News
Turbulence ahead: Airline on the block in Sri Lanka reforms
By Amal Jayasinghe
Dozens of state-owned Sri Lankan companies employing tens of thousands of people could be restructured or closed as part of an IMF bailout of the bankrupt country, with the country’s airline top of the list for reform.With nearly 6,000 staff, SriLankan Airlines is the biggest and most expensive of the cash-haemorrhaging, sclerotic companies that have drained the budget and compounded the worst financial crisis in national history.
According to treasury figures, the carrier was losing $4.50 for every dollar it earned at the start of this year. It has not turned a profit since 2008, when its chief executive was sacked for offending the country’s then-leader.
“Even those who have never stepped into a Sri Lankan aircraft are paying to subsidise the airline,” government spokesman Manusha Nanayakkara told reporters this month.
“We can’t continue like this.”
Sri Lanka defaulted on its $51 billion foreign debt in April and is now neck-deep in the arduous process of renegotiating its obligations with creditors.Its 22 million people suffered through months of food and fuel shortages, and at the peak of the crisis, a furious mob stormed government buildings and chased Sri Lanka’s former president into exile.
The International Monetary Fund (IMF) has given preliminary approval to a $2.9 billion bailout, and the government hopes to be able to access the first tranche by the end of the year.Terms of the deal have yet to be released, but IMF cash is usually conditional on painful reforms, such as tax hikes, removing consumer subsidies, and privatising or closing underperforming state firms.
The country has more than 300 state enterprises, ranging from nut farms to fuel retailers, and the top 52 firms lost nearly $2.4 billion between January and April — around $140 million a week.
SriLankan Airline’s future is the most urgent priority, and the government last month instructed the finance ministry to begin its restructuring, ideally by attracting outside investment.
But finding a company willing to pour money into the airline will be immensely challenging, analysts say, given its history of interference, mismanagement and turbulent partnerships.In 1998, Emirates bought a minority stake in the carrier and took over its management.
It stayed in the black for most of the next decade, although one of its most profitable years was — ironically — 2001, when the Tamil Tigers separatist movement attacked the country’s main international airport. Several of the airline’s planes were destroyed in the July attack, but insurance payouts and the removal of excess capacity offset a downturn in ticket sales.
But the partnership was terminated and the chief executive sacked by then-president Mahinda Rajapaksa in 2008 after the carrier refused to bump fare-paying passengers to make room for members of his family returning from a jaunt in London. The leader packed SriLankan’s management with relatives and loyalists, several of whom now face corruption charges, and the airline has bled cash since.Rajapaksa even started a rival state-owned airline named after himself, a colossal failure that was eventually merged into SriLankan — along with its accumulated losses.
Authorities tried to sell a 49 percent stake in SriLankan back in 2017 when the island nation’s tourism market was booming, but even then private equity firm TPG eventually withdrew its bid after deciding it was not a viable operation.Airlines are “generally not that attractive” to investors, Singapore-based aviation analyst Brendan Sobie told AFP, “particularly airlines that are government owned and have a lot of legacy issues, have a lot of debt, like SriLankan does”.
“There’s not many foreign airlines, particularly in this post-Covid environment, that are even looking or considering buying stakes in airlines overseas,” he added, and the track record for strategic investments in the sector was “very bad”.
“It’s very difficult,” he said.SriLankan chairman Ashok Pathirage acknowledges the airline’s current balance sheet is not an attractive proposition.
“If you try to privatise the whole thing, people will come and ask the government to take half of the debt,” Pathirage told AFP.
But he said SriLankan could settle about half of its liabilities by splitting off and selling profitable business arms, including its virtual monopoly on catering and ground handling at Colombo airport.Trade union leaders and employees support a restructuring along those lines, on the condition that no jobs are cut.
“The airline is losing money not because of the staff, but expensive leases and poor financial structures,” a cabin crew member, who requested anonymity, told AFP.But selling off the airline’s profitable divisions would leave the rump operations generating even bigger losses for the government.
Former state finance minister Eran Wickramaratne told AFP that if authorities could not find an investor, the airline should be grounded permanently before it could burden the public further.
“We are a bankrupt country,” he said. “We have not been able to service our debt and that reality has struck home.”
