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Don’t let elections distract from stabilization warns Indrajit Coomaraswamy

Published

3 years ago

2023/09/10

By HIMAL KOTELAWALA

ECONOMYNEXT – If Sri Lanka allows elections to distract from the path of recovery, stabilization and growth, the country will be hit by a fresh crisis far worse than any before, former central bank governor Indrajit Coomaraswamy said.

Speaking at a forum organized by Cal, a Colombo-based investment banking group, Coomaraswamy said on Tuesday (Sept. 5) that Sri Lanka’s election calendar has historically resulted in the reversal of progress made under the 16 International Monetary Fund (IMF) programs that SL had undertaken until the latest extended fund facility (EFF).

“Every single time there has been an election, Sri Lanka’s macroeconomic policies have become indisciplined. We’ve had 16 IMF programs before the current one. On many of them we did make progress in stabilization as we have done on this one. But as soon as an election approached, the progress that was made was reversed,” Coomaraswamy said.

“We’re supposed to be having elections next year. I hope we don’t have the same thing again. We must not allow the gains that we have made to be reversed through policy slippage.”

Critics of President Ranil Wickremesinghe and his administration have been demanding elections, but political analysts say there is no likelihood of a major election until the presidential polls due in November 2024.

Noting that Sri Lanka has never done well on structural reforms due to lack of political will in the face of the “losers’” being louder despite being fewer in number, Coomaraswamy said such reforms should now be pursued vigorously.

“Unless we do differently this time, we will not be able to get into a sustained recovery,” he said.

“This time around, if we allow elections to distract us from the path of stabilization and recovery and then sustained growth, the crisis that will hit us will be worse than anything that we’ve had in the past. It will be worse than what we had some 18 months ago. We should remember that.”

The former central bank chief called for a mould where economics is not seriously undermined by the electoral calendar.

“That has to change. If it doesn’t, we will lose what we have gained so far and the consequences will be far worse than we’ve ever experienced in the past,” he said.

Explaining why the next crisis, if it were to come to pass, would be worse, Coomaraswamy said Sri Lanka would be entering it with a far lower level of resilience, both in the economy and among the people. Next time around, he said, the impact is going to be much more painful.

“The multiple crises of the present have had such a devastating impact that we’ll be at a much much lower level of resilience going into the next one. We need to make sure we never allow that to happen,” he said.

The electoral calendar was among a series of risks that Coomaraswamy identified as possible obstacles to Sri Lanka’s recovery. Other risks he highlighted included climate risks such as the ongoing El Nino phenomenon and elevated geopolitical tensions which demand a more transparent and prudent external relations policy.

“The world has become a more tense place. That will have an impact on global supply chains and commodity prices. We need to be proactive and factor all that in and see how best to have contingency plans to cope with the impacts of this,” he said.

On the domestic front, the senior economist said Sri Lanka must achieve a primary surplus in the budget to keep the debt stock in check and must also work towards a transformation in exports, aiming at a more diversified export basket with a more complex set of products as well as a diversification of markets.

“Those two things will take us out of this twin-deficit category that we have been stuck in for many years, if we do it well,” he said.

Coomaraswamy said the programme now under way to restructure state-owned enterprises (SOEs) is also critical and should ideally move faster.

“We need to use whatever political capital is necessary to give tailwind to this process,” he said.

Coomaraswamy went on to say that Sri Lanka needs to move faster in factor market reforms, improving the investment climate and investment promotion. He also called for expediting new free trade agreements (FTAs).

“There are negotiations to convert the Indian FTA into an economic partnership agreement under ECTA (Economic and Technology Cooperation Agreement). Negotiations for an FTA with China are also ongoing, as well as with Thailand. These need to be pushed forward,” he said.

“The revitalization of the Singapore FTA is a good thing. It will give us opportunities in terms of investment as well as using that FTA to penetrate the ASEAN market, particularly in e-commerce.”

