Opinion
Dollar Crisis: What aggravated it
by Eng. D. Godage
Total foreign currency reserves of the country were around seven billion dollars at the beginning of 2021 but it decreased to around 1.2 billion dollars towards the year end, even though the Central Bank announced that there was a reserve of three billion dollars. The net foreign assets of the total banking system are said to be a US$ 4.1 billion deficit by 2021 end. Everybody knows the suffering and difficulties the countrymen undergo as a result of the depletion of foreign currency or dollar reserves. Without elaborating on those effects, it is the intention of the writer to examine how foreign reserves depleted so fast.
Politicians, officials, public speakers very often tend to blame every government since independence over the past 70 years for ruining this country, but with regard to foreign debt, it is not applicable. Moreover, the effects of the COVID-19 pandemic were felt globally but other countries in this region did not suffer as much and face such crises like the ones faced by Sri Lanka, so it is no excuse. It is not essential to elaborate on this fact as it is common knowledge. Consequently, the writer makes an attempt to understand how and when it happened. The focus of this discussion is on infrastructure development, and not other debt instruments.
Debt burden since independence
The Oya project implemented around 1948 using local funds comes to mind. Moreover, from 1950 the major port development scheme of Colombo Harbour created the Colombo Port, one of the most modern ports at the time, by 1956 under the leadership of the Minister of Transport and Works, Sir John Kotelawala in the Dudley Senanayake Cabinet, utilising local funds amounting to 110 million rupees. While work was in progress, the ship ‘Gothic’, carrying Queen Elizabeth II, berthed alongside the newly constructed Customs Quay to christen it the Queen Elizabeth Quay (QEQ). Incidentally, the QEQ was buried in the privately developed SAGT or South Asia Gateway Terminals around year 2000.
The Mahaweli Development Project, a massive irrigation cum hydroelectric scheme originally planned for 30 years but telescoped into about six years, was undertaken by the J.R. Jayewardene government using concessionary loans as well as grants. Funds were provided based on a thorough feasibility study, with eminent engineer late Dr. A.N.S Kulasinghe and his team of engineers working as consultants. Resultant benefits are well known and they did not lead to any debt crisis in the country.
Road and railway infrastructure development has been carried out with locally raised funds. After the 2004 tsunami disaster, the Railway Department staff rehabilitated the destroyed line to recommence operations with the least possible delay. It is said that northern rail line improvements carried out later on loans under Uthuru Wasanthaya had spent two to three times the cost.
Since 1980 the country has seen another major development programme in the port sector. Studies had been conducted at a time of increasing demand for container traffic, confirming the urgent need to expand port facilities. The first phase of expansion, requiring US$ 32 million, was funded in the form of a Yen currency loan. The project progressed systematically aided by further loans, through a transparent bidding process. As a result, the Colombo Port was elevated from the global rank of 127 in 1981 to 21st in 1997. These loans were granted only after proper feasibility studies were carried out and confirmation of loan repayment capability, as affirmed by the lending Japanese Agency. Extensive borrowing for project infrastructure became the norm only after about 2000 and not since independence.
Newer debt accumulation
A Sunday English newspaper on March 9, 2014 and May 1, 2016 reported, with details from the External Resources Department, on 28 projects funded predominantly by China Exim Bank loans amounting to US$ 7,671 million, with five-year grace and 10-year repayment periods; their interest rates are not indicated but is supposed to be over six percent. All these projects are said to have been initiated through unsolicited tenders. The same newspaper published a report under the caption, “Normal tender procedure not possible for mega projects: PBJ”. This is a questionable statement. Further examination of the above list shows seven projects, all in Hambantota, totalling US$ 5,054 million, for airport, port, highway extension, railway extension and local road network. None of them seem capable of generating revenue to repay the massive loans even though they have been in operation for around 10 years by now. These loans alone require about US$1 billion per year as repayment, burdening the country, and using up its dollar reserves. During the previous regime the Hambantota Port was given out on a 99-year lease.
