February 12, Colombo (LNW): In a distressing incident this morning at the Meegoda Economic Center, a 23-year-old woman was wounded in a shooting carried out by an assailant on a motorcycle, as confirmed by Sri Lankan police.
Although specific details are limited, authorities have verified that the assailants, both clad in full-faced helmets, arrived on a motorbike and infiltrated the premises. Disturbing footage from the CCTV cameras, obtained by News 1st, reveals that one of the individuals brandished a firearm, threatening the young woman and another person, while the accomplice emptied the cash register.
The victim, employed as a cashier at a shop within the economic center, was promptly taken to Homagama Hospital for necessary medical attention.
On 08 Feb 2024, the Domestic Operations Department of the CB issued a press release announcing the decision of the Monetary Policy Board (MPB) taken at its special meeting held on 07 Feb 2024 to relax restrictions on standing facilities with effect from 16 Feb 2024. The press release clarified the the purpose of imposing such restrictions as well as their favourable outcomes that helped relaxation of same now.
The purpose of this short article is to shed some light on the corruptive manner in which the CB/MPB conducts the monetary policy as revealed from those restrictions of standing facilities, their implementation, relaxation and contents of relevant press releases.
In this article, the corruption is defined as adoption of ad-hoc policy actions in non-compliance with the generally accepted policy principles, the lack of publicly accountable internal controls behind such policy actions, breach of the authority, arbitrariness of policy actions without supporting facts/data and resulting losses to public funds.
The empirical evidence is provided below as to how the CB monetary policy has been significantly corruptive since the imposition of said restrictions announced on 02 January 2023 at the dawn of the year 2023.
Principles behind policy interest rates-based monetary policy model in Sri Lanka
Similar to many central banks, the CB follows policy interest rates-based bank reserve/liquidity management model for the goal of inflation control or preservation of price stability. This model contains several principles/elements (Read global monetary policy model).
Policy rates are the official targets for the variability permitted for overnight inter-bank interest rates (OIR). In Sri Lanka, Standing Deposit Facility Rate (SDFR) and Standing Lending Facility Rate (SLFR) are the two policy rates treated as the official corridor for OIR. They are 9% and 10% at present.
Standing facilities of the CB are the conduit used to keep OIR within the policy corridor. This is similar to the managed float exchange rate mechanism. Standing facilities are Standing Deposit Facility (SDF) and Standing Lending Facility (SLF) provided overnight basis without limits. Accordingly, any bank having excess funds/reserves can deposit them at the CB overnight SDF at SDFR. In opposite, any bank facing a deficit of reserves can borrow from the CB overnight SLF at SLFR. However, unlike in SDF, SLF is collateralized with government securities. Therefore, no bank has to lend at rates lower than SDFR or borrow at rates higher than SLFR in the overnight inter-bank market. Therefore, OIR will vary within the policy rates corridor.
In addition, repo and reverse repo auctions (overnight and term) are conducted by the CB to finetune the banking sector reserves in order to keep OIR at preferred locations within the policy rates corridor, i.e., towards lower bound or upper bound.
OIR is the operating target of the monetary policy used to transmit the policy to achieve the policy goal of the price stability.
Accordingly, the major monetary policy decision of the MPB in this model is the policy rates, i.e., raising, cutting or keeping unchanged, at each policy meeting.
Accordingly, the model principle is the market-based OIR and policy transmission through bank reserves held at bank vaults and the CB. Accordingly, concerns over new monetary policy model with restrictions on standing facilities are presented blow.
Violation of monetary policy principle
Restrictions imposed by the CB on SDF and SLF effective from 16 January 2023 (a holiday) are a gross violation of the model principles set out above. The restrictions were as follows.
SDF maximum 5 days a month for a bank.
SLF maximum 90% of statutory reserve of the bank at any date.
With effect from 16 February, SDR restriction is relaxed as 10 days a month while SLF restriction has been removed.
Facts relating to policy model violations due to restrictions are as follows.
As policy rates corridor became dormant, the policy model was irrelevant.
Restrictions are the rations on standing facilities. Policy rates are the price controls on overnight inter-bank loans. Therefore, when price controls and rations are imposed together, natural market behaviour is the emergence of the black market. This means that OIR is likely to behave outside policy rates corridor (control price).
Further, continued restriction on SDF will involve in black market of OIR below SDFR. Therefore, SDFR will not be an effective policy rate for the official OIR corridor.
Therefore, the operating mechanism for the price stability goal of the monetary policy has been unduly changed from policy rates and OIR-based market transmission to ad-hock, bureaucratic monetary interventions in bank reserves and banking businesses (i.e., bank interest rates and credit).
Disruption of bank standard liquidity management
In any country, standard liquidity management of banking system is the reserve management through central bank standing facilities. This ensures the smooth functioning of the fractional reserve system to preserve the confidence in the fiat money system.
However, CB restrictions disrupted the system causing significant volatilities of bank reserve operations and liquidity management. As a result, daily operations of reserves of banks through OMO became highly unpredictable and bureaucratic (see two Charts below). This is a significant threat to the system stability in a fractional reserve system, given the foreign currency and debt default crisis confronted by the economy at present.
If any economist believes that reserve operations of Sri Lankan banking system as shown by above two Charts are healthy and sound despite those restrictions, he/she will need to learn the subject further.