Coomaraswamy commented on President Wickremesinghe’s plans to join the Regional Comprehensive Economic Partnership (RCEP), a free trade agreement among the Asia-Pacific nations of Australia, Brunei, Cambodia, China, Indonesia, Japan, South Korea, Laos, Malaysia, Myanmar, New Zealand, the Philippines, Singapore, Thailand, and Vietnam.

“I don’t think we’ll be able to do it very quickly. The kind of reforms needed to be able to join RCEP will be quite challenging. But it’s a good aspiration to have and it’s a good signal to give to say that we’re keen on joining,” he said.

On Sri Lanka’s relations with India and proposals for a land bridge and grid connectivity on top of plans to improve sea and air connectivity, Coomaraswamy said Sri Lanka can benefit from increased connectivity with the Indian economy.

“We’ve had proximity [to India] forever but the very poor infrastructure in both countries has made transaction costs for cross border economic activity very high. India also had an inward looking strategy for a long time, but now it has its Neighbourhood First policy and its Made In India policy, all of which will create new opportunities for countries in the region,” he said, noting that transaction costs are in fact coming down with improvements in roads, railways, airports etc in both countries.

“We should make a concerted effort to piggyback onto the Indian story,” he said.

In terms of addressing corruption vulnerabilities, which is a key pillar of the ongoing IMF programme, Coomaraswamy said implementation is key.

“Laws mean nothing unless they’re implemented effectively. So it is to be seen whether the anti-corruption act which is better aligned with UN convention on corruption is implemented,” he said.

“The IMF diagnostic on addressing corruption vulnerabilities has just about been finalized. It should be shared with the government this month. Whether or not the government is serious about addressing vulnerabilities will be demonstrated in how it treats the recommendations of this diagnostics study. It will be a good litmus test for the government’s attitude,” he said.

Sri Lanka saw a 31% surge in poverty over the last four years – from four million people in 2019 to seven million in 2023, according to a study by LIRNEasia – and a number of reports have come out on increased vulnerability, child malnutrition and other indicators of socioeconomic deterioration. Coomaraswamy, while recognizing this, said however that the MF cannot be blamed. The ongoing anti-IMF rhetoric has centered its messaging around the IMF, laying the blame for all of Sri Lanka’s ongoing ills at its door.

“People blame the IMF program. People who do that fail to take into account that the country was in a very big hole before the IMF came. We had massive shortages of essentials, long queues, etc. Very severe problems. Dollar and LKR illiquidity at the time that was causing all these problems, which have been addressed to a significant extent because of the IMF program,” said Coomaraswamy.

“So you can’t blame the IMF program. These problems were there because of the hole we had fallen into and that hole was caused by various things which everybody knows,” he said, declining to elaborate on the causes.

The former central bank governor also called for a strengthened social safety net.

“When you have as big an adjustment as we have to make, when the hole is as big as the one that confronts us, there is a strong case for strengthening the social safety net upfront,” he said, adding that the ongoing Aswesuma programme should ideally have been launched sooner.

“It wouldn’t have done away with the increase in poverty and vulnerability, but it could’ve mitigated it to a significant extent,” he said.

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Construction of Jet A-1 Aviation fuel pipeline and new oil tank complex at Muthurajawela begins under President’s patronage

Published

8 hours ago

2026/10/4

Priyan

President Anura Kumara Dissanayake said that the Government’s objective is to maintain a strong state presence in the energy market while providing an efficient service to the people, adding that significant progress has been achieved towards this objective over the past two years and that a strong energy market that does not place a burden on the people is now being built in Sri Lanka.

The President made these remarks on Friday (02) morning while attending the commencement of construction of the Jet A-1 pipeline system of the Ceylon Petroleum Corporation (CPC) and two new oil storage tank systems belonging to the CPC and the Ceylon Petroleum Storage Terminal Limited (CPSTL).

