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BASL concerned about impact of economic crisis on rule of law and democracy

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The Bar Association of Sri Lanka (BASL) has said that it is gravely concerned about the signs of a looming economic crisis in Sri Lanka and its possible impact on the rule of law and democracy and on the living conditions of the people.

Secretary to the BASL, Rajeev Amarasuriya has said that the spiraling inflation, shortages of essential goods including cooking gas, the unavailability of foreign currency, people’s inability to remit monies overseas, the downgrading of Sri Lanka’s ratings by multiple international rating agencies, the temporary closure of the oil refinery at Sapugaskanda, reports of the operations of certain foreign airlines being suspended, warnings of a possible power crisis are all indicators which demonstrate the urgency of the need for the government to address the economic crisis without any further delay.

Text of the BASL statement: “A downturn in the economy can have far reaching adverse consequences to the Rule of Law and Governance of a Country. At its worst, economic decline can result in a complete breakdown of Law and Order, but even prior to that, serious repercussions flow from growing financial hardships that have to be borne by citizens that perpetuates inequality and the ability of citizens to enjoy or vindicate their rights, be they public or private rights. It goes without saying that the worst affected by economic hardship are the most vulnerable in society,” Amarasuriya said

Given below are excerpts of the press release: “It is an undisputed fact that since March 2020 there has been a gradual erosion of foreign reserves from approximately USD 7 billion. Although it was announced by the Central Bank that the reserves have increased to USD 3 billion, it remains to be ascertained how much of that are usable reserves to repay the debt and used to redress the prevailing balance of payments crisis. Even out of the available reserves a large proportion contains moneys obtained in the form of short-term foreign exchange swaps.

“There have been several sovereign credit ratings downgrades in the corresponding period by all the major credit rating agencies. The latest being the downgrades by Fitch Rating Agency to CC and Standard and Poor’s (S & P) to CCC. The International Sovereign Bonds yields across all tenures have remained in double digits for over a period of 2 years. This has made rollover of maturing sovereign bonds not feasible.

“There have also been reports of a flight of foreign capital both from the equities and as well as the money markets. Foreign participation in both markets at present is only negligible. The Economist magazine named Sri Lanka as one of the most vulnerable countries to the expected fallout in emerging markets from the anticipated raising of interest rates by the Federal Reserve of the United States. Debt to GDP from approximately 85% in 2019 is now estimated to have risen to approximately 104% of GDP. However, in the same period the government revenue as a percentage of the GDP has fallen from approximately 12% to 10%. Year on Year headline inflation in the month of November 2021 was recorded at 9.92% and December 2021 recorded a double digit figure of 12%, the highest in the past 7 years. The Net International Reserve Position of the Country has been negative for over three months consecutively. All of this has resulted in the scarcity of foreign exchange to sustain essential imports.

“The ability of the government to meet its total dollar requirements of approximately USD 6.9 billion in 2022 is being questioned, although the Central Bank has pledged that such commitments will be met. Questions as to the stability of the financial sector are also being raised.

“The BASL notes with deep concern the statement made in late December by the Joint Chambers of Commerce calling upon the government that if actions as envisaged by the recently announced Roadmap by the Central Bank of Sri Lanka are not materialized within the anticipated timeframes to reconsider other alternative courses of action available to the country such as engaging with the IMF to explore the funding options they can offer. The Joint Chambers have warned that if conditions do not improve many local companies would look to relocate their business operations overseas and that the ability to attract Foreign Direct Investment (FDI) into the country will be constrained.

“The BASL acknowledges that the government has been confronted with extraordinary challenges in the form of the pandemic which has caused disruptions to the economic activities. It also recognizes the fact that the government has taken measures to address the challenges arising thereof. Similarly, the Government has sought to undertake remedial measures to address the fallout from the prevalent crisis consequent to the loss of access to financial markets and the resulting paucity of foreign exchange domestically thereof. However, none of those measures have brought about the desired results and have failed to build confidence to reverse the flight of foreign capital from the equities and money markets. Neither have these steps resulted in regaining access to international financial markets to raise debt.

“Enjoyment of a living standard based on desired lifestyle choices and income has become a challenge. Our members who are mostly self-employed are particularly vulnerable and adversely impacted by these events as savings and assets form the bedrock of their economic safety net. Some of the measures taken by the Government have directly impeded the ability of our members to perform their professional duties, particularly the purported regulation that compels the conversion of foreign inflows into rupees within a stipulated time period.

“We believe that the present crisis is the crescendo of the crisis emanating from the systematic undermining of the rule of law and governance based on executive convenience and expediency rather than on institutional independence and autonomy over a long period of time by successive governments.

