Editorial
Of that debt debate
Tuesday 2nd July, 2024
Parliament is to have a debate on the recently-concluded external debt restructuring agreement between Sri Lanka and some of its foreign creditors. It is hoped that the focus of the House will remain undivided on the country’s debt crisis and the ways and means of overcoming it, and nothing else. Parliamentary debates usually descend into slanging matches.
Opinion is divided on the aforesaid agreement which the government has made out to be a huge success. The Opposition has dismissed it as a sellout, claiming that the government has agreed to conditions totally unfavourable to the country. The truth, we believe, is somewhere between these two extreme positions.
The debt structuring agreement has provided Sri Lanka with some respite, but by no stretch of the imagination can it be considered an achievement worthy of celebration. Sri Lanka’s International Sovereign Bonds have not yet been restructured; the government is hopeful that an agreement with the bondholders can be reached. There is a long way to go before we achieve debt sustainability, the be-all and end-all of breaking the back of the current crisis, and putting the economy back on an even keel. This is a gargantuan task that requires a substantial increase in the country’s export revenue and a drastic reduction in the outflow of foreign exchange, among other things.
The Opposition’s position on external debt restructuring smacks of a mindset that the foreign creditors must be penalised for Sri Lanka’s blunders which have brought about the current crisis. True, Sri Lanka would have gained hugely if its creditors had been made to agree to big haircuts and other such extreme measures, but the question is whether it would have been able to borrow again from external sources in such an eventuality.
How can the foreign creditors be expected to be so considerate as to take huge haircuts for the sake of Sri Lanka while some local trade unions are demanding their pound of flesh or even more, and the MPs are all out to secure duty-free vehicle permits, which will be a drain on the country’s foreign currency reserves? Worse, Sri Lankan exporters stand accused of parking their export proceeds overseas.
Meanwhile, the crisis we are facing is multi-factorial although our focus is only on the economic aspects thereof. Therefore, our efforts to solve it once and for all should not be limited to the economic front. The need for social and political reforms to prepare the country for doing what needs to be done to overcome the present crisis cannot be overemphasised. We are without a work ethic as such and our attitude to work, as a nation, is appalling, to say the least; it is only natural that our national productivity remains woefully low, and we continue to be dependent on foreign aid.
Ideally, the government and the Opposition should have got together to help resolve the country’s worst-ever economic crisis, and formulated a recovery strategy, instead of playing politics with the issue. In fact, all members of the current Parliament are duty bound to make a collective effort to hoist the country out of its debt crisis. The SLPP government on Gotabaya Rajapaksa’s watch precipitated the economic crisis, but successive governments have contributed to the country’s unsustainable debt, albeit to varying degrees. Those in the current Opposition were in the Yahapalana government or were supportive of that regime, which borrowed more than USD 10 billion between 2015 and 2019, according to SLPP Leader and former President Mahinda Rajapaksa. The SJB MPs were in the UNP at the time. The TNA, the JVP, etc., fully backed the Yahapalana administration, and even prevented its collapse in 2018 by helping it muster a parliamentary majority. Besides, the TNA backed the LTTE, which inflicted incalculable damage on the economy, and the JVP itself destroyed state assets worth billions of rupees in the late 1980s.
President Ranil Wickremesinghe has expressed his willingness to consider alternative proposals outlining a viable strategy to overcome the debt crisis. He has invited the Opposition to submit such proposals, if any, and undertaken to facilitate a meeting between the proponents thereof and the IMF representatives. Will the Opposition take up the challenge and present an alternative plan when the debt deals are taken up for debate?
Editorial
Desperate political sandbagging
Friday 26th December, 2025
There is nothing more predictable than surprise in politics. After securing a two-thirds majority in Parliament last year and emerging victorious in most local councils, this year, the JVP-led NPP may have thought that it was plain sailing. But the government now has many unforeseen, seemingly intractable issues to contend with almost on all fronts. The disaster-stricken economy is expected to slow down, with relief and rebuilding costs escalating, and the deadline for the resumption of debt repayment approaching. Vehicle imports are bound to decrease, causing a sharp drop in the government’s tax revenue. The rupee is depreciating fast. As if these were not enough, the government is experiencing serious problems on the political front.
The defeat of the NPP’s budget in the Colombo Municipal Council (CMC), which the JVP/NPP seized control of through extensive horse trading, could not have come at a worse time for the government. The same fate has befallen many other NPP-controlled local councils. Most of all, the NPP has suffered a string of defeats in the cooperative society elections countrywide during the last several months.
