Editorial
A budget oozing overoptimism
Thursday 19th November 2020
Prime Minister Mahinda Rajapaksa, who is also the Minister of Finance, has presented Budget 2021, which looks a good story with a happy ending. It has offered something to everyone, and is bound to go down well with those who are to benefit from tax exemptions and other such relief. All 75 budgets presented in the Sri Lankan Parliament have been tales told by Finance Ministers. Most budget proposals, especially the progressive ones, have remained unimplemented, all these years, for want of funds mostly due to failure on the part of successive governments to meet their revenue targets and curtail wasteful expenditure.
As for Budget 2021, proposals to abolish PAYE and the withholding tax and increase the personal income tax threshold will benefit a large number of people. But it will be swings and roundabouts for them if indirect taxes increase, as feared in some quarters. Steps taken to develop local agriculture and industries through tax exemptions, etc., and allocate additional funds for developing public health and education sectors are welcome. The proposed expansion of the university system, however, is a task that the government has to carry out cautiously, taking into consideration the need to ensure their standards. Even the existing universities are experiencing a severe dearth of qualified teachers and facilities. There are some more progressive budget proposals, and they are welcome. One can only hope that there will be enough funds for their implementation.
The devil is in the detail, though. When one reads Budget 2021 carefully, one sees that several crucial issues have not been addressed in a satisfactory manner. The government has made numerous expenditure commitments as regards development and social welfare, but how does it propose to meet the revenue shortfall resulting mainly from tax concessions and a significant decrease in foreign earnings? Borrowings, both foreign and domestic, will not be easy.
The government has undertaken to reduce the budget deficit to 4% of GDP by 2025. This is a very ambitious target. One may recall that it was first set by a UNP-led government, in 2002. The then Prime Minister Ranil Wickremesinghe declared, in Parliament, that the budget deficit would be brought down to 4% of GDP by 2008. (His government fell in 2004!) Later on, the Mahinda Rajapaksa government undertook to achieve that target. Now, another Rajapaksa government has repeated the same promise. It seems to believe that the economy will expand at such as rate that its revenue will increase automatically. It is being overoptimistic.
The success of any programme to reduce the budget deficit to the expected level hinges on the government’s ability to increase revenue to at least 10.8% of GDP, in 2021, as economists argue. This goal will be unattainable without new tax proposals. A shortfall in revenue collection may lead to a much higher budget deficit than 8.8% of GDP. Such a situation can be averted only by curtailing public investment, inter alia, to match lower revenue. This means most ministries will not receive allocated funds for the implementation of envisaged projects in such an eventuality.
It will also be an uphill task for the government to fulfil its expenditure commitments while reducing public debt from 90% of GDP to 70% of GDP and ‘minimizing the risk in debt composition caused by sourcing of foreign loans’. How the government is planning to achieve this target is not clear.
As for the envisaged budget deficit, 8.3% of GDP is expected to be financed through domestic borrowings. Enough domestic financial resources in terms of savings will not be available for the government to borrow such a large amount domestically, and the Central Bank may have to print money as it has done this year in view of the pandemic. If money printing continues, it will result in serious problems such as higher inflation and price instability.
The government has expressed serious concern about slow progress in foreign-funded projects and low returns therefrom. Pointing out that the number of programmes implemented annually with foreign financing has increased exponentially, the PM has said in Budget 2021: “However, a significant number of projects worth more than USD 6.000 million show slow progress. The main deficiencies identified in monitoring of project planning, feasibility, implementation are deviation of the projects from national requirements, and frequent cost and time escalations resulting in low returns … Due to these expenditures, productive investments which could have been implemented at a lower cost are not adequately financed …” Has the government forgotten that most of these problems are also due to rampant corruption involving politicians and bureaucrats. How does it propose to tackle corruption, which will put paid to its efforts to keep the costs of development projects low and increase returns?
Meanwhile, Budget 2021 does not reveal how the Treasury is going to meet USD 6 billion worth of foreign currency debt obligations falling due during 2021 while having only USD 5.5 billion official reserves with the Central Bank. If the government fails to raise at least USD 6 billion external borrowings, it will be forced to default on its external debt obligations––absit omen!––and this has never happened in Sri Lanka. If it were to happen, Sri Lanka would have a hard landing currency crisis similar to ones faced by Greece, Argentina and Zimbabwe, in the past.
Overall, we view Budget 2021 as a government attempt to achieve a set of highly ambitious goals within an overoptimistic macroeconomic framework.
Editorial
The strange case of Kanjipani Imran
Thursday 16th July, 2026
Occasions are not rare when absurd twists and turns in Sri Lanka’s legal system remind us of Mr. Bumble, the famous Dickensian character, who declared, “The law is an ass”. The police arrest criminals, after months of meticulous planning, risking their life and limb, but the latter obtain bail, go into hiding, either here or overseas, and continue to run their illegal operations. The police have to launch fresh operations to arrest the criminals on the run.