Did the Treasury officials who handled these borrowings not see the danger of the debt burden or debt trap and the country’s inability to repay them without adequate future revenue? One can cite the shifting global financial structure and unforeseen circumstances as the reason. But they should have been taken into consideration in any plan. High costs due to unsolicited proposals without a competitive bidding process are also an issue. As for costs, the Treasury Secretary has said that it is the engineers who determine costs. This is not an acceptable excuse.
The Colombo Port South Harbour was found to be an urgent project, and proved viable after an extensive feasibility study by 2001. After producing detailed designs, cost estimates and all implementation requisites, it was not possible to proceed due to lack of funds. The Hambantota Port project was also given high priority by the same government though two feasibility studies failed to show the viability of the project. For the Colombo Port project, the Treasury Secretary advocated commercial borrowing claiming that the lending agency conditions were unacceptable.
In fact, only one lending agency came forward to offer approximately one third of the fund requirement. The Ports Authority managed to obtain very concessionary loan of US$ 300 million in 2006, to proceed with the project, albeit after a two-year delay. The new harbour was completed successfully within the stipulated time and cost while adhering to a transparent tender process. It is worthwhile to note that the lowest cost, approximately US$ 320 million, was quoted by the Korean contractor who successfully completed it, while the next bid was around US$ 570 million by a Chinese contractor. This project seems to be generating more revenue than budgeted.
In fact, the biggest container ship in the world ‘Ever Ace’, with a carrying capacity of 24,000 TEU, berthed in the Colombo South Harbour in October 2021 as it is the only port in the region that could accommodate a ship of that scale, bringing great honour and promoting the Colombo Port.
Most Chinese funded projects that commenced during the past two decades seem now complete and in operation, spread among power and energy, transportation, airport and aviation, ports, irrigation and water sectors. Debt distribution is US$ 1,553 million in power and energy, US$ 3.99 billion in transportation, US$ 232 million in airport and aviation, US$ 1,336 million in ports and US$ 101 million in irrigation. This includes projects indicated by the aforementioned 2016 news item, and subsequent major projects like the Central Highway are not included.
Expensive ventures like the Norochcholai coal power plant costing US$ 1,346 million have helped to meet the country’s energy demands and there has to be a post project evaluation to ascertain its financial gains and loan repayment capacity. Highway projects undertaken on expensive loans do not seem to generate enough revenue to meet dollar loan repayments. Although some benefits accrue, the post project economic and financial evaluations are not satisfactory. The highest revenue on a peak day on the Southern Highway has been 38 million rupees a day. Considering the average annual turnover minus the operation and maintenance costs it could take 100 years to repay loans. Authorities should perform a post project evaluation for the benefit of future planners.
Lessons to learn
This is history but should not be discarded, for the valuable information and data therein demonstrate the actual scenario and resultant repercussions. Decision makers and economic advisors to the government, especially of the Treasury and any other relevant officials could review them.
The debt burden has aggravated the dollar crisis during the past two decades. The COVID-19 pandemic during the past two years is not an excuse as other countries in the region too have faced the same but are performing better. The negative economic growth in 2020 and the considerable dollar debt burden, with the country’s reserves collapsing have not occurred suddenly. Severe import restrictions have made day to day life of the people inconvenient and led to the collapse of some domestic industries.
The worst is yet to come, as warned by the Secretary to the President, delivering a speech in Colombo, as reported by a Sunday English newspaper on 28 Nov. 2021. He was the Treasury Secretary during the past two decades, when China Exim Bank loans were signed to the tune of billions of dollars mostly for white elephant projects, The massive dollar debt seems the root cause of most problems faced today.
Opinion
Lakshman Balasuriya – simply a top-class human being
It is with deep sorrow that I share the passing of one of my dearests and most trusted friends of many years, Lakshman Balasuriya. He left us on Sunday morning, and with him went a part of my own life. The emptiness he leaves behind is immense, and I struggle to find words that can carry its weight.