Routine conduct of reverse repo auctions to cover up adverse impact of restrictions
Reverse repos are the means of lending reserves to banks against collaterals of government securities through auctions announced by the CB. They can be overnight basis or term basis or both.
Consequent to the SLF restriction and banks not willing to lend inter-bank out of surplus reserves, the CB introduced a routine system of reverse repo auctions to provide banks with fresh liquidity/reserves to cover up the restrictions. Accordingly, the CB conducted 297 auctions and provided a total of nearly Rs. 11,556 bn of reserves to OMO participants (see the Chart below). This comprises 72% of overnight reverse repos, 13% of 7-day reverse repos and 13% of long-term reverse repos. Therefore, the policy rationale for the SLF restriction is highly questionable.
However, even with restrictions banks also have utilized a significant volume of standing facilities during the restricted period. Accordingly, the total amounts of SDF and SLF were Rs. 16,440 bn and Rs. 22,713 bn, respectively. Accordingly, reverse repo auctions have been utilized to manage mismatches among liquidity sources.
According to publicly available information, concerns are raised on the ad-hock nature of the conduct of reverse repo auctions and resulting irregularities as follows.
The manner in which the term for auctions is decided to provide reserves, i.e., overnight, short-term and long-term, is questionable.
Acceptance of amounts lower than the offers for auctions despite higher demand.
High volatility of auctions on a daily basis.
As the main source of supply reserves, overnight reverse repo auctions were regularly conducted in a highly bureaucratic manner where reverse repo rate was used as an unofficial and arbitrary policy rate to drive inter-bank market as official policy rates were frozen with restrictions on standing facilities. This type of hidden operations is not in good governance of market based monetary policy model.
The interest rates on overnight reverse repos have been mostly lower than the SLFR despite no difference between two types of lending of reserves. The rate difference has been in the range of 40-95 basis points with average of 64 basis points (see Chart below). Therefore, the loss to public funds for the reference period in respect of total overnight repos of Rs. 8,583 bn is around Rs. 13.5 bn. Further, reverse repo rates have been mostly lower than overnight call money rates too while inter-bank overnight repo rate has been significantly higher than the call money rate. This confirms unreasonable conduct of reverse repo auctions favouring banks.
The basis of the offer of long-term reverse repos with terms longer than one month is highly questionable as CB’s monetary policy does not target such longer-term reserves and interest rates. For example, 11 auctions have been announced for terms between 700-1,188 days while 4 auctions failed without bids while others ended up accepting smaller amounts of bids than announced. It is strange that two outright sale auctions for bonds with remaining maturity of 741 days and 878 days were offered for Rs. 40 bn but ended up with lower amounts of bids worth Rs. 9 bn with acceptance of Rs. 4.2 bn. The yield rates applicable to acceptance are highly arbitrary as there are no market benchmarks. Data show that such longer term auctions have been arranged for targeted banks.
Use of Treasury bill auction yields as de-facto policy interest rates outside the monetary policy model
As policy interest rates-based OIR did not exist due to restrictions and other structural issues, the CB has been using Treasury bill auction yield rates as de-facto policy rates to communicate and transmit the monetary policy direction. The high activity in the Treasury bill market as compared to the small size of the inter-bank market and bank reserves during the reference period has led to this unofficial policy stance. In this regard, 91-day yield has been highly targeted due to dominant demand.
CB’s direct subscriptions to auctions and special issuances of Treasury bills and post-auction private placement window have performed as contingent funding to drive yield rates at levels and directions preferred by the CB (see Chart blow). In addition, restructuring of provisional advances to the government and Treasury bill holding of the CB (around Rs. 2,713 bn) on 21 September 2023 has helped ease market pressure on new issuances. With that ease, the CB now uses post-auction private placement window to drive yield rates.
At the Presidential Commission 2017, all frontline monetary policy economists of the CB testified that private placement system was a powerful policy instrument to control interest rates in the monetary policy where the Commission determined the system was filled with significant irregularities subject to forensic audit. Therefore, the present post-auction private placement window in driving yield rates in the direction of the monetary policy is not immune to such irregularities as the system is implemented by same officials who favoured the old system.
The above Chart shows that policy rates and OIR have behaved without a clear policy trend while 91-day Treasury bill yield has got an underlying story. In this story, it is surprised to observe following two facts.
Why the yield rate was driven down continuously while policy rates continued to be raised in March 2023.
Why the yield rate was held flat in the last quarter of 2023 despite significant cut in policy rates since June 2023.
Why the yield rate has been left for faster reduction during the last four weeks. This seems to facilitate the latest CB communication for the need to reduce market interest rates without cutting policy rates further.
In fact, Treasury bill yields were used as the conduit to implement the super monetary tightening cycle too (see the Chart below). This unauthorized practice has punished the public debt and tax payers unreasonably for the conduct of the arbitrary monetary policy. For example, raising yield rates to 30%-33% during the post-pandemic political crisis driven by the monetary policy led domestic debt service unsustainable causing a de facto default by way of restructuring of domestic debt. The government has failed throughout the history to set up an independent debt office due to the resistance of the CB’ s market network.
Overall, this type of hidden, unauthorized monetary manipulations is not in good governance of the market-based monetary policy model and principle.
