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Imran Khan is trying every trick in the book to stay in power

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If imran khan’s opponents hoped their push to unseat him would move at the blistering pace of a Twenty20 cricket match, the Pakistani prime minister has instead dragged them into the slog of a five-day Test. Tension had been building as Mr Khan’s precariously ruling coalition frayed. It looked as if enough defectors had joined the opposition to bring down his government in a no-confidence vote in Pakistan’s National Assembly on April 3rd. But the prime minister, who captained Pakistan’s triumph in the 1992 World Cup cricket final, bowled a googly. He declared the bid to unseat him a foreign conspiracy, dodged the floor vote, dissolved parliament and called for fresh elections.

Opposition legislators cried foul. They said Mr Khan had violated the constitution by getting the deputy speaker of the assembly, a close ally, to quash the vote on vague grounds of a national security threat. The Supreme Court was called in to umpire the mess. The judges have refused to be rushed. On April 6th they held a third day of hearings, and were due to resume on April 7th. Pakistan is meanwhile in constitutional deadlock.

If the judges rule against Mr Khan, the no-confidence vote will be held and he will almost certainly be out of power, less than four years into his five-year term. A new government, probably a broad coalition led by Shehbaz Sharif, the brother of Mr Khan’s predecessor Nawaz Sharif, would then be in charge.

The court could rule instead for fresh elections under a caretaker government. By law such a vote should take place within 90 days, but officials say it might take longer to prepare. This could give Mr Khan what he wants, which is time to mount a counter-offensive against opponents he berates as corrupt. The court could also simply dither. The longer the legal stand-off ensues, the less inclined the judges would be to reconstitute the assembly and reimpose the vote, the opposition fears.

The crisis has flared quickly and reflects a rapid downturn in Mr Khan’s fortunes. The 69-year-old won power in 2018 on an anti-corruption platform, promising to dislodge the country’s venal political elite. He also vowed to create an Islamic welfare state.

But though he had some success averting damage from the pandemic, extending a social safety net and offering health insurance, Pakistan’s worsening economy is hurting ordinary people. Inflation is almost 13% (see chart). The Pakistani rupee trades at more than 180 to the dollar, 50% more than when Mr Khan took charge. The World Bank says gdp per person has fallen from nearly $1,500 in 2018 to $1,200 in 2020. Mr Khan’s confrontational style and insistence on jailing “corrupt” political opponents also left little room to manoeuvre while defending a slim majority.

But many believe the biggest factor in his fall has been a breakdown in relations with the chief of the army staff, General Qamar Javed Bajwa, though Mr Khan denies a rift. The army for its part has always insisted, implausibly, that it is politically neutral. For years, Mr Khan’s opponents have charged that he owes his ascent solely to the powerful, unaccountable military establishment that has ruled Pakistan directly for much of its history and pulled strings for much of the rest.

General Bajwa and Mr Khan appeared to clash in October over who should be head of the armed forces’ formidable Inter-Services Intelligence (isi), a sprawling agency with covert fingers in many pies, including Afghanistan. The suspicion that Mr Khan wished to disrupt the military line of succession in order to have his own man in the top job proved too much for General Bajwa, some analysts believe.

Mr Khan’s railing against America and its allies may also have alarmed the army. The prime minister appeared in Moscow, shaking hands with Vladimir Putin, on the very day that Russia invaded Ukraine. That was perhaps seen as an embarrassment—though not by Mr Khan, who has roused supporters by declaring that America is conspiring with the opposition to oust him for daring to pursue his own foreign policy, and for seeking good relations with Russia and China. Yet Mr Khan has given no evidence of any plot and America dismisses the charge as baseless.