Desperate times are said to call for desperate measures. Cyclone Ditwah and the attendant extreme weather events that badly damaged roads, tank bunds and river banks prompted repair teams to resort to sandbag revetment. But there have been many instances where sandbag facings collapsed, unable to withstand the intensity of floods and slope failures. The government politicians who boasted of having carried out swift restoration work have been left red-faced; they have failed to assess the severity of the problems they are trying to solve.
The NPP government has resorted to a method similar to sandbag revetment in a desperate bid to consolidate its control over some local councils which cannot secure the passage of their budgets for want of majorities. Its members have gone to the extent of setting the clock forward in such institutions, meeting in advance of the regular start time and declaring their budgets passed before the arrival of the Opposition councillors. What the NPP did in the Horana Urban Council the other day is a case in point, the Opposition says.
The NPP is accused of having inflated the number of votes for its Galle MC budget amidst a howl of protests from the Opposition and declared victory. The Opposition councillors prevented the council secretary from leaving the auditorium, put the budget to a fresh vote and defeated it. The Opposition has threatened legal action against the Mayors/Chairpersons and the state officials for violating the law. The government is likely to employ a similar method to have the CMC budget passed when it is put to a vote again next week. The JVP has no sense of shame, just like all other political parties that have been in power.
All self-righteous politicians, given to moral grandstanding, lay bare their true faces when their interests are threatened, and they face the prospect of losing their hold on power. The JVP/NPP is now without any right to be critical of its rivals who did not scruple to undermine democratic principles and traditions to retain power.
Gaining control of hung local councils is one thing, but running them to the satisfaction of their members and the public is quite another. The non-majority councils that the Opposition parties have gained control of could face the same fate as the CMC. This situation has come about because the country is without patriotic leaders. Ideally, the political parties that obtained pluralities in the hung councils should have been allowed to control those institutions, and they should have adopted a conciliatory approach and sought their political rivals’ cooperation to serve the public.
The shameful manner in which the NPP acted during the Galle MC budget vote is not unprecedented. One may recall that in January 2024, the SLPP-UNP government did something similar to secure the passage of its despicable Online Safety Bill. The then Speaker Mahinda Yapa Abeywardena stooped so low as to make use of a brawl in the House and declare the Bill passed. Interestingly, the SLPP and the UNP are among those who are raking the NPP over the coals for undermining democratic principles and traditions. So much for the self-proclaimed messiahs and their critics.
Editorial
Christmas spirit, relief and pledges
Thursday 25th December, 2025
Christmas has dawned while Sri Lanka is reeling from the cumulative impact of multiple disasters which snuffed out hundreds of lives and destroyed many homes and livelihoods. It is a time of hope. Its ethos, which emphasises hope, compassion and giving, could not be more relevant in these difficult times when the task of looking after a large number of disaster victims and helping rebuild their shattered lives has become a top national priority.
Santa came here the other day, as it were. There was no magical flight of a sleigh pulled by reindeer across the night sky. Instead, a jet landed at the BIA, and out stepped Indian External Affairs Minister S. Jaishankar. He unveiled a generous disaster relief and reconstruction package from India and flew back. This noble act of giving exemplifies the spirit of Christmas as much as good neighbourliness.
The best way the Sri Lankan rulers can show appreciation for generous assistance from India and other nations is to uphold accountability, rationalise disaster relief and ensure that it is distributed in a transparent manner. There are disturbing reports about political interference with the disbursement of funds among disaster victims. A high-level probe must be conducted into these allegations.
Christmas is also the season of giving and forgiving. The irony of Minister Jaishankar meeting President Anura Kumara Dissanayake, who is also the leader of the JVP, may not have been lost on keen political observers. If the JVP had acted wisely, heeding religious tenets, and pursued its political goals without resorting to violence, in the late 1980s, tens of thousands of precious lives and state assets worth billions of rupees could have been spared. India has forgiven the JVP, which it even helped gain international legitimacy and shore up its electoral chances in the run-up to last year’s presidential election. India has also helped Sri Lanka manage its worst-ever economic crisis and the impact of natural disasters. The people of Sri Lanka have also forgiven the JVP, despite its past violence, as evident from its impressive electoral victories last year. Sadly, the JVP is not willing to forgive its political enemies. Its General Secretary Tilvin Silva himself has said so. It ought to soften its stand.
