Can Sri Lanka rise from its constitutional limbo? When Mr. Nandalal Weerasinghe accepted to take over as the Head of the Central Bank, in one of his early statements, he said that he would be able to do the expected job if there is no interference from outside. The demand for non-interference is today one of the key issues that is being demanded in terms of restoring public life and getting the public institutions to work in the interest of the nation.

However, the issue of non-interference from outside is alien to the kind of constitutional setting that Sri Lanka has. The 1978 Constitution was made with the design that the Executive President could and should interfere into everything and that he should be the king over all public institutions. The popular name that is given to this interference is called “politicization”. Politicization simply means that the Executive President or his/her agents could interfere into the working of any of the public institutions, directly or indirectly.

A rule written into the workings of rule of law based institutions is that every institution should work according to the legal mandates given to such institutions and that the individuals who carry out these mandates should also obey the legal rules above anything else. Implied in this doctrine is that nothing other than legally valid considerations should weigh on anybody who exercises functions within the State. This applies both to the institutions as well as to the individuals who perform the duties.

The popular conversation today, involving many persons like various kinds of experts as well as media personnel and other opinion makers, is around the manner in which Sri Lanka could emerge out of the present political limbo. It looks like a completely paradoxical situation, where, on the one hand, the popular demand is for the resignation of the Executive President and the response to that by the Government is one of complete refusal. On the other hand, there is a demand that while the Executive President remains with all his powers given under the Constitution, there should be a kind of an interim Government composed of persons from all of the political parties and even including experts who have credibility in the country. However, this situation, from the point of view of the exercise of power as envisaged within the 1978 Constitution creates almost an impossible situation to achieve. However credible, well intentioned and committed the persons appointed as the interim Government, they have to work within a power arrangement which is determined by the Constitution. The Constitution makes the Executive President the ultimate source of power in dealing with any matter or with anyone. So long as the President and the interim Government do not agree on any matter, the ultimate capacity to annul any action is in the hands of the President. Whatever he does in terms of that, will be constitutionally valid.

Thus, there is as a core, a constitutional deadlock. If an interim Government or any other arrangement is made within that constitutional deadlock, there is no ground to believe that any such arrangement could practically work.

Thus, the central issue of the constitutional debate should be to resolve this deadlock. The Executive President, by remaining in power under these circumstances, has become, the grave obstacle to resolving these problems of how to govern the country. If the country needs to be governed with a framework of governance that will be, first of all, acceptable to the people and also international organizations with which the ultimate solution to these problems also lies, this means that the constitutional issue needs to be resolved.

Leaving apart any considerations about the individual who holds the Executive President’s position, the issue now is an objective: How to continue to govern the country when the existing Presidency in terms of the constitutional framework, has become the main obstacle for running a rational form of governance? This problem cannot simply be ignored.

Many arguments can be made by anyone but all the arguments will be of a circular nature. Going round this whole issue of establishing a rationally functioning Government with a constitutional framework which is totally irrational – this is not merely a problem of an individual but an inherent problem which has been there within the 1978 Constitution from its initiation. Now that from an economic, social and cultural point of view, the country has reached the very bottom, this contradiction needs somehow to be resolved. There is no other way to resolve it in the immediate future with a quick possibility of finding a solution other than the President himself taking the initiative to end this deadlock and thereby allowing the system of governance to run in a manner that is acceptable to the people and also to the international community.

Even otherwise, the major problems that need to be addressed to resolve the present crisis are those that the present Executive President will oppose. First of these is the ending of corruption. The ending of corruption requires a considerable capacity for the law enforcement to function without any interference. The law enforcement collapsed under the 1978 Constitution because of the inference into the law enforcement agencies which are today being paralyzed in order to just keep law and order.

Thus, the central issue is as the present Central Bank Chief has seen, is how to ensure that public institutions function without interference. This is not possible so long as measures are taken to ensure that the Executive President no longer has that capacity of interference into all affairs. Thus, everything depends on a sober, well considered, thoughtful and responsible decision on the part of the Executive President to end this deadlock.

Asian Human Rights Commission

Ahilan Kadirgamar

All eyes are on Sri Lanka as it endures its worst economic crisis since Independence. Millions of families are struggling to put food on the table. Long lines of people queuing for fuel or gas are a common sight across the country. Sri Lanka’s doctors are running out of medicines for patients. Schools have run out of paper to conduct examinations. The large majority of the people are protesting with single focus, demanding the Rajapaksa brothers, who are in power, go home.