Cosy relations with the army are unlikely to resume, whatever the Supreme Court rules. This could spell trouble for Mr Khan, regardless of whether his fate is handed back to parliament, or to the polls. Yet the prime minister’s populist gambit—casting his looming parliamentary defeat as international persecution abetted by a traitorous opposition—may prove tactically deft. Polling by Gallup suggests that 36% of Pakistanis buy the conspiracy line. Among shopkeepers in a commercial district of Rawalpindi that voted for his party in 2018, many accept his claim that the West is out to get him. “America will never want Imran Khan in power, because he is not a yes-man,” says Mohammed Zahid, who sells embroidered women’s tunics. “External powers don’t like that our country now has true leadership.” 

THE ECONOMIST

Sri Lanka doubles interest rates to tame inflation; stabilise economy

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COLOMBO, April 8 (Reuters) – Sri Lanka’s central bank doubled its key interest rates on Friday, raising each by an unprecedented 700 basis points to tame inflation that has soared due to crippling shortages of basic goods driven by a devastating economic crisis.

The heavily indebted country has little money left to pay for imports, meaning fuel, power, food and, increasingly, medicines are in short supply.

Street protests have been held nearly non-stop for more than a month, despite a five-day state of emergency and a two-day curfew.

The Central Bank of Sri Lanka’s (CBSL) monetary board raised its standing lending facility (LKSLFR=ECI) to 14.50% and its standing deposit facility (LKSDFR=ECI) to 13.50%.

The build-up of aggregate demand, domestic supply disruptions, the plunge of the local currency and high prices of commodities globally could keep up the pressure on inflation, CBSL said in its monetary policy decision statement.

“The rate hike will give a strong signal to investors and markets that we are coming out of this as soon as possible,” governor P. Nandalal Weerasinghe said at a post-policy decision briefing.

INDEPENDENT CENTRAL BANK

Weerasinghe said that he wanted to run the central bank independently without any external influence and that he had been given the authority to do so by the president and has been asked to expedite measures to get the country out of the current crisis.

“I want to be very clear that my message is not one of blind positivity. Things are challenging and we need to take decisive action. Things will get worse before they get better, but we need to apply the breaks to this vehicle before it crashes,” he added.

Inflation hit 18.7% in March.

An analyst had expected hikes of up to 400 basis points. read more 

“With the monetary policy tightening now finally clear, the stage is set to take the next vital steps with regards to IMF and debt restructuring and clearly communicate this to the international stage,” said Thilina Panduwawala, head of economic research at Frontier Research.

Finance Minister Ali Sabry said earlier that the country must urgently restructure its debt and seek external financial help, while the main opposition threatened a no-confidence motion in the government and business leaders warned exports could plummet.

“We cannot step away from repaying debt because the consequences are terrifying. There is no alternative, we must restructure our debt,” Sabry told parliament.

J.P. Morgan analysts estimate that Sri Lanka’s gross debt servicing costs will amount to $7 billion this year, with a $1 billion repayment due in July.

“We have to go for a debt moratorium,” said Sabry, who offered to quit a day after he was appointed on Monday but later confirmed that he was still finance minister.

“We have to suspend debt repayment for some time and get bilateral and multilateral support to manage our balance of payments.”

NO-CONFIDENCE MOTION?

President Gotabaya Rajapaksa is running his administration with only a handful of ministers after his entire cabinet resigned this week, while the opposition and some coalition partners rejected calls for a unity government to deal with the country’s worst crisis in decades.

At least 41 lawmakers have quit the ruling coalition to become independents, though the government says it still has a majority in parliament. read more 

“The government needs to address the financial crisis and work to improve governance, or we will move a no-confidence motion,” Sajith Premadasa, leader of the Samagi Jana Balawegaya opposition group, said in parliament.

Sabry, a former justice minister, said political stability was necessary as the country prepared to start talks with the International Monetary Fund (IMF) this month. Weerasinghe said he will be holding a virtual meeting with the IMF on April 11.

Earlier on Friday, nearly two dozen associations, representing industries that collectively employ a fifth of the country’s 22 million people, together urged the government to quickly seek financial help from the IMF, the World Bank and the Asian Development Bank (ADB).