The projects are being implemented in line with the Government’s national objective of developing infrastructure in the energy sector, with the aim of ensuring the security of aviation fuel supplies, reducing supply costs and providing the capacity required to meet future demand for aviation fuel.

A dedicated pipeline and associated tank complex are being constructed to connect Muthurajawela with the Bandaranaike International Airport in Katunayake, with the aim of meeting the future demand of the country’s aviation sector, ensuring the security of aviation fuel supplies and reducing transportation costs.

Construction has commenced on five new Jet A-1 fuel storage tanks with a total capacity of 92,000 cubic metres. These comprise two large Jet A-1 tanks, each with a capacity of 30,000 cubic metres; two medium-sized tanks, each with a capacity of 15,000 cubic metres; and an additional tank with a capacity of 2,000 cubic metres. The fuel supply pipeline system will be connected to the airport through a 21-kilometre-long underground pipeline with a diameter of 10 inches from the Muthurajawela tank complex. The project is scheduled for completion within 30 months.

Meanwhile, as part of ongoing efforts to strengthen and expand storage and infrastructure facilities in the petroleum industry, the Ceylon Petroleum Storage Terminal Limited (CPSTL) commenced construction today of three new storage tanks at the Muthurajawela Terminal.

Upon completion, the three-tank system, comprising two tanks with a capacity of 15,000 cubic metres each and one tank with a capacity of 10,000 cubic metres, will provide an additional total storage capacity of 40,000 cubic metres.

This will further enhance the petroleum storage capacity of the terminal and support the continued development of the country’s petroleum infrastructure. The project has a contractual period of 18 months and is scheduled for completion in April 2028.

The tanks are being constructed in compliance with relevant international standards and recognised industry best practices, ensuring enhanced safety, reliability and operational efficiency. The additional storage capacity will strengthen the country’s fuel reserves, improve operational flexibility and support the reliable and uninterrupted distribution of fuel products to meet the country’s growing energy requirements.

Minister of Ports and Civil Aviation and Minister of Energy Anura Karunathilaka said,

“We are now in an era of energy transition. The world is rapidly moving towards the use of clean energy. The use of electric vehicles is very important in this regard, and our country is also now moving in that direction.

The use of solar energy is also important. We expect to add 1,200 megawatts of solar power capacity to the national grid by 2029.

As a country, we must focus not only on controlling fuel prices but also on controlling fuel consumption. The public also has a major responsibility in this regard.

It is particularly important to change our patterns of energy consumption. Greater energy security can be achieved by avoiding periods of high energy demand, shifting towards electricity use and using fuel-efficient vehicles, particularly electric vehicles.”

Chairman of the Ceylon Petroleum Corporation D. J. Rajakaruna said,

“We faced a major challenge due to the war in the Middle East. However, with the intervention of the President, relief was provided to the people and the situation was managed very effectively.

As a result, while diesel prices in the global market increased by 91%, the increase in Sri Lanka was only around 39.5%. While petrol prices in the global market increased by 80%, the increase in Sri Lanka was only around 41%.

Despite providing fuel at lower prices in this manner, the Corporation has recorded a profit of Rs. 28 billion this year. We also recorded a profit of Rs. 36 billion last year.

This may raise the question of why fuel prices are not being reduced when there are such profits.

However, we have used those profits to commence a number of infrastructure development projects at the institution.

These include adding the capacity of 11 tanks, including the construction of six tanks that had previously been abandoned, to increase fuel storage capacity; modernising our oil-filling section, which is more than 90 years old, and establishing a gantry system similar to that at Muthurajawela; laying two new pipelines for unloading fuel from the port to Kolonnawa; constructing a new pipeline to transport Jet A-1 fuel to Katunayake; and upgrading the pipeline system and laying new pipelines, among many other projects.

We are implementing these projects using those profits. Therefore, we have returned the benefits to the people through these investments.”