Lakshman was not simply a friend. He was a brother to me. We shared a bond built on mutual respect, quiet understanding, and unwavering trust. These things are rare in life, and for that reason they are precious beyond measure. I try to remind myself that I was privileged to spend the final hours of his life with him, but even that thought cannot soften the ache of his sudden and significant absence.
Not too long ago, our families were on holiday together. Lakshman and Janine returned to Sri Lanka early. The rest of the holiday felt a bit empty without Lakshman’s daily presence. I cannot fathom how different life itself will be from now on.
He was gentle and a giant in every sense of the word. A deeply civilized man, refined in taste, gracious in manner, and extraordinarily humble. His humility was second to none, and yet it was never a weakness. It was strength, expressed through kindness, warmth, and dignity. He carried himself with quiet class and had a way of making everyone around him feel at ease.
Lakshman had a very dry, almost deadpan, sense of humor. It was the kind of humor that would catch you off guard, delivered with too straight a face to be certain he was joking, but it could lighten the darkest of conversations. He had a disdain for negativity of any kind. He preferred to look forward, to see possibilities rather than obstacles.
He was exceptionally meticulous and had a particular gift for identifying talent. Once he hired someone, he made sure they were cared for in unimaginable ways. He provided every resource needed for success, and then, with complete trust, granted them independence and autonomy. His staff were not simply employees to him. They were family. He took immense pride in them, and his forward-thinking optimism created an environment of extraordinary positivity and a passion to deliver results and do the right thing.
Lakshman was also a proud family man. He spoke often, and with great pride, about his children, grandchildren, nephews, and nieces. His joy in their achievements was boundless. He was a proud father, grandfather, and uncle, and his devotion to his family reflected the same loyalty he extended to his colleagues and friends.
Whether it was family, staff, or anyone he deemed deserving, Lakshman stood by them unconditionally in times of crisis. He would not let go until victory was secured. That was his way. He was a uniquely kind soul through and through.
Our bond was close. Whenever I arrived in Sri Lanka, it became an unspoken ritual that we would meet at least twice. The first would be on the day of my arrival, and then again on the day I left. It was our custom, and one I cherished deeply. We met regularly, and we spoke almost daily. He was simply a top-class human being. We were friends. We were brothers. His passing has devastated me.
Today I understood fully the true meaning of the phrase ‘priyehi vippaogo dukkho’ — (ප්රියෙහි විප්පයෝගෝ දුක්ඛෝපෝ) ‘separation from those who are beloved is sorrowful.’
My thoughts and prayers are with Janine, Amanthi, and Keshav during this time of profound loss. Lakshman leaves behind indelible memories, as well as a legacy of decency, loyalty, and quiet strength. All of us who were fortunate to know him will hold that legacy close to our hearts.
If Lakshman’s life could leave us with just one lesson, that lesson would be this. True greatness is not measured in titles or possessions, but in the way one treats others: with humility, with loyalty, with kindness that does not falter in times of crisis. Lakshman showed us that to stand by someone, to believe in them, and to lift them up when they falter, is the highest of callings, and it was a calling he never failed to honour.
Rest well, my dear friend.
Krishantha Prasad Cooray
Opinion
My friend Padmini is no more
It was so sudden!
I have known Padmini as a French student in the 70s. She was recognized at the Non Aligned Conference in 1976 by being recruited as a French interpreter. She was an active member at l’ Alliance Francaise and was able to associate with the Director/s in a manner that was closer than to many of us would venture.
She also knew astrology, did you know that?
She knew to dress fashionably. In later years, her walking stick was as fashionable as her dress!
She knew to cook and impressed the Colombo Hilton by winning first place or was runner-up at cookery competitions. She rarely spoke about such achievements but did so sometimes at the right moment.