Masakorala said that both merchandise and service exports could drop 20%-30% this year due to a dollar shortage, higher freight costs and power cuts.

Sri Lanka’s foreign exchange reserves have plunged some 70% in the past two years, hitting $1.93 billion at the end of March.

RegisterWriting by Krishna N. Das; Additional reporting by Swati Bhat; Editing by Muralikumar Anantharaman, Raju Gopalakrishnan, Hugh Lawson and John Stonestreet

By Uditha Jayasinghe and Devjyot Ghoshal

Sri Lanka’s economic crisis has created a political one

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Until very recently Gotabaya Rajapaksa, still Sri Lanka’s president as The Economist went to press, was secure in his job. After all, he had done much to consolidate his power. Following his election in 2019 he dissolved the legislature and filled the government with relatives and cronies. A thumping win for his coalition in parliamentary elections in 2020 enabled him to change the constitution, handing himself even more power.

Yet over the past few weeks Mr Rajapaksa’s hold on the country of 22m people has been slipping. Sri Lanka’s economy is in free fall. The rupee has declined by more than 30% against the dollar since the central bank abandoned its peg a month ago (see chart). Fuel and food have been in short supply for weeks. Sri Lankans wait hours in the heat to buy cooking gas at exorbitant prices—if they can get it at all. Power cuts of up to 13 hours a day have crippled businesses, including the budding tech industry. Exams have been postponed for lack of paper. Hospitals across the country are running out of essential drugs. Even well-off Sri Lankans, usually insulated from such crises, have found themselves facing shortages.

All this is a product of long-running economic imbalances, external shocks and government mismanagement. An earlier Rajapaksa government headed by Mahinda, Gotabaya’s brother, borrowed heavily to finance infrastructure projects that have yet to generate returns. The current one slashed taxes, which bashed government revenue just before the pandemic halted tourist arrivals (a big source of foreign currency). It briefly banned fertiliser imports to save dollars, hitting food production.

The government then delayed going to the imf until March, hoping that returning tourists and help from China would tide it over. But just as tourism began to recover, Russia’s invasion of Ukraine pushed up commodity prices yet again, making imported fuel and food dearer still.

Economic hardship has driven people into the streets. Even middle-class types, who usually steer clear of protests and until recently approved of Mr Rajapaksa’s brand of strongman ethno-nationalism, now put the blame for the crisis squarely on the president. “These are people who keep liquor cabinets at home, not those who come to politically-organised protests for a packet of rice and half a bottle of arrack,” says Feroze Kamardeen, a playwright in Colombo.

It has not helped that Mahinda’s son (and minister of youth and sports), was spotted fly-boarding in the Maldives as Sri Lankans struggled to buy food. People are fed up. “Go home Gota!”—the president’s nickname—read the signs mounted on everything from broomsticks to pets’ collars. By “home” they mean America, where Mr Rajapaksa lived for several years.

The government, failing to read the public mood, has responded with a mix of intimidation and ineptitude, producing a political crisis to compound the economic disaster. On April 1st Mr Rajapaksa, apparently spooked by demonstrations outside his home, declared a state of emergency. That gave the army wide-ranging powers to quell unrest. When this failed to dissuade protesters, he imposed a weekend-long curfew and a ban on social media. People returned to the streets anyway.

On April 3rd the president changed tack. He restored social media and dismissed his cabinet, leaving only himself and Mahinda, now prime minister. The next day he lifted the curfew and named four new interim ministers, including a finance minister to replace another Rajapaksa brother who had previously held the job.

Stability remains elusive. Ali Sabry, the new finance minister, resigned on April 5th after just 24 hours in the post. On the same day Mr Rajapaksa’s coalition partners withdrew their support, leaving the government without a parliamentary majority. The president revoked the state of emergency a few hours later. Protesters still want the remaining Rajapaksas gone, but Gotabaya has given no indication that he will resign. The opposition has rejected his call to join an interim government. It seems reluctant to take charge in the middle of a crisis. Sri Lanka cannot afford to run a fresh election.

