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Central Bank raises Policy Interest Rates
The Monetary Board of the Central Bank of Sri Lanka (CBSL), at its meeting held on 03 March 2023, decided to raise the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank by 100 basis points to 15.50 percent and 16.50 percent, respectively, effective from the close of business, on 03 March 2023.
The CBSL and the staff of the International Monetary Fund (IMF) have been engaging continuously in intensive negotiations on the monetary policy stance, amidst extraordinarily high inflation and a high degree of uncertainty surrounding inflation projections and the near term outlook.
There have been some differences between the CBSL and IMF staff on the inflation outlook. Given the necessity of fulfilling all the ‘prior actions’ in order to move forward with the finalisation of the IMF Extended Fund Facility (EFF) arrangement, the Monetary Board and the IMF staff reached consensus to raise the policy interest rates, in a smaller magnitude, compared to the adjustment, which was envisaged during the initial stage of negotiations.
This decision demonstrates Sri Lanka’s commitment to the IMF-EFF arrangement, which has been pursued by the Government in order to ensure stability in the economy, on multiple fronts. The finalisation of the IMF-EFF arrangement is expected to benefit all stakeholders and bolster confidence, which would help restore stability in the economy on a sustained basis.
This will incentivise more foreign exchange flows in the period ahead that would aid the economy to overcome the prevailing economic crisis. The Board was of the view that the economy has already traversed through the most difficult and unprecedented times, with tremendous resilience, and strongly believes that today’s decision would pave way for a faster-than-expected deceleration of inflation.
The Monetary Board anticipates that this monetary policy action would help lower the spread between policy interest rates and high market interest rates. This spread is expected to be further reduced with the reduction in market interest rates in the period ahead, especially the yields on government securities, reflecting the easing of risk premia as the debt restructuring process progresses. The Board urges all stakeholders to remain hopeful and reiterates its commitment to ensuring price and economic stability, and financial system stability, thereby assuring the normalisation of the interest rate structure, no sooner the price pressures are sufficiently contained in the period ahead
News
United Opposition moves to halt interference with judicial independence
By Saman Indrajith
Leaders of all Opposition parties are scheduled to meet today (23) at the Opposition Leader’s Office, on Sir Marcus Fernando Mawatha, Colombo, to discuss future action against the proposed extension of the retirement age of superior court judges, which, they describe, as growing threats to judicial independence.
The special meeting has been convened by Opposition and SJB Leader Sajith Premadasa amid escalating tensions between the government and the Opposition over issues relating to the judiciary.
According to the Opposition Leader’s Office, the meeting is intended to formulate a collective response to, what it termed, a crisis facing the judicial system, alleging that arbitrary actions by the government have posed a serious challenge to the proper functioning and independence of the judiciary.
Former President Ranil Wickremesinghe, former President Maithripala Sirisena, former Prime Minister Dinesh Gunawardena, Sri Lanka Podujana Peramuna National Organiser and MP Namal Rajapaksa, Joint Opposition Convener Prof. G.L. Peiris, and leaders and representatives of all Opposition parties, are expected to attend.
The Opposition Leader’s Office noted that the meeting will mark the first occasion on which Wickremesinghe will visit the Opposition Leader’s Office, since Premadasa assumed office as the Opposition Leader.
The development follows an urgent meeting of Opposition MPs, chaired by Premadasa, at the Opposition Leader’s Office in Parliament yesterday after the government declined to permit a parliamentary debate on matters relating to the judiciary.
Opposition sources said that at the previous Party Leaders’ Meeting, Opposition parties had requested a debate, based on democratic principles, the tripartite system of government, comprising the Legislature, Executive and Judiciary, the separation of powers, and the system of checks and balances. However, the government had not agreed to allocate time for such a discussion.
Opposition MPs argued that issues affecting judicial independence should be openly debated in Parliament and warned that preventing such discussion could undermine democratic governance and accountability.
Addressing the meeting, Premadasa said the refusal to allow a debate on judicial matters was a setback to democratic principles and discussed with MPs the parliamentary and political measures to be pursued in response.
Among those present at yesterday’s meeting were MPs Rohini Wijeratna, Chithral Fernando, V. Radhakrishnan, Chaminda Wijesiri, Gayantha Karunathilaka, J.C. Alawathuwala, Sujith Sanjaya Perera, Kavinda Jayawardana, Chathura Galappaththi, Kabir Hashim, Ravi Karunanayake, M.S.A. Wazeed, Rohana Bandara, W.H.M. Dharmasena, B. Ariyawansa, Dayasiri Jayasekara, Anuradha Jayaratne, Harsha de Silva, Rishad Bathiudeen, Rauff Hakeem, Archchuna Ramanathan, Nizam Kariapper, M.S. Uthumalebbe, Chanaka Madugoda, Suranga Ratnayake and Selvam Adaikkalanathan.
The Opposition meeting today is expected to decide on a coordinated strategy, both inside and outside Parliament, regarding the proposed extension of judges’ retirement age and broader concerns over the independence of the judiciary.
News
PM labels seven Presidential Houses white elephants ; govt. to make them commercially viable
By Saman Indrajith
Prime Minister Dr. Harini Amarasuriya yesterday told Parliament that the government was considering commercially viable uses for seven Presidential Houses across the country, while continuing to bear the cost of maintaining the properties until such plans are implemented.