The Rajapaksas indeed must take the lion’s share of the blame. It was their authoritarian rule, arrogance and myopic policymaking that aggravated the economic downturn. The Government recently announced two major decisions — one, to default on its U.S.$51 billion external debt, in the process tainting the country’s unblemished record, and two, negotiate a support package with the International Monetary Fund (IMF) as the country “restructures” its debt.

Policy choices too

How did this situation come about? Sri Lanka is in crisis, not only because of the blunders of the Rajapaksa government but also because policy choices over decades have left the economy with little strength and resilience to bounce back. The Sri Lankan elite wanted the country to become a Singapore, but today the country is begging to put meals on people’s plates. This is a national shame that must shake the ruling establishment. And yet, the country is once again opting for the same, formulaic remedies, showing no indication of having learnt any lessons from its disastrous path of unrestricted imports and rolling over debt with more borrowings. In fact, Colombo’s economic top brass seem rather pleased with themselves, for pushing a debt default and restructuring through an IMF agreement that the Government has now made its chief responses.

Amidst the great upheaval with the protests to dislodge the ruling regime, the elite opposed to the regime are thinking primarily of constitutional and legal solutions, with no serious economic alternative beyond an IMF package that might, at best, bring in a few billion dollars in the short term. But the real cost of such a “reform” package will be much higher, and invariably borne by the working people.

While it is economic hardship that has brought the masses out on the streets, the Government’s next moves in line with the IMF only foretell greater economic agony for the poor, as taxes rise and social spending for public goods and services face the axe. As seasoned technocrats take up the reins to work with the IMF, there is no recognition that it was lopsided development and glaring inequalities in access to resources, income generation and wealth that resulted in dangerous political consequences for the country.

Defaulting, debt restructuring

Sri Lanka’s strategy of defaulting on its external debt, timed less than a week before negotiations with the IMF in Washington, could not have come about without the Fund’s nod. Default not only taints the country in the international lending scene but also creates a desperate reliance on the IMF, giving it all the power to unilaterally determine loan conditions. In effect, the IMF is in the driving seat to steer the economy or, Sri Lanka will see a deadly crash with bankruptcy.

There is no guarantee that an IMF agreement will lead to even financial stability, going by Sri Lanka’s past engagement as well as the volatility of financial markets today. The logic of default and debt restructuring with austerity is bound to face many hurdles. Financial markets are far too erratic to accept so-called orderly defaults, and the weeks ahead are likely to be tumultuous. Sri Lanka may find it hard to make international financial transactions including those for imports of essential goods. Certainly, the neoliberal dream of accessing international capital markets again to continue the binge of commercial borrowings is a tall order, as default has made the country far less creditworthy.

Explained | Understanding the sovereign debt crisis in Sri Lanka

The IMF Staff Report, that was made public in March 2022, outlines a number of recommendations likely to be entrenched in the upcoming agreement: revenue-based fiscal consolidation through increasing tax rates and energy pricing reforms; restoring debt sustainability; near-term monetary policy tightening towards inflation targeting; a market-determined and flexible exchange rate; and targeted social safety nets.

Significantly, many of these recommendations are already being implemented by Sri Lanka. The exchange rate has been floated, passing on the higher costs of imports to the consumers; interest rates have been doubled to 14%, putting at risk small business and the livelihoods of rural producers, and energy price hikes, for example of petrol and cooking gas, have been transferred to consumers.

The most stringent of those conditions to come are also mentioned in the IMF Report, which calls for “growth-enhancing structural reforms, including increasing female labour force participation, reducing youth unemployment, liberalising trade, developing a wide-reaching and coherent investment promotion strategy, and reforming price controls and state-owned enterprises”. Forcing women into the workforce, further liberalising trade, removing price controls and privatising state-owned enterprises where public services become unaffordable, are going to stifle households and tear apart the social fabric.

Technocratic solutions

During its postcolonial history, Sri Lanka has gone through 16 IMF agreements, most recently an Extended Fund Facility of U.S.$1.5 billion in June 2016. Before this it was a Standby Arrangement of U.S.$2.6 billion two months after the civil war ended in May 2009. These recent agreements were crucial for Sri Lanka to undertake commercial borrowings; for example in July 2016, a month after the last IMF agreement, Sri Lanka borrowed U.S.$1.5 billion in sovereign bonds; U.S.$500 million of that was just repaid in January this year.

In this context, the reforms in the upcoming IMF agreement are likely to be far more impactful and perhaps on the order of the Structural Adjustment Program taken forward after 1977 with the IMF. The launch of those neoliberal policies, called the “open economy” reforms locally, set off policies that are in fact the long underlying causes of the current crisis.