Serious lapse in policy governance
The restrictions on standing facilities were imposed by the Director, Domestic Operations of the CB from his circular (see below) dated 02 January 2023 issued in terms of Consolidated Operating Instructions on Market Operations dated 21 May 2021. However, the Director does not indicate specific reasons for such restrictions/new market regulation.
However, the relaxation now communicated by Communications Department on 08 February 2024 is a decision of the MPB. Therefore, several governance issues are raised.
First, whether the Director, Domestic Operations, had the statuary powers to invalidate and supersede the policy rates corridor-based monetary policy decided by the Monetary Board at that time.
Second, why does the MPB enter into shoes of the the Director, Domestic Operations, to relax a market regulation imposed by him if Consolidated Operating Instructions on Market Operations still prevail.
Third, specific reason why the MPB has decided to continue with the restriction on standing deposit facility as 10 times a month is not communicated in the CB press release. Therefore, it is clear that the MPB has not made any empirical study on market implications and risks caused by restrictions including the continued restriction.
Fifth, the press release has not been issued as a statement of the MPB with names of the members voting and non-voting and, therefore, who accepts the responsibility of the press release is not clear, given its flawed contents as indicated below.
Sixth, these restrictions have not been applied to primary dealers. As they are not subject to statutory reserve requirement, they may have used standing facilities without limits.
Deceptive and flawed contents of the relevant press releases
Selected contents of the press release dated 07 January 2023 on the imposition of restrictions
The Director, Domestic Operations, did not indicate reasons behind his circular dated 02 January 2023. However, Communication Department of the CB issued a press release later on 07 January 2023 to explain the rationale behind the circular. Accordingly, the press release is reproduced with highlights below (Press Release).
Five selected highlights of the press release and my comments are as follows.
Highlight 1. The liquidity deficit in the domestic money market, which remained significantly high during the first half of 2022, declined in the latter part of 2022. However, in spite of the improvements in money market liquidity conditions, market interest rates continued to remain high, partly due to subdued activity in the domestic money markets.
My comments
There is no data to show the decline in deficit and improvement in the market liquidity conditions as stated. Subdued inter-bank market activity was not a result of liquidity deficit but a result of the loss of inter-bank trust and channeling funds to Treasury bill market in view of super high yield rates and low risks.
Highlight 2. At the same time, it has been observed that several Licensed Commercial Banks (LCBs) have continued to depend excessively on the overnight Standing Facilities under Open Market Operations (OMOs) of the Central Bank without considering market based funding options to address their structural liquidity needs. Such LCBs have not indicated any signs of taking remedial actions to reduce the over dependence on overnight facilities offered by the Central Bank, which are available to be used as fall back options after utilizing all other funding options.
My comments
Standing facilities are the core of the monetary policy for daily OIR target or policy rates corridor. Therefore, these facilities are not fall back options to be utilized after other funding options for bank liquidity management.
In the monetary policy model, standing facilities are free from limits or rations and, therefore, banks are not expected to limit themselves on the dependence over them.
How banks resort to standing facilities for liquidity risk management is their choice and addressing structural liquidity needs is a subject to be resolved by bank supervision. Accordingly, bank supervision has imposed liquid asset and liquidity coverage requirements and management of liquidity risk on prudential grounds among other banking risks. Further, how such ad-hock restrictions imposed by the monetary policy would support the structural liquidity is unknown even in bank supervision.
The subject of structural liquidity needs is not clear in both bank risk management and bank supervision. In opposite, liquidity is a very short-term accounting concept derived from the mismatch of tenures between assets and liabilities of banks, mainly deposit liabilities and loans. As deposits are byproducts of loans created by banks and all deposits are sight liabilities, banks have no options other than liquidity risk management on a daily basis while resorting the inter-bank market and central bank standing facilities. It is natural for banks to confront mismatch between cash inflows and outflows arising from the structure of assets and liabilities which affect bank reserves. Accordingly, central bank can target market interest rates in their monetary policies only if they they carry out monetary operations to fill the bank liquidity/reserve gaps on a daily basis. Therefore, structural liquidity needs is bizarre concept of the CB’s Communication Department.
Highlight 3. Such behaviour of LCBs affects the efforts of the Central Bank to reactivate the money markets, primarily the interbank call money market and the repo market, while posing a threat to smooth channeling of funds in the economy with a possibility of clogging the payment and settlement systems.
My comments
Stability of the payment and settlement systems is not a part of the the policy rates- based monetary policy model. It is a technical aspect to ensure that payments go through without interruption. However, as payments arise from bank reserves, the CB has to ensure orderly supply of reserves to avoid liquidity crunches. In this regard, the CB has various other instruments such as interest free intra-day liquidity facility and emergency lending outside the monetary policy to deal with such payment system risks. Therefore, restrictions on standing facilities in fact will worsen payment system risks. This may have led banks to borrow more from intra-day liquidity facility. As reported, borrowing through intra-day liquidity facility in 2022 has been as high as nearly Rs. 650 bn a day on average.
Activity level of inter-bank and money markets is part and parcel of the monetary policy OMO operations. It is common sense that the CB’s super tight monetary policy driven through government securities yield rates at around 30% disrupted money and inter-bank markets, given extremely high risks involved in private credit markets above 30% interest rates.