My favourite times with her was when Padmini invites me with a group of others to many of her Cheese’n Wine get-togethers. There were always different cheeses in abundance, with a choice of rye, baguette or other fancy breads to complement the cheese. It was always a wonderful afternoon only possible at Padmini’s.
Her smile, her charm, and her warm friendship, I will miss. My sympathies go to her three children. Amal, Tamara and Aruni. May her memory live on with all her friends. As for me, she was very special.
Ramani Rajapakse
Opinion
Presidential authority in times of emergency: A contemporary appraisal – II
Keynote Address Delivered at the International Research Conference of the Faculty of Law, University of Colombo, on 12 December 2025.
(Continued from yesterday)
V. Usage Down the Ages
Empirical evidence during all epochs of history, and in a vast array of legal cultures, establishes without doubt the need for far-reaching executive powers during times of crisis.
The legal acumen of the Roman Republic did not recoil from conferment of even dictatorial powers on its principal executive officials—the two consuls—during periods of breakdown. They wielded life and death powers over Roman citizens, but the right balance was struck. Extraordinary authority was limited to the brief span of six months, and the appointing official could not select himself. Checks and balances assured success of the system: although 90 dictators were appointed under the Roman Republic during a period of 300 years, not one dictator attempted to perpetuate the system at the end of his tenure.
The English common law is certainly no exception to this tradition. The essence of the English doctrine is that the Executive has “an inherent constitutional authority to proclaim martial law when it deems there to be a public emergency, a proclamation that entitles the Executive to act as it sees fit to respond to the emergency” (Dyzenhaus).This power has been applied by the United Kingdom to her colonies, including Ceylon, where Governor Sir Robert Chalmers, for example, made ruthless use of it during the Sinhala-Muslim riots under the cloud of World War I.
In the United States, Congress has passed no fewer than 470 statutes granting authority to the President to use extraordinary powers during a declared state of national emergency. An egregious instance is Executive Order 9066 issued by President Roosevelt just two months after the Japanese attack on Pearl Harbour. This resulted in the mass incarceration of approximately 120,000 Japanese Americans from the western United States, over 70,000 of whom were American citizens(Amanda Tyler).
In the aftermath of 9/11, one of the gravest global emergencies in our time, American and British courts, for compelling reasons, showed marked solicitude for executive authority. A plurality of the Supreme Court of the United States held that the Congressional Resolution, Authorization for Use of Military Force, permitted the detention of enemy combatants, such power being recognized as “fundamental” and “a necessary and appropriate use of force” (Hamdi v. Rumsfeld). In the United Kingdom, in the first decision after 9/11, the House of Lords, grounding its decision in the separation of powers, held that it is for the Executive to decide what is in the interest of national security (The Belmarsh case).In doing so, the House of Lords had no hesitation in overruling the decision to the contrary by an administrative tribunal, the Special Immigration Appeals Commission.
VI. Imaginative Features of the Evolving Law
The limits of judicial review in this setting emerge clearly from impeccable precedents across the world. Legitimacy of the Proclamation of Emergency issued in Sri Lanka by the Acting President on 17 July 2022, assessed in light of these precedents, admits of no doubt.
The dominant test is that based on proportionality. The salient requirement is that the impugned measure should clearly realize or advance its underlying purpose, that “the use of such means would rationally lead to realization of the law’s purpose”(A. Barak). In terms of a comparative assessment of the harm inflicted on constitutional rights and the benefit accruing to the public interest, intervention by the Executive should come down heavily on the side of the latter, as opposed to the former(A.P. Brady).
The basis of justification is that the risk of harm sought to be averted should be very high, an overriding public interest being placed at stake in a situation where the outcome is perilously uncertain (J. Zander).Gravity of the risk and the extent of impending harm are the governing factors.