The country must pay $7bn, roughly 9% of pre-crisis gdp, in debt and interest payments, most of it dollar-denominated, by the end of the year. A $1bn bond payment is due in July. Sri Lanka’s dollar reserves are nearly gone and it has had no access to global credit markets for two years. India has extended credit lines and assistance worth some $2.5bn, and has postponed payments on debt owed to its central bank.

But Sri Lanka urgently needs a stay on other debt repayments to avoid a messy default. It will also need further lines of credit or aid—perhaps through the World Bank’s existing pandemic-relief mechanism—to import food and fuel over the coming months while it negotiates how to restructure longer-term debt and regain access to bond markets.

The lack of a stable government will make those discussions all the more difficult. Initial talks with the imf began this week but official negotiations may be delayed until the president manages to appoint a new finance minister. Yet a bail-out by the fund is a crucial first step towards solving the crisis. Other creditors are unlikely to agree to new loans or the restructuring of existing ones without its backing.

Things are not entirely hopeless. Both the decision to talk to the imf and the appointment of P. Nandalal Weerasinghe, a respected economist who was due to take over as the new head of the central bank on April 7th, suggest that the government may have grasped the seriousness of the situation. Whether it can convince furious Sri Lankans that it deserves a chance to fix the mess is another question. 

THE ECONOMIST

If 19A would be re-enforced, a short-term agreement could be reached with President Gotabhaya – Harsha

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If the 19th Amendment to the Constitution is re-enacted, his party will be able to participate the formation of an interim government even under the current President Gotabhaya Rajapaksa, says Samagi Jana Balawegaya MP Harsha de Silva.

Q. What you are saying is that the people do not accept this government. But you do not want to accept this either. What should be done then?

“We are ready to accept, we did not say no. Didn’t the government create this crisis? We can do this, but if we are to do this we must have some power to do this. If the executive president keeps the power and tells us to do this, it’s a joke. ”

Q. That is, if the 19th Amendment is enacted if you are asked to take over the government under this President, will it be accepted?

“Yes. We have the ability to come forward in such a situation. If the 19th Amendment comes into force we can come to some agreement. But that agreement will lead to a short-term, interim government with a plan to abolish the executive presidency. ”

Dr. Harsha de Silva said this while participating in a political discussion on Neth FM.

Will Smith banned from Oscars for 10 years over Chris Rock slap

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King Richard star Will Smith had already resigned his membership from the Academy and said before the disciplinary hearing that he would accept any consequences. Following his outburst, he released a public apology and admitted his actions were “shocking” and “inexcusable”.

Will Smith will not be allowed to attend any Academy events, including the Oscars, for 10 years after slapping comedian Chris Rock on stage at the ceremony.

The board of the Academy of Motion Picture Arts and Sciences, which organises the Oscars, announced the decision after meeting to discuss possible sanctions following the star’s outburst at the eve

Will Smith accepts the award for best performance by an actor in a leading role for King Richard. Pic: AP Photo/Chris Pizzello
Will Smith at the Vanity Fair Oscar Party. Pic: Evan Agostini/Invision/AP

But she added: “That’s quite a bold statement – you’re banned from the Oscars for 10 years, especially if you’re a big Hollywood superstar. It’s hitting you where it hurts.”

During the ceremony at the Dolby Theatre in Los Angeles on 27 March, Smith walked on to the stage and smacked Rock, who had made a joke at the expense of the actor’s wife, actress Jada Pinkett Smith, as he was about to present an award.

Smith returned to his seat and shouted twice: “Keep my wife’s name out of your f****** mouth.”

Rock’s joke had made a reference to the 1997 film GI Jane, in which actress Demi Moore shaved her head. It is still unclear whether the comedian was aware that Pinkett Smith has alopecia, an autoimmune condition that causes hair loss, when he made the remark.