The loss of inter-bank trust amid the liquidity and interest rate risks consequent to the super tight monetary policy was the reason for the low activity in the money and inter-bank markets where markets were closed some days. Liquidity stresses and bank turmoil were reported from many countries including the US and UK in the recent past due to such tight monetary policies.
Highlight 4. The imposition of the limitations on the Standing Facilities is expected to reduce over dependence of LCBs on the overnight facilities offered by the Central Bank and support the reactivation of the domestic money market, which remained nearly inactive for the last few months, while encouraging LCBs to transact among themselves.
My comments
As stated above, inactivity of money markets, i.e., inter-bank market, is an outcome of the super tight monetary policy and underlying inter-bank trust issues in the environment of the debt default and economic crisis in Sri Lanka. Therefore, there is no macroeconomic or monetary policy rationale to impose such restrictions on CB standing facilities as they would worsen the bank liquidity situation.
Further, data do not show any significant reactivation of inter-bank market so far (see Chart below). The increase in repo market with significant volatility from November 2023 is due to significant increase in market values of government securities consequent to the steady reduction in yield rates and high liquidity risks caused by interest rates. Meanwhile, inter-bank call money has remained at a low activity mostly below Rs. 10 bn throughout the period as banks had frequent access to the CB’s reverse repo window at lower interest rates.
Highlight 5. These measures would also eliminate unhealthy competition for deposits among financial institutions and would be instrumental in inducing a moderation in the market interest rate structure (of both deposit and lending interest rates) in the period ahead along with improving market liquidity conditions, which will help to restore stability of the Sri Lankan economy, while preserving stability of the financial system.
My comments
This is a completely meaningless view.
First, it is impossible to think that these restrictions will improve the healthy competition for deposits among financial institutions. The flow of deposits is an outcome of credit creation and market share of banks.
Second, the CB issued a monetary order to require banks to reduce interest rates on credit products as interest rates did not moderated as the CB envisaged. It is common sense that such restrictions will not moderate market interest rates as those are market distortions. Recent interest rate reductions came from other monetary policy actions inclusive of manipulations in Treasury bill yield rates as already stated.
Third, there is no evidence to establish that these restrictions helped restore the stability of the Sri Lankan economy and preserve financial stability as the country is still struggling in the foreign currency and debt crisis. Those are the subjects of a wider macroeconomic policy package. If restrictions have been so favourable as stated, the MPB should continue these restrictions for several years to come until the economic crisis is over.
Overall, if these contents of the press release are correct, the Director of Domestic Operations of the CB should be the most single public official who can act to recover the economy from the current crisis because market restrictions imposed by him on 02 January 2023 has had magical powers on the stability of the financial system and economy.
Selected contents of the press release dates 08 February 2024 on the relaxation of restrictions
The press release is reproduced with highlights below ((Press Release).
This press release has been issued by Domestic Operations Department by referring to the purposes of restrictions on standing facilities communicated in the press release dated 07 January 2023 issued by the Communication Department on such restrictions imposed by the Director, Domestic Operations, who failed to indicate such purposes in his Circular dated 02 January 2023. Accordingly, three key highlights of the press release and my comments are as follows.
Highlight 1. These measures were imposed with the intention of reducing the overdependence of LCBs on the overnight facilities offered by the Central Bank, supporting the reactivation of the domestic money market, particularly the call money market, and inducing LCBs to introduce internal corrective measures.
Highlight 2. The Central Bank observes that these measures have yielded positive outcomes by way of reactivating the domestic money market and curtailing excessive competition for deposit mobilisation among financial institutions. These measures were also instrumental in inducing a moderation in the market interest rate structure in line with the monetary policy stance, while preserving stability of financial institutions and the financial system.
Highlight 3. The relaxation of the restrictions on the Standing Facilities is expected to accelerate the downward adjustments in market interest rates as envisaged under the overall monetary policy direction of the Central Bank.
My comments
As already commented above on the first press release, all contents in this press release are unjustified. There is no evidence to establish that inter-bank market got activated and market interest rates structure got moderated or financial system stability was preserved by those restrictions. If the position is correct, the relaxation is unfounded as it would worsen favourable market outcomes already achieved and will not help accelerate downward adjustments in market interest rates in line with the monetary policy, especially as inflation has started rising again.
Further, the first highlight mentions about inducing LCBs to introduce internal control measures. However, what those measures are not stated in the press release.
This press release has forgotten to mention about progress on restoration of the stability of Sri Lankan economy through market restrictions as envisaged in the first press release.
Accordingly, the rosy story painted as usual in the press release regarding reasons for relaxation of standing facilities is unjustified. It is only a text of fancy technical terms which are not understood by even those who drafted and approved the press release. Therefore, press releases are meaningless communications to the public.
Concluding Remarks
Empirical facts presented above justify that monetary policy with stated restrictions on standing facilities has been an arbitrary, bureaucratic operation in violation of principles behind the present market-based monetary policy model.
These restrictions have led to a massive scale of providing reserves to banks through ad-hoc reverse repo auctions-based money printing. As internal controls and processes on such auctions are not transparent, the possibility of significant irregularities exists, given its involvement in trillions of money printing to identified bank dealers. There is no information whether auditing authorities are even aware of such bureaucratic monetary operations and resulting exposure to significant financial and system irregularities including losses to public funds.
