections in 2023. The next was to summon the Finance Ministry Secretary to Parliament and question him over the failure to release funds for the holding of Local Government Elections. The third matter discussed was the need to urgently convene Parliament to discuss the issues that could arise due to the postponement of elections.

Sri Lanka Podujana Peramuna (SLPP) dissident MP Prof. Charitha Herath had pointed out that it was important to get the Speaker to respond to the issues being raised by the Opposition parties without leaving room for the latter to say he would also have to consult with the governing party.

During the meeting with the Speaker, Premadasa had urged the Speaker to immediately convene Parliament in order to discuss these issues of national importance.

SLPP dissident MP Prof. G.L. Peiris had provided a constitutional explanation on the holding of elections and the Government’s ability to make the necessary financial allocations for the elections.

MP Dullas Alahapperuma had pointed out that the Local Government Elections were likely to face the same fate as provincial councils if the necessary actions were not taken to hold the polls. 

The Opposition Leader had also called on the Speaker to summon the Finance Ministry Secretary to Parliament to question him about the failure to release funds to hold the Local Government Elections.

Premadasa had also cautioned that the protests demanding the holding of Local Government Elections could intensify in the future if the Government failed to release funds for the polls.

Following this meeting, the Speaker had decided to convene an emergency party leaders’ meeting the following day, Wednesday (1), to discuss the issues raised by the Opposition Leader and the group.

When the Opposition Leader had requested that the Finance Ministry Secretary be summoned for this party leaders’ meeting, the Speaker had noted that such summons could be issued after reaching an agreement with the governing party representatives at the meeting as well.

Nevertheless, Premadasa had pointed out that the Speaker had the authority to call a public official for a discussion in the event the approved financial procedures by Parliament were violated. 

Debate and resolution

The party leaders’ meeting on Wednesday (1) saw an interesting change in the attendance of Opposition members. SJB MP Thalatha Atukorale usually attends the meeting representing the party, but last week it was SLPP dissident G.L. Peiris who had reportedly attended the party leaders’ meeting, occupying a slot allocated to the SJB in the meeting forum.

Also, NPP MP Vijitha Herath had attended the meeting in place of JVP and NPP Leader Anura Kumara Dissanayake.

SLPP General Secretary Sagara Kariyawasam had raised objections to Peiris’s and Herath’s participation at the meeting. However, Opposition Leader Premadasa had told the meeting that there was no issue in Peiris attending the meeting as an MP knowledgeable of the latest developments as a constitutional expert in the country and that he had attended in place of SJB’s Atukorale.

When Herath’s issue was taken up, Premadasa had also defended Herath’s participation at the meeting. “Anura is also a party leader with a lot of work. He, therefore, has a lot of work scheduled and is unable to attend sudden party leaders’ meetings. He has sent his representative for the meeting. We cannot find fault with that. It is important to have representation from their party since we are discussing elections. We should let Vijitha Herath attend the party leaders’ meeting and say their party stance,” Premadasa had said.

It was decided at the party leaders’ meeting last Wednesday that a two-day debate would be held in the House on Thursday (9) and Friday (10) on the postponement of the Local Government Elections. The SJB is to also submit a resolution to get Parliament to intervene in getting the allocated funds for polls released to hold the Local Government Elections and it is to be put to a vote as well.

Prime Minister Dinesh Gunawardena at the meeting had requested that the Speaker act according to the Constitution and parliamentary Standing Orders when addressing the request by Opposition MPs from the Speaker to intervene to get funds released for the holding of Local Government Elections.

Meanwhile, Speaker Abeywardena had told the meeting that he did not have the power to summon the Finance Ministry Secretary to Parliament. The Speaker had pointed out that the Executive, Legislature, and Judiciary did not serve under each other.

Anura to EC

While the Opposition Leader and a group of Opposition MPs met with the Speaker of Parliament to discuss the Local Government Elections, JVP and NPP Leader Dissanayake met with the Election Commission on Tuesday (28 February).

The discussion was focused on the holding of Local Government Elections and the ongoing challenges faced by the commission.

NPP’s predicament

However, the NPP protest on Sunday (26 February) demanding the holding of Local Government Elections and the Police attack on the protest at Town Hall in Colombo became a topic of discussion during the early part of last week, especially following the death of one of the party’s supporters after the protest.

The death of the NPP protester, who was also a candidate at the Local Government Elections, was attributed to a longstanding ailment later on.

