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Editorial

Economics vs. Politics

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Thursday 15th August, 2024

All signs are that the upcoming presidential poll and the next general election, which is expected to follow in quick succession, will take their toll on the country’s economic recovery process. The main presidential candidates are ready to do things that are fraught with the danger of not only inhibiting economic recovery but also sending the economy back into a tailspin.

The government, controlled by President Ranil Wickremesinghe, who is also the Finance Minister, is playing Santa. It is throwing money around in a desperate bid to recover lost ground. It has promised a pay hike for the public sector workers while claiming that the IMF-prescribed revenue targets have to be met. The President himself has indicated that vehicle imports will resume soon. Predicting that the country’s foreign currency reserves will suffer a temporary setback as a result, he has claimed that they will improve with the passage of time. However, there is no guarantee that they will. Tensions between Israel and Iran are reaching a boiling point, and if war erupts in the Middle East, oil prices will shoot up and workers remittances will drop; the prices of imports are bound to increase exponentially in such an eventuality. We peddle no argument against the resumption of vehicle imports, but the government must tread cautiously without allowing its political goals to take precedence over the country’s economic recovery strategy.

Until the announcement of the presidential election, the government had been rejecting requests for a downward revision of painfully high personal taxes. It has now made an about-turn. President Wickremesinghe is reported to have told a group of university administrators that government is ‘looking at adjustments to the personal tax structure to provide some relief to the taxpayers’; he says he has received two proposals in this regard––one from the Treasury, which is under him, and the other from the IMF.

There is no gainsaying that people are reeling from direct and indirect taxes, and the news about possible tax revisions will certainly gladden their hearts, but the question is whether the factors that led to sharp tax increases have been tackled for tax cuts to be considered. The IMF has stressed the need for Sri Lanka to raise its state revenue to the region of 15% of GDP by 2025, and pointed out that the revenues in other middle-income countries average 26% of GDP. The SJB and the JVP/NPP have also promised to ease the tax burden on the public. Their argument that if the tax net is cast wide, and tax collection is streamlined with corruption being tackled, it will be possible to grant relief to the public, is not without some merit, but will that goal be attainable in the foreseeable future? It will be interesting to see the tax adjustment proposals by the Treasury and the IMF.

Curiously, all contestants in the presidential race have chosen to remain silent on the imputed rental income tax on the cards. What do they propose to do with it?

There is hardly anything that Sri Lankan politicians baulk at doing to further their political interests and win elections. Never do they hesitate to subjugate the country’s long-term economic interests to their short-term political goals. The current economic crisis is multifactorial, but it is mainly attributable to politically-motivated tax cuts and ill-conceived welfare measures under the Gotabaya Rajapaksa government. Having won the 2019 presidential election, the SLPP slashed taxes, causing a sharp drop in state revenue, and embarked on a relief programme aimed to win the 2020 general election. It resorted to excessive money printing, which led to an increase in inflation, and the depreciation of the rupee, aggravating the country’s forex woes.

Having ruined the economy, the SLPP had to upend its own economic strategy by way of crisis management at the behest of the IMF. But there are signs of the blunders that led to the current economic crisis being repeated.

Given what the government has undertaken to do at the expense of the economy to garner votes, and the attractive promises its rivals are making to woo the public, the upcoming presidential election can be considered a contest between economics and politics. One can only hope that the economy will survive the coming elections.



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Editorial

From Nazi Germany to Zimbabwe and beyond

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Friday 4th September, 2026

Doomed are the nations that look on while rulers seek to perpetuate their grip on power through undemocratic means. John Stuart Mill famously observed in 1867: “Bad men need nothing more to compass their ends, than that good men should look on and do nothing.”

Adolf Hitler established an authoritarian rule in Germany by throttling democracy, which enabled him to capture power, and the entire world suffered as a result. His rise to power followed the Nazi Party’s victory at the July 1932 election, albeit without an absolute majority. After becoming the Chancellor, Hitler did not overthrow the Constitution. Instead, he systematically destroyed it from within by exploiting its emergency provisions, suspending its safeguards, manipulating the legislature and the judiciary and obtaining legal authority through legal amendments, etc., to introduce laws in defiance of it.

Today’s comment however is not about the Third Reich or what Hitler did to the Weimar Constitution. Instead, it is about Zimbabwe, a multi-party democracy that descended into dictatorship, and how that country’s Constitution was manipulated to undermine judicial independence.

In 2021, President Emmerson Mnangagwa’s government hurriedly secured the passage of a constitutional amendment Bill to raise the retirement age of judges, provoking a debate over whether it was proper to amend the Constitution to increase judicial tenure just in time to keep an incumbent Chief Justice in office. That amendment was obviously not part of a wider judicial reform initiative; it immediately opened the way for the then Chief Justice Luke Malaba to remain in office for another five years.