Evaluated against these criteria, the Sri Lankan Emergency Proclamation of 17 July 2022 passes the test with ease. In the backdrop of the nerve centres of the Executive Administration having fallen to the control of a violent mob, and the attempted extension of their initiative to the precincts of Parliament, where a crucial vote was scheduled within a matter of days for the election of the President of the Republic, in keeping with constitutional procedure, the Proclamation clearly served the purpose of ensuring unimpeded access to Parliament for legislators to perform their constitutional duty. Prevention of this by unlawful force would have presaged nothing less than the collapse of constitutionalism and the descent of the country into anarchy.
While recourse to the proportionality test would inevitably yield this result, it is worth noting a further refinement in the developing law. This has taken the form of modifying the criterion of proportionality by the application of a “precautionary principle” in suitable contexts.
The effect of this principle, now fortified by reliable antecedents, is “to favour the governmental objective (to mitigate or avert a crisis) over fundamental rights” (Ondrejek and Horak). This approach, militating against the postulate, in dubio pro libertate, has been described as “a rational and prudent response in the face of uncertainty”(Renn).
The precautionary principle, as a feature of contemporary jurisprudence, has its origin in international environmental law. Its substance is captured in the Rio Declaration on Environment and Development, 1992, which states: “In order to protect the environment, the precautionary approach shall be widely applied by States according to their capabilities. Where there are threats of serious or irreversible damage, lack of full scientific certainty shall not be used as a reason for postponing cost-effective measures to prevent environmental degradation”. Lack of epistemic certainty, then, must not forestall preventive action against grave damage. This principle has currently received acceptance outside the domain of environmental law as the anchor of a pragmatic mediating technique, of particular value in our time.
Applied to the Sri Lankan situation, it should conclusively govern the outcome, in that pre-emptive action in the face of impending disruption of a crucial meeting of Parliament is obviously a measure of prudence.
VII. A Realistic Assessment
The ratio decidendi of the majority decision of the Supreme Court is that, even after the President had reached a proper conclusion about the existence of a state of public emergency, he is still compulsorily required to consider whether other options are available to deal adequately with the crisis. This finding is demonstrably at variance with established authority.
The view has been persuasively taken that “There is usually more than one decision compatible with the complainant’s rights,
and it is for the public body rather than the court to choose between them”(T. R. S. Allen). Thus, “when there is scope for different answers or approaches, it is right that the court accept the solution favoured by the public authority”. Sir Thomas Bingham (as he then was) has referred in this context to “the range of options open to a reasonable decision maker”(R v. Ministry of Defence, ex parte Smith).Accordingly, there should not be “too narrow a space for the discretion of the primary decision maker”(Ondrejek and Horak).
The Supreme Court of the United States has declared: “It is no part of the function of a court to determine which one of two modes was likely to be the most effective for the protection of the public”(Jacobson v. Massachusetts). The Court spelt out the rationale for its ruling: the contrary decision could well lead to “disorder and anarchy”.
In a well-known ruling in 2018, in a case involving a travel ban imposed by President Trump, the Supreme Court observed: “Whether the President’s chosen method of addressing perceived risks is justified from a policy perspective, is irrelevant”(Trump v. Hawaii).The Court therefore refused the plaintiffs’ request for “a searching inquiry” on the ground of “the deference traditionally accorded to the President in the sphere of national security”.
This approach has cogency, for at least four compelling reasons.
First, the need for expeditious intervention is paramount. This is tied to the essential “reassurance function” of the Executive. “The government must act visibly and decisively to demonstrate to its terrorized citizens that the breach was only temporary, and that it is taking aggressive action to contain the crisis”(Ackerman).Speedy action on the spur of the moment, in an atmosphere far removed from one conducive to meticulous weighing of alternatives ex post facto, in a relaxed and unhurried setting, is the critical need.
Second, the consequences of delay should be evaluated against the prudence of prompt action. The reflection by Obeyesekere J. carries conviction: “In the event the Acting President did not take decisive steps, and further elected representatives were murdered, or Parliament was stormed, this Court may have had to consider whether there was a dereliction of duty in failing to act on the advice of pivotal officers responsible for maintaining law and order”. This was a situation in which the Minister of Public Security, the Secretary to the Ministry of Defence, and the Inspector General of Police had all recommended to the Acting President the declaration of a State of Emergency.