It is not possible to assume that this type of bureaucratic monetary policy is able to achieve the price stability of the economy because it is only carried out to provide billions of new reserves to money dealers on a daily wholesale basis.
As the IMF financial programme is built on good governance and anti-corruption principles, relevant authorities must examine how the said restrictions and their outcomes inclusive of concerns raised as above could pose risks to the good governance and anti-corruption-based macroeconomic management model.
As a final piece of advice, the government must consult subject specialists whether the present form of bureaucratic monetary policy model (with or without restrictions) can help recover the credit flow which is directly instrumental in the recovery of the economy, especially through small and medium enterprises and other priority production sectors (such as exports and import substitution) before it is too late. This is necessary as the CB Governor stated at a recent Parliamentary Committee meeting that elected members of the government do not have the technical knowledge on such macroeconomic management subjects.
The recovery from the present bankrupt economy status requires a blend of expansionary monetary and fiscal policies that target priority sectors and distribution of credit to revive production and investment activities on priority basis. Therefore, the present monetary policy model will not help that type of policy package and macroeconomic recovery.
(This article is released in the interest of participating in the professional dialogue to find out solutions to present economic crisis confronted by the general public consequent to the global Corona pandemic, subsequent economic disruptions and shocks both local and global and policy failures. All are personal views of the author based on his research in the subject of Economics.)
P Samarasiri Former Deputy Governor, Central Bank of Sri Lanka
(Former Director of Bank Supervision, Assistant Governor, Secretary to the Monetary Board and Compliance Officer of the Central Bank, Former Chairman of the Sri Lanka Accounting and Auditing Standards Board and Credit Information Bureau, Former Chairman and Vice Chairman of the Institute of Bankers of Sri Lanka, Former Member of the Securities and Exchange Commission and Insurance Regulatory Commission and the Author of 12 Economics and Banking Books and a large number of articles published.
The author holds BA Hons in Economics from University of Colombo, MA in Economics from University of Kansas, USA, and international training exposures in economic management and financial system regulation)
Civil society organizations (CSOs) engaged in the co-creation of third National Action Plan have collectively decided to withdraw from the Open Government Partnership (OGP) in Sri Lanka to express their opposition to the recent actions of the Government, specifically the purported passage of the Online Safety Act and attempts to introduce a draconian anti-terrorism law despite widespread public resistance. CSOs are concerned that these actions of the Government are aimed at suppressing the civic space and fundamental freedoms of the people, and therefore clearly contradict the fundamental principles of the OGP.
As the co-convenors of the CSOs in the OGP process in Sri Lanka, Transparency International Sri Lanka (TISL) and Sarvodaya Shramadana Movement, we wrote to the President today to officially inform him of this collective decision.
The full letter to the President is attached herewith (in English, Sinhala, and Tamil).
Background information:
The Open Government Partnership (OGP) is a multi-stakeholder initiative focused on improving government transparency, ensuring opportunities for citizen participation in public matters, and strengthening mechanisms for public accountability.
More than 70 countries, a growing number of local governments and thousands of civil society organizations are members of OGP. Under the OGP, all participating countries are required to develop a two-year National Action Plan through a multi-stakeholder process to implement governance initiatives in prioritized sectors in collaboration with civil society.
Since 2015, Sri Lanka has been internationally committed through its membership in the OGP. Since then, two National Action Plans have been prepared, but the implementation faced various challenges.
February 12, Colombo (LNW): The Voice of Migrants Network (VOM) vehemently condemned the recent decision by Israeli authorities to terminate the employment of Palestinian migrant workers in Israel, citing the Israeli-Palestinian conflict as justification.
This act of discrimination not only violates labour rights but also perpetuates a cycle of injustice against migrant communities, the organisation said in a statement.
The Israeli government’s decision to dismiss 72,000 Palestinian migrant workers from their jobs on construction sites in Israel and impose a ban on their entry is deeply troubling, it added.
Such actions are not only discriminatory but also disregard the fundamental rights of migrant workers, the VOM pointed out.
It is disheartening to witness that Israel has opted to fill job vacancies with migrant workers from other countries, including Sri Lanka, amidst global concerns over the ethical implications of such employment practices.
Migrant workers should not be made scapegoats in political conflicts; they are innocent victims who deserve equal treatment and protection under the law.
The recent bilateral agreement between the Indian government and Israel, which aims to send a significant number of Indian workers to Israel, has raised further concerns.
The National Platform of Central Trade Unions has rightfully criticised this decision, denouncing India’s involvement in what they describe as Israel’s “genocidal war against the Palestinians.”
As a national network advocating for migrant workers’ rights, VOM stands firmly against discrimination of any form.
Instead of exploiting conflicts for economic gain, we urge the Sri Lankan government to express its strong disapproval of Israel’s discriminatory policies through diplomatic channels.
In conclusion, VOM calls for solidarity and support for Palestinian migrant workers and urges all parties involved to prioritise human rights and dignity in their actions.
08 February 2024: A National Peoples Power (NPP) delegation led by its leader comrade Anura Kumara Dissanayake was invited to India for talks with India’s External Affairs Minister Dr S. Jaishankar, the National Security Adviser (NSA) Mr Ajit Doval, and the Foreign Secretary Mr Vinay Mohan Kwatra. Dr Jaishankar’s social media posts denoted positive and productive discussions that centred on bilateral relationships, and mutual benefits.