The police have sought information about Mohommad Najim Mohommad Imran alias Kanjipani Imran, who is wanted under an INTERPOL Red Notice. He is running his criminal operations from overseas, according to a report published in this newspaper yesterday. It defies comprehension why he was released on bail in 2021 though it was patently clear that he would flee the country.
Quoting the police, our news item has said intelligence reports point to links between Imran and international terrorist organisations as well as major mafia syndicates, which enable him to use transnational networks and technology to manage drug trafficking and other criminal operations.
Much is being spoken these days about the need to strengthen public confidence in the judiciary. There is no gainsaying that everything possible must be done to preserve the integrity and dignity of the judiciary. Worryingly, some issues crop up, making one wonder whether a section of the law enforcement authorities and some members of the legal fraternity bend the law to safeguard the interests of wealthy underworld figures at the expense of the judicial process and public security.
The police and the state prosecutor take great pains to prevent some suspects, especially the political opponents of governments in power, from obtaining bail. They invoke all laws and come out with various arguments to have such suspects held on remand for extended periods. Instances abound where their investigations get underway in earnest only after suspects are arrested and remanded for weeks, if not months, while ruling party politicians conduct social media trials, as it were, and declare the suspects guilty, with no heed for the presumption of innocence or the fact that public speculation is prohibited when cases are sub judice.
When Imran was arrested in Dubai and extradited in 2019, it was widely thought that he would have his work cut out to secure bail because Sri Lanka police and their UAE counterparts had worked tirelessly for months to arrest him and Makandure Madush, known as Sri Lanka’s Napoleon of Crime, and bring them here. Madush was shot dead while in custody, and the then government claimed that he had been caught in the crossfire between police and an underworld gang while being taken to a place where a haul of narcotics was believed to have been buried. It is doubtful whether the discerning public bought into that claim.
The news of Imran being released on bail raised many an eyebrow. We said in an editorial comment dated 02 January 2023 that having secured bail he would flee the country and carry out his illegal operation from overseas as other criminals did.
However, Imran is not the only criminal to have jumped bail and fled the country. Janith Madushanka de Silva alias Podi Lasi, a dangerous underworld character, fled to India after being released on bail in 2024. He even claimed that his life was in danger and asked for police protection. It was obvious that he would flee the country, and he did so soon afterwards. One may recall that in 2020, while being detained at the Boossa high-security prison, he and two other criminals, known as Kosgoda Tharaka and Pitigala Keuma, threatened to kill the then President Gotabaya Rajapaksa, Defence Secretary General Kamal Gunaratne and several senior prison officers. Podi Lasi bragged that their private armies were capable of striking anywhere at will. He was arrested in India and brought back in 2026. Thus, criminals are caught, released and caught again. Now, the police are trying to arrest Imran.
Only a thorough probe into the circumstances that led to the release of Imran on bail will reveal how he managed to manipulate the legal process and flee the country.
Editorial
Missteps can lead to pratfalls
Wednesday 15th July, 2026
The JVP-NPP government’s efforts to increase the retirement ages of the judges of the Supreme Court (SC) and the Court of Appeal (CA) has triggered an avalanche of criticism. The Judicial Service Association of Sri Lanka (JSASL), which represents all District Court judges and Magistrates in the country, has also opposed the government move. It has written to President Anura Kumara Dissanayake, informing him of its decision. However, the government remains unresponsive.
Ironically, the JVP affronted elderly politicians and officials in previous administrations, claiming that they were past their productive years and therefore had to be put out to pasture. But no sooner had it formed a government in 2024 than it brought two former police officers, Ravi Seneviratne and Shani Abeysekera, out of retirement and elevated them as the Secretary to the Ministry of Public Security and the Director of the CID, respectively, because they were members of the NPP’s Retired Police Collective. Its action compromised the integrity of the CID and the Ministry of Public Security. Now, it is trying to extend the retirement ages of some members of the judiciary selectively.
Several leading lawyers’ associations, both local and foreign, prominent political leaders and legal luminaries have unequivocally taken exception to the government’s proposed plan to amend the Constitution to extend the tenure of the SC and CA judges. The Bar Association of Sri Lanka (BASL) is leading the campaign against the government plan at issue. Its arguments are cogent. The Colombo Law Society has also asked President Dissanayake not to proceed with the proposed constitutional amendment and warned that such a move could undermine public confidence in the judiciary. The Colombo High Court Lawyers’ Association has also called upon the government to abandon its controversial plan which, if implemented, will undermine judicial independence, disrupt career progression within the judicial service, and erode public confidence in the judiciary. The opponents of the government’s questionable move also include LAWASIA (the Law Association for Asia and the Pacific), which consists of regional association of lawyers, judges, jurists, legal academics and legal organisations in the Asia-Pacific region, and the Commonwealth Lawyers’ Association, which promotes the rule of law, an independent legal profession, access to justice, human rights and high standards of legal ethics.