The Police had stated that water cannons and tear gas were used on the NPP protest on the grounds that demonstrations had been prohibited, protesters were blocking the road, and since permission for such a procession march had not been obtained from the relevant Police station.

When queried about the grounds on which water cannons and tear gas were used on the NPP protest, Police Media Spokesperson SSP Nihal Thalduwa has told the media that the same was done on the grounds that demonstrations could not be held against the backdrop of the Local Government Elections being declared as well as due to protesters blocking the vehicular movement of a main road and as no permission had been obtained from the relevant Police station for a protest march to be held under the relevant provisions of the Police Ordinance. 

Thalduwa has noted: “The Police are working as per the provisions of the Criminal Procedure Code and other existing laws. A court order is not mandatory to disperse a protest which causes inconvenience to the public. Even when the Police request an order, the courts instruct the Police to act on the powers vested in the Police. However, the Police always attempt to make the relevant submissions and obtain a court order.”

Meanwhile, at the time of the NPP protest in Colombo on Sunday, former Prime Minister Mahinda Rajapaksa was reportedly engaged in a discussion with a few people. One of his security personnel had made his way to Rajapaksa and had said that the NPP protest was under Police attack.

Hearing the details, the former Premier had said: “Not like us, Ranil knows how to hit hard.”

SLPP disgruntled

Amidst the ongoing political drama, the governing SLPP is also facing somewhat of a crisis, with some sections of the party expressing displeasure over the party’s involvement with the Government.

It is learnt that a group of SLPPers had informed several party seniors during public gatherings at an electoral level that the SLPP should not extend its support to President Wickremesinghe and the Government. 

However, another section of the SLPP has stated that such a campaign was being pushed by the party’s theoretician Basil Rajapaksa, who continues to push for the holding of Local Government Elections. Basil and his loyalists continue to maintain that the party’s restructuring programme cannot proceed without the party facing the Local Government Elections.

Meanwhile, the SLPP’s Executive Committee has reportedly decided to remove Prof. G.L. Peiris as the party’s Chairman.

SLPP General Secretary Kariyawasam has said the decision was taken recently. He has further stated that two nominees to the position are under consideration – either a senior politician or a person recognised by the civil society will be chosen.

Kariyawasam has further stated that SLPP office-bearers now supporting other parties too will be removed from their positions.

SLFP clashes intensify

Meanwhile, the clashes within the Sri Lanka Freedom Party (SLFP) continue unabated, with party General Secretary Dayasiri Jayasekara claiming that there is a conspiracy to oust him from the post held by him in the party.

Jayasekara has alleged that a group of SLFP members who have been suspended from the party and are facing disciplinary inquiries were working to oust him. He has further noted that this group of members has already claimed that they would return to the party only if he (Jayasekara) was ousted from the post of general secretary.

It is learnt that a group of SLFP dissidents had also held a discussion with former General Secretary of the SLFP and senior member Rohana Lakshman Piyadasa about the issues faced by the party and the need for solutions. However, unconfirmed reports state that there was a push by some members of the SLFP to re-appoint Piyadasa as the SLFP general secretary.

Meanwhile, the Western Provincial Civil Appellate High Court on Wednesday (1) issued an interim injunction against SLFP Chairman, former President Maithripala Sirisena and the party’s General Secretary Jayasekara.

The order prevents the removal of Nimal Siripala de Silva from his positions in the SLFP.

The case was taken up by a two-member judge panel comprising Frank Gunawardena and M.B. Chamath Moraes.

COPF drama

The party leaders who met on Wednesday (1) to discuss this week’s Parliament proceedings had also called on the Speaker to probe the alleged intimidation that had forced a Chairman of the Committee on Public Finance (COPF) to resign from the post. 

The appointment and eventual resignation of SJB MP Mayantha Dissanayake from the post of COPF Chairman provided ample political drama to the public.

Dissanayake stated on Monday (27 February) that he had decided to resign from the post while adding that he did not have any deals with the Government or President Wickremesinghe to take up the chairmanship of COPF.