President Mnangagwa and his government craftily camouflaged their real intention, which was to retain Malaba, who was loyal to them; they undertook to raise the mandatory retirement age of the Chief Justice, Deputy Chief Justice and Judges of the Constitutional Court and the Supreme Court from 70 to 75. Malaba’s 70th birthday was only eight days away when the controversial constitutional amendment was passed. The government claimed that Parliament had lawfully changed the retirement age of judges, thereby authorising the continuation of the incumbent senior judges. But that regime could not dupe its critics and the international community, who pointed out that the Constitution did not allow any amendment to be introduced to the term-limit provision, benefiting the serving judges. They also argued that the amendment had been crafted and timed specifically to benefit Chief Justice Malaba.

Legal challenges and arguments were mainly focused on whether constitutional safeguards intended to prevent politicians from manipulating judicial tenure could be circumvented by a mere constitutional amendment without a referendum. Two applications challenging the position of the Mnangagwa government were filed before the High Court, and on the day Malaba turned 70, a three-judge High Court bench ruled that he had ceased to be the Chief Justice as well as a judge because increasing the retirement age effectively extended judicial tenure and therefore could not be applied to the serving judges without approval at a national referendum. The High Court ruled that it would amount to a violation of constitutional protections to allow an incumbent judge to benefit from the retirement age revision. The Mnangagwa regime tore into the High Court, condemning the bold judgement and appealed against it.

The appeal was lodged with Zimbabwe’s Constitutional Court, whose judges themselves had been cited in the original litigation as they were among the beneficiaries of the constitutional amendment at issue. They had no qualms about acting in contravention of the much-cherished legal maxim, nemo judex in causa sua, which holds that no person should adjudicate a matter in which he or she has a personal interest. The Constitutional Court overturned the High Court judgement, and Malaba remained in office.

Interestingly, when the revision of the judges’ retirement age was first mooted, Malaba was in the centre of a controversy over his handling of the Opposition’s legal challenge to the 2018 presidential election results. In the same year, the Constitutional Court, with Malaba presiding, dismissed the Opposition’s challenge to Mnangagwa’s election and confirmed Mnangagwa as President. Ironically, three years later, Malaba’s tenure was extended by a constitutional amendment moved under Mnangagwa’s presidency. A quid pro quo?

Malaba’s continuation in office was widely seen as an indication of the judiciary having become an appendage of the Executive. After his controversial extension of tenure, Malaba acted in a manner that was widely seen as partial to the Executive, and the constitutional amendment that enabled him to remain in office came to be dubbed the “Malaba Clause”. He retired a few months ago.

The Malaba affair may not have caused Zimbabwe to face a new round of sanctions, but it resulted in much international opprobrium, with the UN expressing serious concerns about the controversial constitutional amendment that undermined judicial independence.

One can only hope that no other country will suffer the same fate as Zimbabwe, where the separation of powers has been eroded and constitutional and judicial processes are manipulated for political ends.

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Editorial

Strange arithmetic goes unchallenged

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Thursday 3rd September, 2026

The price of a kilo of wheat flour has recently been increased by Rs. 17, and the All Ceylon Bakery Owners’ Association has lost no time in jacking up the price of a 450g loaf of bread by Rs. 10. Loaves of bread weighing 450g are as rare as hen’s teeth in this country. But supposing the average weight of a loaf of bread is 450g, as claimed by bakers, and an equal amount of wheat flour is used to produce it, the actual cost increase resulting from the wheat flour price hike would be Rs. 7.65 per loaf, and not Rs. 10. However, it is public knowledge that producing a 450g loaf does not require an equivalent amount of wheat flour, since water and other ingredients also go into making bread. If this fact is taken into account, the cost increase attributable to the flour price hike should be even lower. Thus, the recent flour price hike has been a boon for bakers.

The Consumer Affairs Authority (CAA) is apparently unconcerned about how bakers do their cost calculations and determine bread prices. It also takes no action against those who sell bread below the stipulated weight. Consumers have to grin and bear it.

The government should direct the CAA to make a decisive intervention to prevent the exploitation of the public struggling to keep their heads above water, with the cost of living soaring. That is the least it can do to mitigate the impact of the double whammy of increasing cost of living and decreasing real incomes.

The government must not lose sight of the fact that Sri Lanka ranks 120th out of 130 countries in the latest Visual Capitalist global minimum wage comparison, based on data from the International Labour Organisation. The report puts Sri Lanka’s monthly minimum wage, measured in purchasing-power terms, at the equivalent of USD 200, placing it among the lowest in the world. Sri Lanka has also ranked last among the South Asian countries covered by the index. Pakistan has ranked 68th with USD 570, followed by Nepal at 78th with USD 490, Bangladesh at 89th with USD 379 and India at 111th with USD 233.

Bakers are not alone in exploiting the public. Eatery owners also fleece consumers mercilessly. They have also made the most of the recent wheat flour price hike, increasing the prices of a range of products, including hoppers, kottu roti and string hoppers, by disproportionate amounts. If the petrol price goes up by Rs. 30 per litre, trishaw operators jack up fare by Rs. 10 per km as if a tuk-tuk did only 3 km to a litre of petrol.