All arguments put forth by the aforesaid legal associations are compelling. They have pointed out that a change benefiting sitting judges could create a perception of favouritism; judicial tenure is closely linked to the separation of powers and constitutional safeguards; any reform should follow broad consultation rather than a rushed constitutional amendment, and existing vacancies numbering four each in the SC and the CA, should be filled immediately through proper appointments rather than extending the tenure of current judges.
One may recall that in 2024, the then Speaker Mahinda Yapa Abeywardena told Parliament that following the resignation of President Gotabaya Rajapaksa at the height of Aragalaya, in July 2022, a foreign envoy and a group of Sri Lankans had striven to pressure him into appointing himself Acting President in violation of the Constitution, and their intention had been to plunge Sri Lanka into anarchy, like Libya. Tens of thousands of protesters were trying to march on Parliament at that time. The JVP has admitted that it sought to lead those protesters to Parliament. Luckily, Sri Lanka did not become Asia’s Libya in 2022, but four years on, under a JVP-led government, it runs the risk of facing the same fate as Zimbabwe!
Addressing a recent BASL public forum, CLA President Steven Thiru warned that Sri Lanka would risk repeating Zimbabwe’s judicial crisis if it went ahead with its controversial plan to extend the retirement ages of sitting judges arbitrarily. If Sri Lanka proceeded with an ad hoc, non-transparent extension of Superior Court judges’ tenure without a broad consultative process, it risked plunging its legal system into a crisis of legitimacy similar to that in Zimbabwe, he warned.
The government must abandon its ill-conceived plan to amend the Constitution to extend the tenure of the superior court judges. Instead, it must take steps to fill the vacancies in the SC and the CA. Let it be warned that missteps can lead to pratfalls.
Editorial
Millers’ Rolls-Royces and farmers’ tears
Tuesday 14th July, 2026
Paddy farmers have refused to sell their produce to the Paddy Marketing Board (PMD) at the prices offered by the government. They are demanding better prices in view of increasing production costs, and their protests are gathering momentum. Their consternation is understandable. They backed the JVP-led NPP to the hilt, enabling it to win elections, expecting it to liberate them from the clutches of unscrupulous millers. Today, big-time rice millers are buying Rolls-Royces and helicopters while farmers are mortgaging their houses and tractors, unable to recover production costs.
Protesting farmers have claimed that although the government has offered to buy paddy, most of its warehouses still have stocks of paddy purchased during the Maha season. Even if storage facilities are available, the government can buy only 2% of the national paddy production, according to the PMD officials. So, how can the government make an effective market intervention to safeguard the interests of paddy farmers and consumers? It apparently does not explore other ways and means of preventing wealthy millers from exploiting paddy farmers and consumers.
Powerful rice millers, who bankroll election campaigns of main political parties, leverage their political connections to protect their interests. Reams have been written about how they manipulate governments to facilitate exploitation. They create rice shortages a few weeks before the commencement of every paddy harvesting period, prompting governments to import rice. Thereafter, they release some of their stocks into the market, bringing the prices of rice down so that they can buy paddy from farmers at very low prices. When their rice enters the market, imported rice in government warehouses rot and end up in breweries or animal feed factories. Governments, capitalist or socialist, are wary of antagonising the powerful millers for obvious reasons.
Curiously, President Anura Kumara Dissanayake has recently argued that Sri Lanka should diversify the uses of locally produced rice by manufacturing more value-added products. He has said rice can be used for producing beer and animal feed among other things. The government has cancelled a gazette notification that prohibited the use of rice as a raw material for beer and animal feed. Rice-based food products are common in this country, and the use of rice for manufacturing them does not adversely affect the public. However, the lifting of the aforesaid ban could lead to unforeseen problems.
The question is whether it is advisable to allow a water-intensive crop, raised with subsidised fertiliser, etc., to be used for manufacturing beer or animal feed when alternative raw materials are available. Is the government capable of regulating the paddy and rice markets to prevent a situation where the manufacturers of beer and animal feed will act in a way that may lead to a shortage of rice?
It is hoped that the government will be able to build sufficient buffer stocks of paddy, particularly in view of the current El Niño phenomenon, which is expected to adversely impact rainfall here. El Niño drastically changes predictable weather patterns and poses challenges for agriculture and water resources, experts have warned.
If the government is planning to divert a part of the local rice production to breweries and animal feed factories due to storage issues, as claimed in some quarters, it should seriously consider abandoning its plan and expanding its warehouse network by rebuilding the PMD storehouses, most of which went to wrack and ruin under UNP governments, following the 1977 regime change or were destroyed by the JVP during its second uprising in the late 1980s.
Minister Bimal Rathnayake has gone on record as saying that unlike in the past, today there are ‘tons and tons of money’ in the state coffers. If so, there is no reason why the government should not utilise a fraction of those funds to help the hapless farmers struggling to keep their heads above water and develop the PMD so that it will be able to regulate the paddy and rice markets and safeguard the interests of rice growers and consumers.
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