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Sri Lanka’s Chinese debt making international headlines
Sri Lanka’s debt to China is making headlines in international and local media again. Media reports partly blame China and its lending practices, for Sri Lanka’s debt crisis, says a Verité Research media release. It said: The publication titled: “The Lure of Chinese Loans: Sri Lanka’s experiment with a special framework to finance its infrastructure” sheds light on the perils of creating frameworks to facilitate deviations from competitive bidding to tap into concessional export credit from emerging economies such as China.
The report reveals that the root causes of problems associated with loans taken to finance infrastructure are weak regulatory frameworks in the country and the excessive discretion exercised by politicians and public officials in making decisions.The report findings highlight that fixing the country’s procurement regulatory framework and improving independent oversight of the procurement process is essential to prevent irresponsible borrowing, cost overruns, and poor project selection.
Sri Lanka does not have a procurement law enacted by Parliament, and the guidelines that govern procurement can be modified, with Cabinet approval. In 2010, Sri Lanka introduced a framework that allowed the Cabinet to approve the processing of projects that originated as Unsolicited Proposals (USPs) outside the normal competitive bidding process.
The Cabinet approval is given based on the recommendation of a Standing Cabinet Appointed Review Committee (SCARC). This framework was in operation till 2016. The objective was to tap into concessional loans from export credit agencies of emerging economies such as China to finance the Government’s ambitious infrastructure development plan. The period of 2010-2016 can be considered the golden era for financing from China, with Sri Lanka receiving $ 5,895 million in loans from China. Over half of these loans (53%) were realised through projects that were approved by SCARC.
The report analyses the design and execution of the special framework and finds that the lack of rigour in the evaluation process and the ability of decision-makers to exercise excessive discretion made the framework highly prone to abuse and misuse. The analysis of the Gampaha, Attanagalla, and Minuwangoda Water Supply Project (GAMWS), approved by SCARC, demonstrated the weaknesses of the special framework in practice.
The project originated as a USP from China Machinery Engineering Corporation (CMEC) and was awarded to the same company despite having little experience and expertise in similar water projects. The contract was awarded without the normal competitive bidding process and without carrying out the minimum due diligence required. For example, the feasibility study and environmental impact assessments for the project were completed after the contract was signed.
The contract price was 33.4% higher than the cost estimate of $ 172 million. Despite rushing to award the contract in the hope of securing a concessional loan from the China EXIM Bank, the Government failed to secure the concessional export credit facility. Three years after signing the contract, it had to settle for a less concessional loan from the China Development Bank. Delays in securing funding with investigations into alleged malpractices delayed project completion by more than seven years.
The report’s analysis reveals inadequacies in the oversight processes to detect and prevent malpractices. While the Auditor General’s Department frequently reported on financial and other irregularities related to the project, there was no evidence of any legal action being taken against the individuals involved.
This lack of accountability is a key factor that contributes to the recurrence of such problems. The report finds that weak and ineffective oversight makes the rewards of bypassing due process far higher than the risks of getting caught. The findings of the report thus highlight the importance of limiting the Cabinet of Ministers’ discretionary power to create lax regulatory frameworks that allow contracts for publicly funded projects to be awarded outside the normal competitive procurement process. Further, it demonstrates the importance of strengthening independent oversight in the procurement process to prevent such malpractices and having systems to penalise individuals and companies that circumvent due process.
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Gnanasara Thero absconding after SC ruling
Ven. Galagoda Aththe Gnanasara Thero was not at his temple in Rajagiriya when prison officials visited the premises yesterday to take steps following the Supreme Court ruling that nullified the presidential pardon granted to him, police sources said.
Prison officials who visited the temple on Nawala Road, Rajagiriya, were reportedly informed by those present that the Thero’s whereabouts were unknown. The development comes a day after the Supreme Court declared former President Maithripala Sirisena’s 2019 pardon of Gnanasara Thero null and void.
The three-member Supreme Court bench comprising Justices Janak De Silva, Dr. Sobhitha Rajakaruna and Sampath B. Abayakoon held that the pardon was arbitrary, violated the public trust and principles of natural justice, and was made beyond the proper exercise of the President’s constitutional discretion.
The case arose from Gnanasara Thero’s conduct at the Homagama Magistrate’s Court in January 2016 during proceedings relating to the disappearance of journalist and political cartoonist Prageeth Eknaligoda.
The Court of Appeal convicted him on four counts of contempt of court in 2018 and imposed concurrent prison terms amounting to six years. He had served about nine months when Sirisena granted him a presidential pardon on May 23, 2019.
The Supreme Court found that although Article 34 empowers the President to grant pardons, that power is held in trust for the people and is subject to constitutional limitations and judicial review. The Court concluded that Sirisena had effectively acted on the recommendation of the Additional Secretary (Legal) without demonstrating that he had independently considered the relevant material.
Justice De Silva held that the pardon was “arbitrary”, violated public trust and the rules of natural justice, and was ultra vires the President’s powers. The Court consequently found that the decision violated the fundamental right to equality guaranteed by Article 12(1) of the Constitution.