Third, in this instance, the effect of Presidential intervention was required only for a strikingly brief duration—until Parliament met within two days. Professor Bruce Ackerman of Yale University has offered the sapient comment: “The Executive should be given the power to act unilaterally only for the briefest period—long enough for the Legislature to convene and consider the matter, but no longer”.
Fourth, the rigidly circumscribed scope of judicial review in this setting is indicated by the narrow window for application of the Wednesbury test of reasonableness. In the evolving law, the impugned action is no longer required to be “suitable”, as a matter of judicial proof. All that is required is that it should “not be manifestly unsuitable”. This involves, from a practical standpoint, shifting of the burden of proof from the decision maker to those assailing the decision; and the threshold of proof is dauntingly exacting. The preferred principle in modern law is that “the courts should not quash or declare illegal any emergency measure or decision unless it is very likely(based on the already available data and evidence) that it cannot contribute to the legitimate aim in any way”(Ondrejek and Horak).
The Supreme Court of India has determined that there is no warrant for judicial intervention unless it is clear from the material on record that there is “absolutely no justification” for the Proclamation (Bhagvati J in Minerva Mills).Stringency of the test for availability of judicial review is laid bare by the example given by Bhagwati J—the Chief Minister of the state in question being below five feet in height(State of Rajasthan v. Union of India).This bears comparison with the famous illustration of the red-headed schoolteacher in the Wednesbury case. The trend, then, is unmistakably hostile to expansion of judicial review on this ground.
In our own country, this predisposition is reinforced by a firmly entrenched constitutional norm. A foundational principle of our public law is the vesting of judicial power, not in the courts but in Parliament, which exercises judicial power through the instrument of the courts. This is made explicit by Article 4(c) of the Constitution which provides: “The judicial power of the People shall be exercised by Parliament through courts, tribunals and institutions created and established, or recognized by the Constitution, or created and established by law, except in regard to matters relating to the privileges, immunities and powers of Parliament and of its members, wherein the judicial power of the People may be exercised directly by Parliament according to law”.
VIII. Conclusion
One of the most influential academic contributions to this subject in our time is the paper recently published in the University of Queensland Journal by Richard Ekins, Associate Professor of Law in the University of Oxford, and Graham Gee, Professor of Public Law in the University of Sheffield. The view is there articulated with exceptional force that there is reason to entertain deep suspicion regarding “a vague freewheeling judicial power”, which is seen at bottom as “antithetical to the rule of law”. This has been trenchantly denounced as “a lawless grab for power, unrooted in our constitutional tradition”.
The overarching problem is one of legitimacy. It should certainly give us pause that “this dangerous stretch of legal technique” carries with it the risk of displacing the proper exercise of political accountability and, in doing so, compromising basic constitutional principle.
This kind of judicial overreach has many undesirable consequences beyond the crisp question of the legality of the declaration of a state of emergency in 2022, including:
a) Traducing constitutional tradition;
b) Subverting the specific model of separation of powers reflected in our Constitution;
c) Undermining the established rule of interpretation that the courts construe the law from the face of the statutory and/or constitutional text, including due respect for ouster clauses;
d) Eroding established principles of public law in respect of the legality of executive or administrative actions; and
e) Inappropriately invoking doctrines such as those relating to ‘public trust’ and ‘just and equitable’ remedies to justify judicial overreach when those doctrines are there to ensure the common good and institutional role morality.
By Professor G. L. Peiris ✍️
D. Phil. (Oxford), Ph. D. (Sri Lanka);
Rhodes Scholar, Quondam Visiting Fellow of the Universities of Oxford, Cambridge and London;
Former Vice-Chancellor and Emeritus Professor of Law of the University of Colombo.
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