“In these circumstances, the BASL calls upon the government to seek the assistance of acknowledged independent and non-partisan experts both domestically and internationally and also of multilateral institutions that have a proven record of providing resources financially as well as in the form of technical expertise that will enable sustainable solutions to this crisis. It is our belief that such assistance will result in the prescriptions that manifest to the world Sri Lanka’s belief in institutions as a country where effective governance is not contingent on personalities. It will manifest the fact that Sri Lanka has the desire and institutional capacity to respond to the exigencies brought by the present crisis via prescriptions that subscribe to the Rule of Law. Moreover, it is our belief that only such a response will create the institutional framework that ensures the efficient collection of revenue and the result in the efficient allocation of scarce resources and the formulation of monetary policy that ensures economic stability rather than a permissive one which facilitates executive expediency and convenience. The achievement of these outcomes is in our opinion indispensable to resolve the crisis at hand.”



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Endure daily power-cuts or face countrywide indefinite blackouts, warns Minister Gammanpila

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‘Electricity supply cannot be maintained at the expense of transport sector’

By Shamindra Ferdinando

Energy Minister Udaya Gammanpila yesterday (18) said that the foreign currency crisis was so acute the country had no option but to implement daily 90-minute power cut until the hydro power generation increased with the onset of rains.

Minister Gammanpila, who is also the leader of Pivithuru Hela Urumaya (PHU) has advised the Ceylon Electricity Board (CEB) to impose daily 90-minute power-cuts or face the consequences.

Gammanpila said that the entire country would face indefinite blackouts if the CEB tried to avoid 90-minute power cuts. The warning was issued at a media briefing called by Minister Gammanpila at the Power Ministry where he stressed that power cuts were inevitable in view of the foreign exchange crisis.

The cash-strapped government was able to pay for stock of diesel on Tuesday (18). In spite of vessels carrying diesel entering Sri Lankan waters nine days ago the government had to struggle to pay them, the lawmaker said.

At the onset of the briefing, Minister Gammanpila flayed the CEB for blaming the Ceylon Petroleum Corporation (CPC) for the rapidly developing crisis.

MP Gammanpila said: “About 60 percent of the electricity requirement was met by hydro-power till end of Dec 2021. By then, hydro-power generation was down to 38 percent. Struggling to cope up with the situation, the CEB on January 11 asked us to provide additional fuel with effect from January 13. The CPC was not prepared to meet their requirement for obvious reasons. We were told they needed additional supplies at the end of January.”

Minister Gammanpila asked as to how the CPC could supply 1,500 metric tonnes beginning January 13 as it didn’t have the required stocks. The Energy Minister emphasised that the cash-strapped government couldn’t maintain extra stocks.

Lawmaker Gammanpila emphasised that his ministry had no option but to refuse to provide diesel to the CEB at the expense of the transport sector. The lawmaker pointed out that the country couldn’t afford to allow the disruption of transport by releasing sparse stocks available to them.

The Energy Minister asserted that disruption in public and private transport would be far worse than being subjected to daily 90-minute power cut.

Advising the CEB to be mindful of the current situation, Minister Gammanpila said that of the 37,000 tonnes of diesel the government paid for on Tuesday, 10,000 tons would be made available to the CEB. Declaring that would be sufficient for just eight days, Minister Gammanpila said that the CPC would also provide 2,200 tons of furnace oil and 700 tons of diesel to a privately-owned power station that supplied electricity to the government.

Minister Gammanpila said that it would be better to experience daily 90-minute power cuts than facing the prospect of three-hour disruption after having uninterrupted supply for a short period.

The outspoken lawmaker said that there was no point in denying the fact that the country was in severe difficulty due to the foreign currency crisis.

Pointing out that Sri Lanka received USD 750-800 mn a month, the Energy Minister asked how banks coped up with the situation as the government sought 2/3 of that amount for oil imports.

Minister Gammanpila told The Island that the public should be taken into confidence. The current crisis would cause further problems, the lawmaker said, urging the decision makers to be responsible to those who elected them.

The MP warned the failure on the part of the powers that be to realise the actual ground situation and take tangible measures to cut down the fuel bill would plunge the country into an unprecedented crisis.

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Speaker: MPs borrowed only 330 books from Parliamentary library in 2021

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122 of them are novels!

By Saman Indrajith

The MPs’s poor reading habit had led to deterioration of their conduct in the House and made their speeches full of unparliamentary language, Speaker Mahinda Yapa Abeywardena told Parliament yesterday.

The Speaker said that it was very embarrassing to note that all 225 MPs had borrowed only 330 books from the House library during the whole of last year.

Making a special statement at the commencement of the sittings, the Speaker said that the Members of the House should take note of their conduct during the debates. “Once you have crossed the bar of the House you are considered honourable members of the House of Parliament. The honourable title demands that you speak and behave accordingly in a respectable manner which in turn reflects back on the House. When I first spoke in Parliament I did so after weeks of preparation. Today, very few members prepare before their speeches. According to the information furnished to me by the library only 330 books have been borrowed by the MPs during the year 2021, and 122 of them were fictions. Ninety-four of the books borrowed were on political science and 27 on sociology, only 11 books on economics. Five books on science, four books on law and three books on technology, one book on education, and one book on Sinhala literature among those books borrowed by the MPs.