All political leaders in this country usually issue well-written Christmas messages, extolling the core Christian virtues, such as giving, forgiving, compassion and peace-making. If only they lived up to the ideals they claim to cherish, at least while the country is struggling to recover from a series of natural disasters. Unfortunately, their post-disaster political battles are intensifying apace, and one wonders whether their focus is actually on helping disaster victims or furthering their political interests. They are not willing to sink their political differences for the sake of the disaster victims crying out for relief.
Meanwhile, the government leaders ought to go beyond issuing Christmas messages if they are to prove that they actually care about the believers in Jesus Christ. They ought to fulfil their pledge to serve justice for the victims of the Easter Sunday terror attacks (2019), which claimed more than 275 lives.
About seven years have elapsed since that tragedy which could have been prevented if the then government had heeded intelligence warnings, and the country has had four Presidents and three governments. But the promises made by the political leaders to bring the masterminds behind the Easter Sunday carnage to justice have gone unfulfilled. Those who are desperately seeking justice pinned their hopes on the current leaders who vowed to trace and prosecute the terror masterminds expeditiously.
The present-day leaders, too, have chosen to remain silent on their promise at issue; they are impervious to calls for justice, just like their predecessors. Let fulfilling their pledge to serve justice for the Easter Sunday terror victims be one of their Christmas resolutions.
Editorial
Time to pursue climate relief more vigorously
Wednesday 24th December, 2025
Climate change has upended long-held theories about cyclones in the equatorial regions, and Sri Lanka, which was once considered reasonably safe from such severe weather phenomena, is becoming increasingly vulnerable, as evident from the devastating impact of Cyclone Ditwah. All signs are that the worst is yet to come, and the need for a multi-pronged national strategy to prepare the country to face future natural disasters linked to climate change cannot be overstated.
The government of Sri Lanka has been in overdrive, seeking assistance from the international community for its post-Ditwah rebuilding programmes. The World Bank has estimated the losses caused by the recent disasters at USD 4.1 billion. Foreign assistance is coming, but in dribs and drabs. There have also been loans for rebuilding, but such borrowing is bound to make the country’s efforts to achieve debt sustainability even more uphill. This has caused much concern to international experts.
A group of internationally renowned economists, including Nobel Laureate Joseph Stiglitz, has called for the “immediate suspension of Sri Lanka’s external sovereign debt payments, and a new restructuring that restores debt sustainability under the new circumstances”. Other members of the group of eminent economists urging the international community to help Sri Lanka are Jayati Ghosh, Thomas Piketty, Martín Guzmán and Kate Raworth. They have said: “This environmental emergency is poised to absorb – and potentially exceed – the extremely limited fiscal space created by the current debt restructuring package. Additional external debt is already being obtained from the IMF, and more lending to deal with the impacts of the disaster is likely.” These economists deserve praise for their concern for a disaster-stricken nation mired in debt, but whether international creditors will take a sympathetic view of Sri Lanka’s predicament and agree to another round of debt restructuring is in doubt.
Another debt default is something Sri Lanka needs like a hole in the head. Hence the need to explore other avenues to raise finance for rebuilding.
Leader of the United Republic Front and former Cabinet Minister Patali Champika Ranawaka argued in an interview with Derana TV on Monday night that Sri Lanka should leverage its situation as a victim of climate change to gain access to international climate financing to cover at least part of the cost of post-disaster rebuilding, instead of depending on loans. He said that obtaining such climate relief should be part of Sri Lanka’s recovery strategy, and some debt relief should be sought from the carbon-polluting industrialised nations among its creditors.
There is a growing corpus of literature about the pathways vulnerable states can use to seek climate aid. The countries affected by climate change can gain access to international aid and relief through established climate finance mechanisms, humanitarian channels, and multilateral institutions. A dedicated Loss and Damage Fund is now in place to channel resources to vulnerable nations. There have been instances where some vulnerable nations, especially those of the organisations, such as the Small Island Developing States (SIDS), have successfully accessed international climate change finance, relief and legal avenues for support. Tuvalu became one of the first Pacific island nations to access climate finance from the Green Climate Fund. However, UN reports show that SIDS still receive only a fraction of international climate finance relative to their vulnerability. There’s the rub.
Another method the victim nations can adopt to raise funds is ‘innovate finance’, which has been defined as “creative use of financial markets and partnerships with international finance institutions to support adaptation and resilience in a climate-vulnerable nation”.
What Ranawaka has proposed by way of easing the country’s rebuilding burden to some extent deserves serious consideration. It is hoped that the government will take such views on board at this crucial juncture.
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