Comrade Anura is also the leader of the Janatha Vimukthi Peramuna (JVP). This is not the first engagement of the JVP with the Indian Government though this recent visit is being subject to much debate and criticism mostly by political pundits. Social media posts from those affiliated with the NPP and the JVP have interpreted this visit as a recognition by India the potential of comrade Anura of winning the next ‘would-be’ presidential elections. Previously, diplomats did not endeavour to engage with the JVP because it was not seen as a strong enough political force. Circumstances have now changed with the NPP increasingly gaining more visibility, popularity and credibility, particularly among the lower middle class.
The first engagement the JVP had with Indian government was when I was the General Secretary of the Janatha Vimukthi Peramuna and its Politbureau member in charge of external affairs. We maintained good relations with the Indian High Commission. Even comrade Rohana Wijeweera accompanied me to visit Mr Narasimha Rao when he visited Sri Lanka in the early eighties. We had by then dropped the policy of “Indian Expansionism”. It was dropped in 1972 and was resurrected by the JVP post 1984. The leading comrades like Somawansa Amarasinghe who led the JVP later, were strongly anti-Indian, that they went as far as wanting to ban Indian imports to Sri Lanka. Ironically, his escape from Sri Lanka occurred via India, arranged by the mediation of comrade Hendry Wickremasinghe. More recently, diplomats of India, US and several other countries have officially met and have held discussions with the NPP and its leaders.
Historically, Sri Lanka being in close proximity with India have had significant cultural, economic, historical, political, and geostrategic relations. India has played a major role in influencing many aspects of Sri Lankan society. Currently, India plays an increasingly significant role in the economic development of the Island. It has been influential also in the international sphere. Given India’s rise to a superpower status, it makes eminent sense for the NPP and the JVP to recognise this reality and develop good relations with India.
Since the JVP’s revival in the recent years and the establishment of the broad front – the National People’s Power, I have not heard them using the political slogan “Indian Expansionism” anymore. As a political activist from my Maoist days, I agreed with the concept of Indian Expansionism put forward by comrade Mao-Zedong when he was the leader of the Chinese Communist Party. However, it was not intended to be used as a weapon against the Indian working class or Malaiyaha workers in Sri Lanka. We wanted to make the working people of Sri Lanka aware of the threat posed by the Indian capitalist class, their collaboration with the Sri Lankan counterparts and their influence on Malaiyaha workers.
It is worth remembering that in the 1980s, particularly at the peak of the LTTE militancy, almost all major and minor political entities in the south as well as in the north were against Indian involvement in Sri Lanka, as reflected in the strong opposition to the Indo-Lanka Accord by the JVP as well as a majority of the Sri Lankan populace and its political movements. Most of the Buddhist, Catholic, Hindu and Islamic religious representatives opposed it. Among them were the current Prime Minister’s Mahajana Eksath Peramuna (MEP), the Sri Lanka Freedom Party (SLFP), and all Maoist groups. The exceptions to this were some Members of Parliament of the ruling United National Party (UNP) such as Messrs A C S Hameed and Gamini Dissanayake led by President J R Jayawardene, the Sri Lanka Mahajana Party (SLMP), the Communist Party of Sri Lanka (CPSL) and the Lanka Samasamaja Party (LSSP). In the North and East, the Eelam People’s Revolutionary Liberation Front (EPRLF) and a few other small groups were also exceptions.
It was President Jayawardene, who invited the Indian Peace Keeping Forces (IPKF) to Sri Lanka, despite the opposition by his Prime Minister R Premadasa and others in his party. Minister Gamini Jayasuriya of the UNP regime resigned from his cabinet, expressing his opposition to the Indo-Lanka Accord. After the Indo-Lanka agreement, Prime Minister R Premadasa became the leader of the anti-Indo-Lanka Accord campaign. He provided armaments to the Liberation Tigers of Tamil Eelam (LTTE) to oppose the IPKF, and ultimately pressured India to withdraw the Indian army. The current President Ranil Wickremesinghe was the Leader of the House of the Premadasa administration at the time. There were protests against the Indo-Lanka Accord and the IPKF held near Fort Bo Tree in Colombo.
The UNP regime led by President Jayawardene was fighting for their political survival with the LTTE waging war in the North and the East and the JVP launching its armed opposition in the South. The regime had no intention of developing a just and long-lasting solution to the national question. The Indo-Lanka Accord of 1987 was drafted to enable the Indian government to intervene militarily in the Sri Lankan conflict with the approval of the Sri Lankan government. While the Accord recognized the country’s unitary status and its territorial integrity and sovereignty, it also acknowledged the demands of the Tamil population in the North and East. Yet, the Indo-Lanka Accord made the national question of Sri Lanka grow worse. Nevertheless, India’s principal stand on the national question on power-sharing based on the 13th Amendment to the Constitution remains unchanged.
This Accord did not come into effect because of a participatory consultative process adopted with people of Sri Lanka, rather it was unilaterally imposed from above. The opposition of many political entities to the Indian intervention through Indo-Laka Accord and the IPKF can be seen in this light. For the lack of any genuine endeavours to develop and implement a just and long-lasting solution to the national question, all political entities in Sri Lanka need to be held responsible and accountable.