“For a House of 225 members this is embarrassing. This lack of knowledge and preparation on subjects have led us to insufficient awareness, false allegations, in speeches. Most of the speeches are to score political points. This has led to shameful, unparliamentary conduct. As the Speaker it is my duty to conduct the House affairs productively and ensure the rights of all its members.

“The members must understand that it is their sacred duty to uphold the dignity of this institution. If people lose faith in this House that means they lose faith in democracy. Repercussions of such a situation would be a grave danger for all political parties and citizens of this country. People expect the members of the government and Opposition to act responsibly.”

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Sri Lanka disputes Canadian Travel Advisory

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… immediate steps taken to apprise Ottawa

Sri Lanka has challenged a Canadian bid to undermine ongoing efforts to attract tourists. In the wake of the latest Canadian Travel Advisory on Sri Lanka issued on January 13, 2022, the Foreign Ministry has stated that the communique contained erroneous and outdated information that did not reflect the actual situation in Sri Lanka. As such, the Ministry has taken steps to apprise the Canadian authorities of ground realities.

The following is the text of the statement: “There are flawed references to the economic and security situation in the country as well as inaccurate information with regard to the safety and security of female travelers and harassment of foreigners.

Sri Lanka has successfully overcome the immediate challenges posed by the COVID-19 pandemic, and is now in a state of normalcy with all public service, corporate and business, and education activities functioning normally without interruption, in accordance with COVID-19 health and safety guidelines. The nationwide inoculation programme has been commended by the World Health Organization (WHO) and almost 90% of the eligible population has received both doses of the COVID-19 vaccine. A campaign has been launched to provide the booster dose to the population above 20 years of age.

Despite the pandemic, Sri Lanka has received several international accolades in the tourism industry including CNN’s “Where to Travel in 2022”; the Global Wellness Institute; Conde Nast Traveler 2021 Reader’s Choice Awards as well as other endorsements received previously in 2019 by Lonely Planet and the National Geographic Travel. GoSL looks forward to more tourists visiting Sri Lanka from Canada and elsewhere with the gradual normalization of travel globally.

It is important to note that even though Sri Lanka’s economy has been affected by the COVID-19 pandemic, the country is making every endeavor to reinvigorate its economy this year, through the implementation of prudent policies. Food security and law & order are the topmost priorities of the Government, and the availability of all essentials is considered as a vital part of the Government’s functions. As such high priority is given to ensuring that all essential items continue to be available to the public at all time and there are sufficient stocks of food items.

With regard to the security situation, the GoSL maintains minimum presence of military in the North and the East to ensure security and stability in keeping with national security imperatives and this is similar to such presence elsewhere in the country. There is no arbitrary arrest and detention of persons by the police or security forces. Since the end of the terrorist conflict in 2009, security forces have conducted a comprehensive demining operation in the North and East, with technical support of several foreign Governments and international agencies. As at December 2014, 94% of the de-mining had been completed, while presently, the figure has risen to 98.7%. The Advisory states, that ‘there is a threat of terrorism’ and that ‘further attacks cannot be ruled out’. It is notable that since the election of President Gotabaya Rajapaksa in November 2019 the GoSL has taken all necessary measures to ensure public safety and national security throughout the country, to prevent any resurgence of terrorism. It is noteworthy that during this period, there has not been even a single terrorist related incident in Sri Lanka, due to the enhanced vigilance and proactive measures taken by the relevant security authorities.

Sri Lanka is a multi-ethnic, multi-religious and multi-cultural country with a rich, cosmopolitan heritage where different communities have peacefully co-existed over centuries. There is no civil unrest in the country. Sri Lanka has a long democratic tradition with strong institutions, and a vibrant civil society. Freedom of association and assembly are safeguarded with peaceful demonstrations occurring in Sri Lanka as in any other country where liberal democratic norms and traditions prevail. The police have allowed and continue to allow such peaceful demonstrations to take place unimpeded. These demonstrations do not in any way hinder the comfort, movement, safety or activities of tourists.

Specific attention is being paid to the safety and security of women tourists with measures taken to strengthen the presence of police, including tourism police, island-wide in all regions. Under this programme, police presence is being increased in all popular tourist destinations of the country with greater presence of women police officers in police stations. Emergency numbers of tourist police regional units, local police, and other emergency units such as hospitals, are available online to be accessed by travelers to Sri Lanka.

Sri Lanka is an island nation with friendly people with a high level of education, knowledge of English and literacy, and incidents of harassment or violence against tourists or foreigners are extremely rare.”

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