The ruling effectively restores the legal position under the original conviction, leaving Gnanasara Thero without the benefit of the 2019 pardon. The Supreme Court also clarified that a pardon does not erase a conviction or sentence, but merely relieves an offender from serving the sentence to the extent specified in the pardon.
Gnanasara Thero, the General Secretary of the Bodu Bala Sena, had been convicted over his conduct during proceedings concerning the disappearance of Eknaligoda, who went missing in January 2010 and has not been located.
Sandhya Eknaligoda, Prageeth Eknaligoda’s wife, was among those who challenged the presidential pardon before the Supreme Court, alongside the Centre for Policy Alternatives and its Executive Director Dr. Paikiasothy Saravanamuttu.
The detailed account of the judgment indicates that the Court’s ruling primarily nullified the pardon and restored the legal effect of the original sentence, with the implementation of the sentence falling to the relevant authorities.
Police sources said that the Supreme Court, however, did not permanently close the door on executive clemency. It held that a future President could grant Gnanasara Thero another pardon, provided the power is exercised lawfully and after proper consideration of all relevant material.
The Supreme Court has so far overturned three presidential pardons granted to two former Presidents. In January 2024, the Court declared former President Gotabaya Rajapaksa’s pardon of former MP Duminda Silva unlawful and invalid. In June 2024, it invalidated two pardons granted by former President Maithripala Sirisena to Royal Park murder convict Jude Shramantha Anthony Jayamaha — the first in May 2016, which commuted his death sentence to life imprisonment, and the second in October 2019, which released him from prison. Jayamaha, who was convicted of the murder of 19-year-old Yvonne Johnson, remains at large. Most recently, on September 10, 2026, the Supreme Court declared Sirisena’s 2019 pardon of Ven. Galagoda Aththe Gnanasara Thero null and void, ruling that it was arbitrary and inconsistent with the Constitution.
News
House to debate 22A, Judicature Bill next week
Parliament is scheduled to debate the Twenty-Second Amendment to the Constitution Bill and the Judicature (Amendment) Bill on September 24 and 25, subject to the Speaker’s announcement following the delivery of the Supreme Court determination on petitions filed against the Bills.
The programme for the Parliamentary Week from September 22 to 25 was decided at a meeting of the Committee on Parliamentary Business held on Thursday (10) under the chairmanship of Speaker Dr. Jagath Wickramaratne.
On each sitting day, Parliamentary Business under Standing Orders 22(1) to 22(6) will be taken up from 9.30 am to 10 am, followed by Questions for Oral Answers from 10 am to 11 am Questions under Standing Order 27(2) will be taken up from 11 am to 11.30 am.
On Tuesday (22), the Orders published in Extraordinary Gazette No. 2497/37 under the Petroleum Resources Act and the Promotion of Export Agriculture (Amendment) Bill will be debated from 11.30 am to 5 pm.
The Tredso Development Foundation (Incorporation) Bill, a Private Member’s Bill, will then be taken up for Second Reading before being referred to the Legislative Standing Committee.
An Opposition motion at the Adjournment Time will follow.
On Wednesday (23), the Chartered Institute of Media Professionals of Sri Lanka Bill will be debated from 11.30 am to 5 pm, followed by Questions at the Adjournment Time.
The Second Reading debate on the 22nd Amendment Bill and the Judicature (Amendment) Bill is scheduled for 11.30 am to 7 pm on Thursday (24) and Friday (25).
News
Wrong house targeted in underworld grenade attack: Two children killed
Two children aged 11 and 17 were mistakenly killed and their 55-year-old father injured in an early morning hand grenade attack on Sirisangabo Mawatha on Friday. Police investigations later revealed that the attackers targeted the wrong house during an ongoing underworld clash.
Three police teams have been deployed to investigate the attack, which occurred at around 3 am.
According to police, a man who arrived near the house in a three-wheeler knocked on the front door before throwing a grenade into the premises and fleeing.
The victims were identified as 17-year-old Kasun Rashmika and 11-year-old Duminda Gihan. Their 56-year-old father, Nalin Thusantha Perera, was seriously injured and admitted to the Kalubowila Teaching Hospital.
Police said the injured man’s brother was allegedly a close associate of a drug trafficker known as ‘Sando’ and had also been accused of involvement in drug trafficking.
The brother lives in a house adjoining the one targeted in the attack, and police suspect the grenade may have been thrown at the wrong house.
Police are also investigating information that the attack was allegedly carried out at the direction of several overseas-based drug traffickers, identified as Pandithage Shantha Kumara alias ‘Kos Malli’, Samantha Perera alias ‘Chuwa Samantha’, ‘Kudu Avishka’ and ‘I.D.’
Police said the attack was believed to be linked to an ongoing conflict between two underworld factions, which have targeted each other’s associates in shootings and grenade attacks. More than 20 people have reportedly been killed in such attacks.
Security agencies are also investigating alleged links between one faction and overseas-based criminals including Kanjipani Imran, Unakuruwe Shantha, Dubai Gagana and Handaya.
Security agencies have also received information that overseas-based criminals identified as Kanjipani Imran, Unakuruwe Shantha, Dubai Gagana and Handaya are allegedly behind the supply of firearms and drugs to the faction associated with Kos Malli and Chuwa Samantha.
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