News
Harsha flays govt. over plan to pass coal, Treasury losses to public
Chairman of the Public Finance Committee Dr. Harsha de Silva, MP, yesterday (31) said that the National People’s Power (NPP) government was going ahead with a controversial move to pass on the massive losses caused by the coal scam to the public. The government also intended to recover USD 2.5 (approximately Rs 800 mn) lost by the Treasury from the people by introducing an amendment to the Budget, the Opposition lawmaker alleged.
Dr de Silva said that the government had been compelled to increase the supply of diesel for the oil-fired power plants to meet the Norochcholai generation shortfall due to the use of substandard coal.
Responding to The Island queries, the former State Minister said that regardless of repeated assurances that electricity consumers wouldn’t be burdened for the lapse on their part, the government, in writing, has assured the International Monetary Fund (IMF) to recover the losses from the public. This came to light after the IMF released the Letter of Intent submitted by the government following the completion of the combined Fifth and Sixth Reviews under the Extended Fund Facility (EFF) programme to receive USD 695 mn.
Commenting on the specific assurance as regards the upward revision of fuel prices and electricity tariffs, MP de Silva pointed out the government’s assurance of its commitment to cost-recovery pricing for fuel and electricity meant that subsidies provided to ease the burden on households and businesses would remain within budgeted limits and be phased out by the end of September 2026.
Welcoming the USD 695 mn IMF loan, MP de Silva said that in terms of the agreement between the government and the IMF, the relief would end once Rs 100 bn allocated to provide relief was spent on subsidies on fuel (Rs 57 bn), electricity (Rs 15 bn) and the rest on ‘Aswesuma’ social welfare scheme and fertiliser.
MP de Silva said that the crisis should be examined taking into consideration that Sri Lanka paid very high prices to procure fuel in the wake of the continuing turmoil in West Asia. He noted that having perpetrated a coal scam the government could not under any circumstances absolve itself of responsibility for the skyrocketing electricity tariffs.
Commenting on the Sri Lanka-IMF agreement, lawmaker de Silva lambasted the government for utterly chaotic and poor management of the economy. Severe criticism was directed at the government over the rapid depreciation of the rupee against the USD and the NPP’s pathetic performance. Amidst speculation that De Silva may switch allegiance to the NPP, the MP also posted a video in which he flayed the government alleging the NPP couldn’t take forward measures taken by former President Ranil Wickremesinghe.
MP de Silva explained how the people would end paying for the theft of USD 2.5 by way of an amendment to the Budget. The MP told The Island that assurance meant that the government acknowledged that there was no hope of recovering USD 2.5 mn though they talked of investigations and progress being made. De Silva called for a combined Opposition effort to pressure the government to act responsibly in the face of growing challenges.
The government couldn’t lie as the relevant IMF report and the government letter of intent were in the public domain, Dr de Silva said.
by Shamindra Ferdinando
News
PM opens Vesak pandals
Two Vesak pandals erected in the Colombo area to mark Vesak Poya were ceremonially opened under the patronage of Prime Minister Dr. Harini Amarasuriya.
The Prime Minister first opened a pandal depicting the Sambula Jataka, constructed by the Sri Vaishakya Society of the Borella Magazine United Traders’ Association. She subsequently attended the opening of another pandal at the Grandpass Kosgas Junction, which portrays the Samudra Vanija Jataka tale, and ceremonially inaugurated it by lighting a traditional coconut-oil lamp.
The event was attended by members of the Maha Sangha, clergy of other faiths, Members of Parliament Dr. Najith Indika, Attorney-at-Law Lakmali Hemachandra and Dilith Jayaweera, Deputy Inspector General of Police Nihal Thalduwa, former Member of Parliament Thilanga Sumathipala, and President of the Magazine United Traders’ Association Palitha Herath, among others.
News
UNP challenges NPP move to amend Vihara – Devalagam Act
The UNP yesterday said that the government did not have the power to establish a Dharma Court. According to the Constitution, neither the executive, the legislature nor the judiciary had the power to interpret the Dharma, it added. The power to pass laws on disciplining the clergy had been granted to Parliament in terms of Article 105 of the Constitution, the UNP said, emphasising that the ultimate powers lay with the committees of the respective sects.