Advocacy of “Indian Expansionism” and “Anti-Indianism” during the 1983 – 1987 period cannot be understood without discussing the global socio-economic and political developments at the time. If we want to be honest and critical when looking at the past, the actions and policies of all the major political parties need to be scrutinised. This is vital given the parlous state the country is in today. However, not a single political entity appears to be brave and honest enough to embark on this vital and necessary task.
In the sixties not only the JVP, but also all other Maoist groups accepted the concept of Indian Expansionism. Those times have changed. Due to the innate nature of neo-liberalism, all its major players overtly and covertly appear to engage in an expansionist agenda. In realpolitik, one needs to consider the changes that have taken place in the regional and international power balance from the 1960s, 1980s, and particularly from 1987 to 2024. The ‘socialist’ camp led by the Soviet Union collapsed in 1989. China has risen as a new global military and economic superpower. India is also becoming an economic behemoth and is aiming to be one of the main players on the international stage. So, it comes as no surprise that Chinese and Indian interventions and tensions in the region have increased.
The NPP and the JVP appeared to have mellowed their opposition to the 13th Amendment to the Constitution and the Provincial Councils, which came to fruition as a result of the Indo-Lanka Accord. They have accepted the amendment as an inflexible feature of the constitutional landscape, till a new constitution is adopted and when the executive presidency is abolished. If any of these structural, political, legislative, and constitutional changes would be possible to be implemented, is still open to debate. The JVP has recognised the significant role India plays in the region in political and economic terms. From my point of view these progressive measures are in stark contrast to the positions they took in the late 1980s. Nevertheless, what the JVP proposes as the solution to the national question remains to be developed and elucidated.
In Sri Lanka, any political party intending to be in power, needs to build diplomatic relations with as many countries as possible. Otherwise, political and economic survival will be almost impossible, particularly due to the influential role India and China play in Sri Lankan politics. In the Indian ocean, any political party or coalition expecting to come to power needs to consider how they can navigate the competitive agendas of these two superpowers, while at the same time pursuing a political agenda that favours the interests of the people of Sri Lanka.
In view of the increasing popularity of the NPP in an election year their visit to India should be seen in this light. This visit is the first time the Central Government of India invited the NPP and its leader. This is not unusual given past practices of the Indian government. In a comparative sense, one needs to acknowledge the fact that the NPP has forthrightly moved into the spheres of policy development, social mobilisation, and propaganda, though there is still a long way for them to go. There are problematic issues, shortcomings, mistakes and avoidance of looking at their own past that need to be discussed and rectified. However, in this crucial regard, not a single political entity among the progressives in Sri Lanka can be considered perfect.
Given the superpower rivalry in the region, it will not be a surprise if China too would court the NPP in the not-too-distant future.
February 12, Colombo (LNW): Chanaka Dharmawickrama, Co-Convener of the Health Trade Union Alliance, disclosed that one of the two cardiac catheterization units at Kandy National Hospital is currently inactive, placing a significant burden on 8,000 heart patients awaiting treatment.
Dharmawickrama also highlighted a widespread issue of diagnostic machines being non-operational in hospitals across the island.
Responding to inquiries, Deputy Director of the Ministry of Health, Dr. G. Wijesuriya, assured that many of the malfunctioning machines have been repaired, with ongoing efforts to restore the remaining units.
February 12, Colombo (LNW): India’s Unified Payments Interface (UPI) will be launched on 12 February, Foreign Minister Ali Sabry has told the Indian media.
“The UPI payment gateway will be signed. And I think both our leaders will connect online which will help increase tourism,” the Minister said speaking to WION diplomatic correspondent Sidhant Sibal in Perth.
“The Minister is in Perth for the Indian Ocean conference. He also pointed to the establishment of Indian IIT in his country. He said, “A delegation from Sri Lanka has gone to IIT Madras and they are discussing this possibility of establishing an IIT campus in Sri Lanka,” the WION reported.
Sri Lanka currently continues operations of the payment and settlement systems to achieve significant growth in digital transactions in 2024, Central Bank policy statement divulged.
With the view of the development of the payment and settlement regulatory framework, the Central Bank aims at revising the Payment and Settlement Systems Act, No. 28 of 2005 (PSSA)and enacting the new PSSA in 2025, to facilitate the rapid expansion of payment innovations.
Further, the Central Bank is to revise regulations to support the expansion of digital payments and to revise the existing regulatory framework to facilitate more FinTechs entering in the coming years.
In terms of strengthening the retail payment infrastructure, LankaPay (Pvt) Ltd (LPPL), under the guidance of the Central Bank, will be developing the Government Digital Payment Platform (GDPP) via the LankaPay Online Payment Platform (LPOPP), to enable government institutions to receive payments digitally from the public, CB statement highlighted.
Under this set up, Sri Lanka and India joined hands to fast track an early roll-out of the Unified Payments Interface (UPI) system with the view of enhancing bilateral economic cooperation significantly, State Finance Minister Shehan Semasinghe said.
He revealed this new development in digital payments at a meeting with Indian High Commissioner to Sri Lanka, Santosh Jha recently.
The high-level discussions, held in Colombo, transpired India’s steadfast support for Sri Lanka’s ongoing debt restructuring process and its economic recovery efforts, state minister Semasinghe disclosed.