Following the outburst, Rock recovered the situation and after a stunned silence the ceremony continued – with Smith going on to win the actor for best Oscar, for his performance playing the father of tennis stars Venus and Serena Williams in King Richard.

In its statement on Friday the Academy said it wanted to “express our deep gratitude to Mr Rock for maintaining his composure under extraordinary circumstances”.

Smith, the star of The Fresh Prince Of Bel-Air and Hollywood blockbusters such as I Am Legend, Independence Day and the Men In Black and Bad Boys films, apologised to the Academy and fellow nominees on stage and later attended the Vanity Fair after party with Pinkett Smith and his children, where he posed for photos with his statuette.

But as criticism grew the following day, he released a statement giving a public apology to Rock, saying he reacted “emotionally” to the joke but that “violence in all its forms is poisonous and destructive”.

He resigned from the Academy a week after the incident, saying: “My actions at the 94th Academy Awards presentation were shocking, painful, and inexcusable.”

SKY NEWS

A Massive Public Protest today calling one million people to Colombo

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A massive public protest is to be held in Colombo today (09) against President Gotabhaya Rajapaksa and the government.

Accordingly, the massive public protest is scheduled to begin at 9.00 am today at the Galle Face Green in Colombo.

It is expected that about one million people will take part in the protest, which will be called by the people themselves without the leadership of any political party.

Political stability is needed to reduce people’s suffering – New Central Bank Governor (VIDEO)

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The new Governor of the Central Bank Nandalal Weerasinghe has emphasized that the current state of the Sri Lankan economy cannot be reversed at once and that political stability and social stability in the country are essential to reverse it in the short term.

“No one can do anything to turn this economy around at once. Our economy is like a vehicle going down a precipice. Then the first task of a vehicle that moves without control is to brake and stop it. You have to jump on it and brake and stop first, before it goes off and crashes. Doing so means this is going to go down a bit more during that time.

No matter who comes in and does it, it can’t be turned the other way at once. I do not like to create unnecessary expectations that I can not do things. I only talk about things I can do. This will take some more time.

Nandalal Weerasinghe stated this addressing a media briefing held at the Central Bank of Sri Lanka yesterday (08).

Sri Lanka’s current crisis raises policy uncertainty

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Sri Lanka’s current crisis coupled with peoples up rising against the cost of living amidst scarcity of fuel and cooking gas raised policy uncertaininty compounding external liquidity and fiscal difficulties, Moody’ rating agency claimed.  

The new cabinet of ministers with majority of previous ministers is to be sworn in today Thursday 07 as  all of Sri Lanka’s Cabinet, with the exception of President Gotabaya Rajapaksa and Prime Minister Mahinda Rajapaksa along with the governor of the central bank, tendered their resignations.

In a desperate damage control measure President Gotabaya Rajapaksa has appointed a Presidential Advisory Group on Multilateral Engagement and Debt Sustainability.

Dr. Indrajit Coomaraswamy former Central Bank Governor  , Prof. Shanta Devarajan and Dr. Sharmini Coorey former IMF director  serve as the members of the said advisory group, according to the President’s Media Division (PMD).

The resignations were partly a response to rising public dissatisfaction and social tensions over high inflation, shortages of essential items and
lengthy power cuts, increasing political and policy uncertainty at a time when Sri Lanka is experiencing a severe external liquidity and fiscal crisis and a deteriorating macroeconomic environment. 

The government declared a state of emergency and imposed a two-day countrywide curfew on 2-3 April after protesters demanding the president’s resignation stormed his home.

Protracted political uncertainty is likely to hinder progress in obtaining external financing  from key development partners or attracting foreign direct investment, or both, because of Sri Lanka’s reliance on capital inflows to repay its sizeable foreign-currency obligations.

The difficult political environment could also weigh on policymaking and the economy’s recovery from the pandemic, compounding challenges to fiscal consolidation and government efforts to shore up reserves to service its external debt obligations.