The UNP said so in response to President Anura Kumara Dissanayake’s recent speech that a concept paper had been submitted for amending the Vihara – Devalagam Act and the Cabinet had approved it. The President further stated that he had held a discussion with the Registrar, the Commissioner for Buddhist Affairs and the Attorney General. It is not known whether he discussed the matter with the Buddhist MPs in the Opposition.
Excerpts of the statement issued by former President Ranil Wickremesinghe’s Office: ” President Anura Kumara Dissanayake has recently publicly agreed to a call to take the same measures as previous kings in cases where the Buddhist religion is distorted under the guise of Dhamma.
Over our history we have seen some kings kill the Sangha during their reigns. The JVP also killed the Sangha in the same way during the years 1987-89.Kotikawatte Saddhatissa, Weltota Pangnadassi, Beligalle Mahinda, Kumbagoda Gnanaloka, Athurugiriya Pangnatissa, Soragune Pangnasara, Pelpola Dharmapala, Kandy Dhammarakkhitha and many other monks are included in the list of the JVP’s assassinations.
Apart from shedding the blood of the Buddha, the greatest sin that Buddhists can commit is the killing of the Sangha. The JVP has not apologised for the killings. Is it moral for the President to accept this invitation without first taking this step?
In addition to killing the Sangha, the JVP also looted valuable historical items from the monasteries and temples.
The JVP has never accepted that Buddhism should be given priority politically. The JVP has always acted against Buddhism.
A major question that arises from this is whether the JVP, which has a history of killing monks, can do such a thing after taking power. What is the hidden motive here?
Mr. J. R. Jayewardene took steps to include a separate chapter in the 1978 Constitution to take necessary measures for monks who behave undisciplined and engage in crimes. Provisions were made for the establishment of a Sangha Court to decide on the discipline of monks.
What did the NPP government done during the Sinhala and Tamil New Year? It disrupted all the auspicious signs. While the whole world was celebrating Vesak Poya on May 1st, the Vesak Poya day in Sri Lanka was postponed to a later date in order to hold political rallies.
There is no objection to taking action against unruly monks. But there is a procedure for how to discipline monks. Cabinet papers related to this should be prepared and presented to the Maha Sangha led by the Mahanayaka Theros and then a decision should be taken. Everything should be carried forward according to the existing tradition in the country.
The President has also expressed his views on taking monks to court. He has expressed such views without understanding the tradition. Taking wrong-doing monks to court in their robes is not something that only happened yesterday. Thalduwe Somarama and Mapitigama Buddharakkhita were presented to court wearing their robes for the assassination of Mr. Bandaranaike and later their robes were removed. This is not limited to monks. Father Mathew Peiris first came to court for legal proceedings wearing his robe. Accordingly, the monks who are currently acting in an undisciplined manner must also follow the same procedure that was implemented earlier.
The President mentioned in his speech that a concept paper was submitted for amending the Vihara – Devalagam Act and the Cabinet agreed to it. The President further stated that he had held a discussion with the Registrar, the Commissioner for Buddhist Affairs and the Attorney General. It is not known whether he had discussed this matter with the opposition Buddhist parliamentarians. This work has all been done only by the government without any consultation.
The government does not have the power to establish a Dharma Court. According to the Constitution, neither the executive, the legislature nor the judiciary have the power to interpret the Dharma. The power to pass laws on disciplining the clergy has been given to Parliament under Article 105 of the Constitution. However, the final powers lie with the committees of the respective sects. At present, this work has been done by the cabinet, officials and a handful of monks of a government that does not accept Buddhism.
The temples with the most assets and properties today are in the monasteries and temples that fall under the Vihara – Devalaya Village Act. It is no secret that the Janatha Vimukthi Peramuna (JVP) is taking the position that these temples should be taken under government control. There is a strong suspicion that the Dharma Court is being created for this purpose.
An organized program to destroy Buddhism is being implemented today through government-affiliated social media. A section of civil society is also involved in it. What is always happening today is the marginalization of the Buddhist monastic-lay opinion.In the President’s speech, a reference was also made to the holding of the World Buddhist Congress in this country under the current government.
Such a situation is also indicated in the Vasala Sutta.
“Na jaccha vasalo hoti,
Na jaccha hoti brahmano;
Kammana vasalo hoti,
Kammana hoti brahmano”
Its Sinhala meaning is as follows.
“One is not a householder by birth.Nor is one a Brahmin by birth.One becomes a householder or a Brahmin by one’s actions.”
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