The government is no better. It continues to impose the so-called loss-recovery levy of Rs. 50 on a litre of fuel, claiming that the Ceylon Petroleum Corporation’s legacy debt has to be recovered. But the Petroleum Dealers’ Association is of the view that the CPC’s losses have been fully recovered. Its spokesman has told the media that there is no justification whatsoever for the continuation of the levy, and urged the government to remove it immediately and provide some relief to consumers. The government has not countered that claim.

Strangely, the Opposition remains silent on the exploitation of consumers. It has not demanded an explanation from the government regarding the petroleum dealers’ claim that the CPC’s losses have been fully recovered and the loss-recovery levy should be done away with. It has also refrained from challenging the padded cost calculations used by bakers, eatery owners, taxi operators and others to justify higher prices and fares. It lacks the courage to criticise private bus operators who have become a law unto themselves, even opposing the metro bus service, which has stood commuters in good stead.

Every nation is said to get the government it deserves. Apparently, the same goes for the Opposition in this country. Both the self-proclaimed Marxist government and its ‘social democratic’ rivals would do well to learn from India, where ‘Cockroaches’ have shaken the Modi administration and the Congress-led Opposition.

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Editorial

Dope in Big Boxes

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Wednesday 2nd September, 2026

Five suspects have been arrested over the recent detection of more than 471 kg of ‘ICE’ (crystal methamphetamine) concealed in a freight container. Three of the suspects are Pakistani nationals, and the others are Sri Lankans. The container carrying drugs came from Pakistan for onward shipment to Cameroon.

Given the sheer cargo volumes handled by ports around the world, there is reason to believe that a large number of shipping containers carrying narcotics go undetected. Freight containers have become a major conduit for the global trafficking of narcotics because millions of them move through ports with enormous volumes of legitimate cargo, and therefore drugs hidden in them often go undetected.

It may be recalled that last year, a World Customs Organization analysis of more than 2,600 drug seizures revealed that shipping containers accounted for 85% of detections and 80% of the narcotics seized by volume. Criminal networks exploit legitimate consignments, container structures and vulnerabilities in the maritime supply chain, sometimes with the help of insiders and powerful politicians in some countries. Cocaine reportedly dominates drug trafficking in containers though heroin, etc., are also smuggled by sea.

During the past one and a half decades or so, several major narcotics detections have involved freight containers in Sri Lanka. In 2010, a consignment of 35 kg of heroin was detected at the Port of Colombo in a container from Pakistan; in 2013, Customs seized 131 kg of heroin concealed in a 40-foot container from Karachi. In 2014, another haul of 93 kg of heroin was found in a container shipped from Pakistan. In 2017, a huge consignment of 218 kg of cocaine was detected in a shipping container carrying sugar. In 2023, Customs seized 16 kg of heroin concealed in a refrigerated container that had arrived from Karachi. These narcotics detections indicate that Sri Lanka has become a transit point for drugs trafficked among Asia, Europe and other destinations. Sri Lanka Customs itself has noted that narcotics are smuggled into the country not only for domestic consumption but also in transit to other countries linking Europe and Asia.

Narcotics as well as other illegal materials have been found even in shipping containers released by the Customs after inspections. The aforementioned stock of cocaine weighing 218 kilos was detected in a cargo container carrying imported sugar, delivered to the Ratmalana Economic Centre. Besides, in 2019, as many as 263 shipping containers were found to carry hospital waste from the UK. It was revealed that a considerable number of such containers had previously entered the country. This is why containers must not be released through the green channel.

Prudence demands that the Customs thoroughly inspect all containers for which politicians seek priority clearance. The haul of 131 kilos of heroin detected in 2013 had been smuggled in a shipping container that the Office of the then Prime Minister D. M. Jayaratne requested the Customs to green-channel on a priority basis.

In January 2025, the incumbent government made use of a port delay to have 323 red-flagged containers released without mandatory Customs checks. The possibility of racketeers making the most of that situation to secure the release of containers carrying contraband through the green channel cannot be ruled out.

The then Additional Director General of Customs Seevali Arukgoda, addressing the media, took great pains to convince the public that there had been no illegal cargo in the 323 containers. He said the Customs had perused all documents pertaining to them, and they had carried goods such as cement, textiles, motor spares, solar panels and pesticides. Smugglers do not mention illegal goods in the documents submitted to the Customs, do they? Most of all, how can the Customs say for sure that there were no illegal goods concealed in those containers that were not inspected at all? It was obvious that Arukgoda was defending the government. He was appointed Director General of Customs, and after his retirement, he was appointed to a senior post in the President’s Office.

The issue of green-channelling so many red-flagged containers will not go away; it is bound to be probed under a future government. The Commission to Investigate Allegations of Bribery or Corruption and the CID arrest former ministers and ex-bureaucrats for lesser offences.

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