Intensifying social unrest and sporadic curfews are likely to further strain the tourism industry, delaying the recovery in tourism receipts that were a crucial part of thegovernment’s plans to bolster foreign-currency inflows before the pandemic

New Zealand Prime Minister seeks clear insight on Sri Lanka crisis 

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New Zealand’s Prime Minister Jacinda Ardern says she has sought advice on dealing with the issue in Sri Lanka.

The Prime Minister says Sri Lanka is experiencing an incredibly tumultuous period as island-wide protests continue amid an economic crisis.

Economic blunders have been compounded by the pandemic, resulting in soaring inflation and a shortage of food, fuel, and medical supplies.

“In terms of the foreign policy implications for New Zealand that’s where I am looking to receive an additional briefing over the coming 24 hours from the ministry,” Prime Minister Jacinda Ardern said.

The protests are calling for a change in the leadership of the Sri Lankan government, which stands accused of mismanaging public funds.

New Zealand Sri Lankans are signing a petition calling for the NZ Government to condemn the actions of the Sri Lankan leadership.

When asked if she condemned Sri Lanka’s leadership, Ardern stopped short but acknowledged the growing frustration of Sri Lankan people.

“It is a very tumultuous time politically and domestically in Sri Lanka,” she said. The President of Sri Lanka, Gotabaya Rajapaksa, imposed a 36-hour curfew and a social media blackout in response to the protests.

New Zealand Foreign Minister Nanaia Mahuta has also weight weighed in, saying: “New Zealand strongly upholds democratic values and institutions, including free speech and the right to peacefully protest.”

She said Aotearoa New Zealand was monitoring the unfolding economic, political, and security situation in Sri Lanka closely – and encouraged all parties to continue to work on a peaceful solution.

The protest is drawing attention from around the world with the diaspora also taking to the streets in the US, Canada, Australia, and New Zealand.

Traffic at  Colombo Port  diverts to Indian ports due to current crisis

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Sri Lanka’s  Colombo Port is gradually losing regular traffic due to  diversion of ships normally calling at the island nation’s harbor , the busiest transshipment port in the Indian ocean due to man-made  present political and economic crisis , international news agencies reported.          

More ships have been turning to Indian ports in recent months as a result of political and economic uncertainty in Sri Lanka, as well as congestion at the Colombo port, Maritime Gateway reported.

According to industry groups, roughly 5-10% of regular traffic from Colombo has been diverted to Indian ports in the last month, with Chennai, Ennore, Mundra, and Thoothukudi’s VO Chidambaranar Port benefiting the most.

Due to the situation in Sri Lanka, traffic at the Kochi International Container Transshipment Facility (ICTT) in Vallarpadam, India’s first transhipment terminal, increased by 62% to 13,609 twenty-foot equivalent units (TEU) in March 2022, compared to 8,394 TEU in March 2021.

“In recent times, we have seen considerable diversion of transhipment traffic from Colombo to Kochi. There are vessels that are skipping Colombo cargo, because of the longer time taken for transhipment,” said Cochin Port Trust Chairperson M Beena.

“Kochi is a natural alternative to Colombo now,” she said. The transhipment container traffic in Kochi saw an increase from 36,183 TEU in 2019- 20 to 86,000 TEU in 2020-21 and 156,000 TEU in 2021-22. Chennai and Kamarajar (Ennore) ports jointly saw a 26 per cent hike in cargo traffic to 87.3 million metric tonnes in 2021-22, according to reports.

“The Colombo port is almost at a standstill. There are no trailers to evacuate containers and cargo from the port. 

In the last one month, we are seeing a considerable shift in normal traffic to the ports in Tamil Nadu — Thoothukudi and Chennai now, due to the congestion in Sri Lanka,” said S Narasimhan, president, India-Asean-Sri Lanka Chamber of Commerce and Industry. 

Narasimhan said he expects more traffic to get diverted to Kochi transshipment terminal and ports in Tamil Nadu in the coming months.