The Minister of Science and Technology, Professor Chrishantha Abeysena; Deputy Minister of Energy, Arkam Ilyas; Member of Parliament Kumara Jayakody; Secretary to the Ministry of Energy and Senior Additional Secretary to the President, Russell Aponso; foreign ambassadors; government officials including officials of the Ministry of Energy and the Ceylon Petroleum Corporation; and representatives of Sinopec were among those present at the occasion.

President’s Media Division (PMD)

News

Lanka enters new phase of prosecutions as hurdles clear

Published

19 hours ago

2026/10/4

Thilina Walpola

MONETABRIEF –The prosecution of high-profile individuals from the former Rajapaksa administrations is set to escalate this month with the clearing of legal hurdles and administrative bottlenecks, according to officials involved in the process.

Former president Gotabaya Rajapaksa’s attempt to secure an order preventing his arrest in connection with the Easter Sunday massacre was turned down by the Court of Appeal on Thursday.

An overseas travel ban has been in operation against Rajapaksa since June, but the Criminal Investigations Department made no move to question him. He instead filed a writ application seeking an order preventing his possible arrest.

President of the Court of Appeal Rohantha Abeysuriya noted that the court would not interfere with the investigative process. Any attempt by the court would amount to an obstruction of the investigation.

In an unrelated case, the same court rejected an application by opposition legislator Dilith Jayaweera seeking the quashing of a contempt charge filed against him by the Fort magistrate. The charges against Jayaweera and a few other opposition politicians are expected to be taken up in the coming week.

Jayaweera and other opposition politicians — Wimal Weerawansa, Udaya Gammanpila, Sugeeshwara Bandara, and Asanka Navaratne

— were hauled up over their remarks relating to the arrest of Suresh Sallay, the former head of the State Intelligence Service.

SLPP academic Mahinda Pathirana is also charged over his public comments about Sallay’s arrest in February under the draconian Prevention of Terrorism Act.

Former president Mahinda Rajapaksa’s son, legislator Namal Rajapaksa, is already in remand custody following his arrest in connection with three cases of bribery and money laundering relating to the 2013 Airbus deal and the Krrish property development in Colombo.

Although Namal has been granted bail in the Airbus money laundering charge, he is in custody until October 13 over the bribery charge relating to the same Airbus transaction. His arrest is under a provision of the Anti-Corruption Act that does not allow a magistrate to grant bail unless under exceptional circumstances.

Meanwhile, his mother Shiranthi Rajapaksa, who had been asked to report to the Financial Crimes Investigations Division on September 24, was a no-show and was yet to return from Singapore.

She had travelled overseas on September 16, and a family spokesman said she was handed the FCID summons at the departure lounge of Bandaranaike International Airport just before she boarded a flight to Singapore.

At the time, the family spokesman said she was due to return in three days.

“We will see greater momentum in the legacy cases in the coming weeks,” an official involved in the prosecutions said.

“We have cleared the legal hurdles to press ahead with more arrests,” he said.

“We are working on a few administrative issues which will be resolved very soon.”

The controversial prosecution of former President Ranil Wickremesinghe is dragging on without him being formally indicted since his arrest in August last year. The Fort magistrate has listed the case again for November 11, when the Attorney-General is expected to report on his decision regarding action against Wickremesinghe.

News

Police warn: Court evaders face property seizure

Published

19 hours ago

2026/10/4

Thilina Walpola

Police have reminded the public that courts have the power to take legal action against individuals who evade arrest or remain in hiding after warrants have been issued against them.

Police said that under Section 60 of the Code of Criminal Procedure Act No. 15 of 1979, a court could issue a written proclamation requiring a person evading arrest under a warrant to appear at a specified place and time.

The proclamation must allow the person at least 30 days to appear before court, Police said.

If the person fails to appear even after the proclamation has been issued, the court may take further action under Section 61 of the Act.

This includes issuing an order for the attachment of the movable or immovable property belonging to the person concerned.Police issued the reminder highlighting the legal measures available against persons who deliberately evade arrest and remain in hiding after warrants have been issued.