The implementation of UPI in Sri Lanka will be expedited soon while this digital payment system, is to extend enhanced accessibility and security for transactions between the two countries.he added.
Discussions between the state minister and the Indian high c0mmissioner focused on the increased use of the Indian rupee (INR) in bilateral trade, reducing currency conversion costs and streamlining financial transactions, finance ministry sources revealed.
The Indian High Commission stated via X (Twitter) that they discussed “early launch of UPI, promoting Indian Rupee trade settlement and investments-led economic partnership.”
In July 2023, Prime Minister Narendra Modi and Sri Lanka President Ranil Wickremesinghe signed an agreement on Unified Payments Interface (UPI) acceptance in Sri Lanka during his two-day visit to India.
Prime minister Modi noted that the governments of both India and Sri Lanka are working together on fintech sector connectivity by linking the Unified Payments Interface (UPI) and Lanka Pay with the aim of facilitating recurring payments digitally.
February 12, Colombo (LNW): Claiming that Sri Lanka can no longer function as an isolated country, NPP leader Anura Kumara Dissanayake said today their intention is to strengthen diplomatic ties to garner international support to achieve the desired transformation in the country.
Speaking to the media at the Bandaranaike International Airport (BIA) on his return from India, he said India is an emerging country in the region and country expertise in the IT sector and that Sri Lanka can obtain support from them.
“We must stop the destructive political culture of 76-years. People have high expectations and are awakening to make that transformation.
Our intention is to give leadership to this expectation and awakening to make a transformation in the country. We need international support for that transformation. We are not a developed country or a country with modern technology.
“We need capital and technology in some sectors. We also need to deal with some countries to expand our market. We can’t achieve our targets by being an isolated country in the world. Therefore, our target is to strengthen our ties,” he said.
Responding to a question, he said the NPP should not change its political or economic policies to visit a country or for diplomatic meetings. “India is an emerging country in the region. We can obtain more support in sectors such as IT from India. We hope we can get support according to our own agenda and in line with our national plan,” he said.
February 12, Colombo (LNW): Prime Minister Shri Narendra Modi, President of Sri Lanka, Mr. Ranil Wickremesinghe and Prime Minister of Mauritius, Mr. Pravind Jugnauth will witness the launch of Unified Payment Interface (UPI) services in Sri Lanka and Mauritius, and also RuPay card services in Mauritius, on Monday 12 February, 2024 at 1 PM via video conferencing.
India has emerged as a leader in Fintech innovation and Digital Public Infrastructure. Prime Minister has placed a strong emphasis on sharing our development experiences and innovation with partner countries.
Given India’s robust cultural and people-to-people linkages with Sri Lanka and Mauritius, the launch will benefit a wide cross-section of people through a faster and seamless digital transaction experience and enhance digital connectivity between the countries.
The launch will enable availability of UPI settlement services for Indian nationals travelling to Sri Lanka and Mauritius as well as for Mauritian nationals travelling to India.
The extension of RuPay card services in Mauritius will enable Mauritian banks to issue cards based on RuPay mechanism in Mauritius and facilitate usage of RuPay Card for settlements both in India and Mauritius.
February 12, Colombo (LNW): The Commission to Investigate Allegations of Bribery or Corruption (CIABOC) has filed legal action against seven persons, including five staff members of the Department of Motor Traffic (DMT) for the unlawful registration of hundreds of vehicles.
Accordingly, the CIABOC said it has filed said action against the seven persons over the registration of approximately 400 vehicles that had not been cleared by the Sri Lanka Customs, thereby incurring a significant loss of revenue to the state.
Issuing a statement in this regard, the CIABOC revealed that further information was gathered pertaining to 156 of the 400 vehicles, adding that several of them had been categorized as ‘luxury vehicles’.
According to a court order obtained by the CIABOC, seven of the 156 vehicles are to be handed over to the Sri Lanka Customs from their current owners. As such, five of the seven vehicles have already been handed over to Sri Lanka Customs.
State Finance Minister Ranjith Siyambalapitiya inspected illegally imported vehicles seized by the Customs, during a visit to the South Asia Logistics Terminal some times back
The Finance Ministry said that there were altogether 446 vehicles held since 2015. A statement issued by the Ministry quoted Siyambalapitiya as having said that action would be taken soon to sell these vehicles.
The Minister said that it would be a crime to allow the destruction of these vehicles at a time the country was in dire straits
Sri Lanka Customs, the Bribery Commission and the Department of Motor Traffic have uncovered a massive organized fraud that has incurred a loss of more than Rs. 5 billion in revenue to the government through illegal import of vehicles and their illegal registrations.
It has been revealed that this racket had been going on for a long time and more than 400 vehicles had been imported to Sri Lanka in this manner and have been registered illegally.
This was revealed following an investigation conducted into the “Mini Cooper” type vehicle, which was taken into custody by the Bribery Commission after being imported to Sri Lanka using forged documents.
The vehicle, bearing number KE-3845 was imported to Sri Lanka without the clearance of the Sri Lanka Customs and falsely entered into the computer system of the Motor Transport Department, causing a loss to the Government in excess of Rs.2.5 million.
When the facts were submitted to the Colombo Chief Magistrate, the Bribery Commission informed court that the said vehicle was brought to Sri Lanka using fake documents in 2007 and registered as a three-wheeler in 2015.