Responding to a question raised by Badulla District SJB MP Chaminda Wijesiri, the Prime Minister said Sri Lanka currently has seven Presidential Houses located in Colombo, Kandy, Nuwara Eliya, Kataragama, Anuradhapura, Mahiyangana and Bentota.
She identified the properties as the President’s House on Janadhipathi Mawatha, Colombo 1 and the ones located at Hill Street, Kandy; on Kandy Road, Nuwara Eliya; Kirivehera Road, Kataragama; in Old Town, Anuradhapura; in Mahiyanganaya; and in Bentota.
Providing details of maintenance and repair expenditure incurred on the properties from 2018 to date, Dr. Amarasuriya said the Government had spent Rs. 125 million in 2018, Rs. 77.2 million in 2019, Rs. 34.7 million in 2020, Rs. 28.8 million in 2021, Rs. 25.6 million in 2022, Rs. 37.4 million in 2023, Rs. 24.4 million in 2024 and Rs. 10.5 million in 2025.
Expenditure for the first six months of 2026 amounted to Rs. 3.04 million, she said.
The Prime Minister said a committee had been appointed in terms of a Cabinet paper submitted by the Ministry of Public Administration, Provincial Councils and Local Government and a subsequent Cabinet decision to examine options for the future use of the properties.
She said the committee had already submitted its recommendations, which include converting the premises into commercially viable ventures.
According to the Prime Minister, some former Presidential residences have already been converted into courthouses, while others are expected to be used for economically productive purposes.
“The government has to spend funds to maintain Presidential palaces until they are put to economically viable use,” Dr. Amarasuriya told Parliament.
News
Gen. Sallay’s writ application against arrest: PC questions validity of Moulana’s statement
President’s Counsel Sanjeewa Jayawardena told the Court of Appeal that the Criminal Investigation Department (CID) had sent a team to Paris to obtain a statement from Azad Moulana, a fugitive from Sri Lankan law and seeking political asylum in Europe, regarding the 2019 Easter Sunday case, though he was a person critical of the Sri Lankan judiciary. Jayawardena, questioned how a statement given by such a person can be relied upon.
Pointing out that the recording of the statement had been done at the Sri Lankan Embassy, in Paris, Jayawardena denied Moulana’s much publicised claim that Maj. General Suresh Sallay had met a group, linked to Zahran Hashim, in Wanathawilluwa, in February 2018.
The PC stressed that Sallay had not been in Sri Lanka at the time.
The declaration was made during the hearing of a writ petition filed by Sallay, challenging his arrest and detention under the Prevention of Terrorism Act (PTA). in connection with investigations into the 2019 Easter Sunday terror attacks.
Submissions from the petitioner’s side, which continued for seven days, were concluded on Tuesday (21), before a bench comprising Court of Appeal President Justice Rohantha Abeysooriya and Justice Priyantha Fernando.
In his submissions, Jayawardena said that Sallay, in his capacity as head of the Directorate of Military Intelligence (DMI), in 2016, had briefed the National Security Council (NSC) on the growing threat posed by the Islamic extremism and ISIS ideology in Sri Lanka but a senior member of the Council opposed the submissions.
The Counsel said the DMI had investigated a Sri Lankan national linked to ISIS, killed in an air strike in Syria. That investigation led Sallay to prepare a “concept paper” outlining measures to combat Islamic extremism and had proposed establishing a task force to address the issue.
Those recommendations had been presented to then Secretary to the Ministry of Defence K. Hettiarachchi. However, a senior member of the Security Council had expressed dissatisfaction with Sallay’s warnings regarding Islamic extremism.
The Counsel said that the matter had been referred to in evidence given before the Presidential Commission of Inquiry (PCoI), headed by Justice Janak de Silva. Mooted by former Army Commander General Crishanthe de Silva, who had indicated that the response within the Security Council had affected the progress of measures proposed by Sallay.
The Defence Counsel also asserted that Sallay had been removed from the Army Intelligence Directorate and appointed to a diplomatic posting in Malaysia, about two months later, due to political reasons.
Questioning the allegations against his client, President’s Counsel Jayawardena told court that an individual, who had raised concerns about Islamic extremism, could not be described as the mastermind behind the Easter Sunday attacks.
He questioned how the threat of extremism could be addressed if intelligence officers involved in investigating such activities were themselves being remanded.
Referring to evidence submitted before the Supreme Court, Jayawardena said former State Intelligence Service Director Nilantha Jayawardena had stated in an affidavit that he had sent a WhatsApp message regarding the planned Easter Sunday attacks to the then Senior Deputy Inspector General of Police, Ravi Seneviratne, on the evening before the attacks.
He also claimed that Ravi Seneviratne had informed the Janak de Silva Commission that the CID was aware of the extremist activities of Zahran Hashim and his followers; he asked why preventive action had been taken.
The President’s Counsel argued that Sallay’s personal background contradicted allegations that he was involved in attacks against Christian places of worship.
He told court that Major General Suresh Sallay’s mother was a Christian, that she had attended a church in Nugegoda, on the day of the Easter Sunday attacks, and that Sallay himself regularly attended St. Anthony’s Church with his mother.
Following the conclusion of the petitioner’s submissions, Deputy Solicitor General Suharshi Herath, appearing for the Attorney General, told court that preliminary objections would be raised against the petition.
The Court of Appeal directed that those objections be submitted on July 27.
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