In Colombo’s elite circles, the refrain now is that “we will have to go through much suffering before it gets better”. But, the elite will be the last to suffer as austerity will mostly hit Sri Lanka’s working people. In fact, the IMF agreement in bailing out external lenders is also bailing out the elite classes in Sri Lanka, as much of the external debt and the related projects and conspicuous consumption served them more than anyone else.

The proposed solution is about being able to borrow more in the capital markets after the green light of the IMF agreement; but that, if achieved, will only increase the debt stock, making a future crisis inevitable. The other more contentious move will be to sell the family silver, in the form of privatising state enterprises and institutions built over the decades to pay up the external debt.

Start with a wealth tax

The idea that, somehow, Sri Lanka can get through this crisis in a short period of say a year, and that the people who are already in dire straits can take on more economic suffering in the months ahead are likely to backfire. While the spotlight is on growth and recovery, Sri Lanka’s worst fear at the moment is a likely food crisis, where starvation or even a famine are real possibilities.

The neoliberal technocrats are proposing to buy over people affected by austerity measures with cash transfers. However, working people are far more committed to their social welfare entitlements as evident from how they have fought hard to protect free education and universal health care over the decades. Indeed, there will be tremendous resistance to privatising state services and utilities. If anyone has to pay for this crisis, it must obviously be the wealthier classes in the country; the imposition of a wealth tax, for example on property and vehicles accumulated over the years, would be a starting point.

The great democratic strivings of the people, both in the electoral realm and through the extra-constitutional means of protests, have ensured that repressive regimes and oligarchies have been consistently overthrown in Sri Lanka. It is the failures of Sri Lanka’s elite for their narrow interests that have allowed for polarising and destructive regimes to emerge time and again. The IMF agreement, its conditionalities and its fallout, are going to be a central point of contention between the elite who are trying to manoeuvre this crisis and the working people who have generated this political opening. It is such ideological and political struggles amidst this crisis that will determine whether Sri Lanka chooses bankruptcy or redemption.

Ahilan Kadirgamar is a political economist and Senior Lecturer, University of Jaffna, Sri Lanka

The Hindu

The Ministry of Foreign Affairs wishes to categorically state that Mr. Bandu Samarasinghe will not be appointed the Consul General in Milan.

Ministry of Foreign Affairs

Colombo

16 April, 2022

The anti-government protest is growing for the eighth consecutive day and protesters in massive numbers are gathering at Galleface tonight (16) as well.

This protest was commenced on April 09 demanding the stepping down of President Rajapaksa and the Government and is not affiliated with any political party.

A ritual dance (shanthikarma) was also performed on the protest ground tonight.

MIAP

Several rounds of discussions were held under the patronage of President Gotabaya Rajapaksa this (16) morning on the country’s situation, revealed the President’s Media Unit.

The first discussion was attended Finance Minister Ali Sabry, Governor of the Central Bank of Sri Lanka (CBSL) Nandalal Weerasinghe, State Minister Shehan Semasinghe, Secretary to the President Gamini Senarath, Chief Advisor to the President Lalith Weeratunga and Secretary to the Finance Ministry K.M.M. Siriwardena.

Another discussion has been held with officials from the Finance Ministry, the Health Ministry and the Energy Ministry.

MIAP

The flight that left Ratmalana today morning – N750GF – for Dubai, belongs to British national and UK millionaire George Davies, the Daily Mirror learns.

Rumors were rife that former Finance Minister Basil Rajapaksa had left Colombo for Dubai on this flight, but sources confirmed that this private aircraft was carrying foreign nationals who had arrived last month.

According to details, the N750GF was carrying two foreign nationals including Davies on board and arrived in Sri Lanka on March 28. It departed Ratmalana Airport on April 16 morning for Dubai, UAE. 

Davies is an Engish fashion designer and is the owner of several leading garment brands. 

Daily Mirror

About ten Police trucks believed to have been deployed in dissolving the anti-government protest were parked near Galleface this (16) this morning.

Since yesterday, revelations were made by media, including us, that the government was planning to dissolve the anti-government protest held at Galleface, following which the parking of Police trucks near the premises had aroused the suspicion of the people. Accordingly, a strong objection was building up on Social Media against the move.

However, these trucks have been removed from the place and sent back.

Meanwhile, the Bar Association of Sri Lanka (BASL) in a statement told the government that the right to stage peaceful demonstrations is protected by the Constitution of Sri Lanka and the peaceful protest held at Galleface, therefore, must not be hampered.

MIAP