Addressing the media, Dissanayake had said: “I did not have any deals with the Government or speak to the President to take up the COPF chairmanship. I accepted this position to reach a consensus on common grounds. Following discussions with our Leader [a reference to Premadasa], I have decided to resign as the Chairman of the COPF. I tried to reach the Speaker of Parliament [Mahinda Yapa Abeywardena] but I couldn’t, therefore, I will hand over the resignation letter to him. I have come to this decision since we have to work on common ground as an Opposition, under the Opposition Leader. These positions are not new to me. Leaving such positions is not difficult for me. I can easily leave it. I want to remind the people that I follow in the footsteps of my father Gamini Dissanayake.

“Last week, MPs spoke to me. They asked me if I would accept the Chairmanship of the COPF if it is based on a unanimous decision. I would like to remind everyone that in 2015 and 2016, I was a member of the COPF when MP, President’s Counsel M.A. Sumanthiran was the first Chairman. When Sumanthiran left for meetings, he would recommend my name to take up the Chair to proceed with the committee sessions. He handed over absolute responsibility to me to carry out the proceedings of the COPF. In my absence, the responsibilities were handed over to another MP. I have fulfilled the responsibilities since then, on behalf of the people, and I have always functioned according to my conscience. 

“I would like to tell those who have been tweeting about this, that regardless of what someone says, the listener should consider what is being said with clarity. The first COPF meeting was held for 10 minutes. I assumed that finance-related bills would come up for consideration, and therefore, I decided to sit and participate in the meeting. If you watch the video of the meeting, you will see me mentioning that only Government MPs were present and that Opposition MPs were not. Therefore, it was clear to me that there was no consensus. I stated at the meeting that unless there is an urgent requirement that needs to be passed and sent to Parliament, we will end the meeting here and will think about and discuss the chairmanship with the Party Leader before coming to a decision on whether to continue in this position in the future.”

When the media had queried whether he had been influenced to step down, he had noted: “There are no such influences. On 24 February, a vote was held and I was chosen to be the Chairman. On 25 February, I considered if there was any agreement within the party. During the weekend, I left Colombo. I was in touch with Premadasa. I informed SJB General Secretary MP Ranjith Madduma Bandara that if there is going to be a split within the party and that if there is no agreement, I am ready to resign from this post.”

The SJB, it is learnt, intends to propose SJB MP and former COPF Chairman Dr. Harsha de Silva’s name for the post. However, de Silva had said he did not wish to be re-appointed to the post as well.

Dissanayake was nominated by ruling party MPs and this fact was used by a group of SJB members to push for Dissanayake’s resignation and make way for de Silva’s re-appointment as COPF Chairman since it was endorsed by the party leadership.

Mayantha in Cabinet

However, the discussion about Dissanayake’s resignation from the COPF chairmanship was discussed once again at a meeting of SJB seniors.

During the discussion, Premadasa, it is learnt, had said Dissanayake should not rush into decisions since his name had already been included in the list of Cabinet ministers under an SJB government.

Meanwhile, former SJB MP and the party’s mayoral candidate for Colombo Mujibur Rahman has told de Silva not to be upset thinking about positions. “I have lost a Parliament seat and the mayor seat is also elusive,” he has said. 

Premadasa was also asked to attend Parliament on sitting days since it was important for the Opposition as well as the party. “You must be in Parliament without going around the country on sitting days,” he has said. Rahman has said that Premadasa should read Karl Marx’s book to understand that.

Vajira acts

Finally, United National Party (UNP) MP Vajira Abeywardena was appointed as the Acting Chairperson of the COPF. 

Abeywardena’s temporary appointment as the Acting Chairperson of COPF has been criticised by Opposition MPs who claim that an acting chairperson is only appointed if the chairperson of COPF has expressed inability to attend that particular session.

“When the post is vacant, there cannot be a temporary chairperson being appointed to the committee,” Opposition MP Chandima Weerakkody has explained, adding that the Government had pushed this move in order to get approval to several pieces of legislation that are to be taken up in the House this coming week. Weerakkody has further alleged that Abeywardena had approved certain pieces of legislation as soon as he was appointed as a temporary Chair without any study into them.

Former COPF Chairperson SJB MP de Silva meanwhile claimed that Abeywardena’s appointment and action were a violation of Sri Lanka’s democracy since the COPF chair must be from the Opposition.

“Gov MP Vajira Abeywardena has approved 8 gazettes after being made Pro Tem Chair #COPF (Comm on Public Fin). Utter violation of #SriLanka democracy as Chair must be Opposition MP per @ParliamentLK rules. Didn’t think I was such a threat even w my pro @IMFNews reform position!” de Silva had tweeted.

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