Please help to identify these criminals

(Lanka-e-News-15.March.2012,6.00PM) In the above photographs are the faces of the criminals involved in the infamous white Van abductions who were captured by the public and handed over to the Wellampitiya police on the 10th, but released unlawfully by the MaRa regime. These criminals are of attached to the Army. They are :

• Army Captain Jayasena Saluge Sampath Pushpa Kumara
• Army Captain Wijekoon Mudiyansalage Chaminda Wijekoon
• Army Lieutinent Thal Arambalage Gedera Dhanushka Dineth Wijetunge
• Army Corporal Sinhabahu Mudiyansalage Saman Kumarasinghe

(The names are not in accord with the row of photographs). Although identity cards were submitted , when inquiries were made by us , there were doubts regarding the veracity of these identity cards.

If this murderous MaRa regime can officially make a phony passport for an LTTE leader Karuna Amman and send him to the UK, to this regime steeped in unlawful activities, making bogus identity cards to its own murderers is no big task. Hence , as a people’s media we are providing the opportunity to the public who are in constant threat of murder and abduction via the white Van to identify these criminals accurately.

It is unimaginable that a regime which is supposedly democratic can conduct itself in this demonic manner pampering and promoting murderers trying to kill its own Mayor who was elected duly by the people. It is most noteworthy that this Mayor’s brother was also abducted by these white Van criminals some time ago and killed based on information passed to the mayor by no less a person than Basil Rajapakse , the brother of the killer duo President Mahinda (Idi Mahin) and Defense Secretary Gotabaya Rajapakse ( Gota). It is most likely that ‘tomorrow’ an SLFP M P , Minister , former Minister , former Prime Minister or a former President can be similarly targeted .

If there is anyone who cannot understand the seriousness and gravity of this present blood thirsty murderous climate in SL , he is either insane or mentally feeble.

Now that these murderers who were committing crimes at the biddings of the Idi Mahin regime enjoying regime’s patronage have been exposed ,it is most probable that these criminals can be liquidated by the brutal regime in order to wipe out all trace of evidence including those behind relating to the crimes committed that may come to light through them if they are living. It is therefore important that they are protected. Citizens of this country who think that as a society respecting discipline and laws is paramount must ensure, based on the information elicited from these criminals that every accomplice associated with the crimes are brought before the law duly irrespective of their positions however high or low. This will be in the best interests of all and for the benefit of the future generations. We seek the public assistance towards this.
Whatever information you may have of these criminals may be conveyed via the following phone Nos. and e mail:

Phone No. 0044 7400 027 826 (If you think your phone calls are being tapped , use a public booth)

E mail : info@lankaenews.com . If you think that is being filtered , fill up our feedback space and send. Since that is linked as one with our server , the regime cannot filter it.

You can contact on the Skype ‘sandaruwans’ which is safe and secure (Regime cannot tap skypes)

Please take copies of this information and distribute as many as possible in the interests of the nation and future generation. If you love Democracy and freedom this is your opportunity.

Sri Lanka media restrictions come amid rise in abductions

By Bob Dietz/CPJ Asia Program Coordinator

Supporters of Sri Lankan President Mahinda Rajapaksa protest in Colombo against the U.N. Human Rights Council in Geneva. (Reuters/Dinuka Liyanawatte)

On March 9, Sri Lanka's military authorities told all news and media organizations that they would have to get prior approval before releasing text or SMS news alerts containing any news about the military or police.

I checked with some reporters in Colombo. The restrictions on reporting on the military were formally lifted in August 2011, after the end of the fighting with Tamil separatists three years ago.

Here's what one journalist told me when I asked about restrictions having been lifted: "Ostensibly yes. But if you write about them you have to be prepared to be abducted by a white van. We've also been told that if you write anything against the defense secretary [Gothabaya Rajapaksa, brother of President Mahinda Rajapaksa], you can be certain he'll put a tail on you. So that's freedom for you."

About that white van: The reporter was referring to white Toyota Hi Ace vans with deeply tinted windows -- some with no license plates, others with differing numbers on the front and rear -- that are seen frequently in Sri Lanka. They have often been used in abductions, as we have noted many times. The first journalist to write about them, in November 2006, was a brave young reporter named Parameswaree Maunasámi, a Tamil writing for the Sinhalese-language weekly Mawbima. She was picked up soon after her article appeared and held for five months, but never charged.

More from the reporter I have been messaging with in the past few days: "Incidentally, white van abducts are back with a big bang. Two weeks ago they even abducted someone from the court premises. On Saturday they tried to abduct an Urban Council member, an opposition party man. His supporters managed to foil the abduction and apprehended five people who turned out to be army personnel."

Charles Haviland, the BBC's correspondent in Sri Lanka, yesterday filed a strong piece about broad human rights violations. His story confirmed the rise in abductions and disappearances.

One abduction that we have covered extensively is that of Prageeth Eknelygoda. He was taken on January 24, 2010, and has not been heard from since, despite the intense, unflagging efforts of his wife Sandhya and the couple's two teenage sons. There has been no movement in the case, despite her appeals at all levels of government, from the cabinet to the local police desk.

Nor has she gotten any support from the United Nations in her quest to find out what happened to her husband. A 2011 campaign lead by CPJ asking the U.N. to investigate came to naught, even though U.N. Secretary-General Ban Ki-moon asked the U.N. High Commissioner for Human Rights and UNESCO, which oversees press freedom, to look into the case.

The Eknelygoda case will be one of many raised when the U.N. Human Rights Council discusses abuses in Sri Lanka at its 19th session, now underway in Geneva. But given the Rajapaksa government's ability to skirt international pressure so far, progress in investigating the case doesn't seem likely.

The government has gone into high gear in denouncing its critics, at home and abroad. Given the vitriol spewing out of the government-aligned press in Sri Lanka, it doesn't seem likely that the accelerating anti-media campaign or the abductions of anyone in opposition to the Rajapaksa government will be reversed any time soon, either.

Foreign Office Minister responds to Channel 4 documentary on Sri Lanka

15 March 2012

Minister for South Asia Alistair Burt spoke after the transmission of Channel 4's documentary 'Sri Lanka's Killing Fields, War Crimes Unpunished'.

"Once again, Channel 4 has brought to international attention important and disturbing evidence to support allegations of grave abuses in Sri Lanka.

“Since the end of the conflict, the international community has called for an independent, credible and thorough investigation into alleged war crimes on both sides of the conflict.  Channel 4’s documentaries reinforce the need for that investigation.  

“I continue to believe that Sri Lanka, in accordance with its Government’s public statements, can achieve lasting peace and reconciliation.  But this requires a full and honest acknowledgement of the past and it requires processes, in which all parties take part, to ensure justice, reconciliation and political progress.  

“That is why the UK will urge the UN Human Rights Council to pass a resolution next week which calls on Sri Lanka to take these steps and implement the recommendations of their own Lessons Learnt and Reconciliation Commission.”

DMK backs off, won't press for Lanka censure

THE TIMES OF INDIA 
TNN | Mar 16, 2012,
NEW DELHI: After easing of tensions withTrinamool Congress, there is relief for Congress on the DMK front too with the southern party unlikely to force a showdown on the alleged human rights violations of the Sri Lankan Tamils as long as the government offers adequate assurances that it will not abandon their cause. 

The mellowing of DMK's stance comes in the wake of discussions with the government during which the Dravidian party was told that India would continue to press for a just settlement for the Tamils during the final draft of the proposed US-backed resolution at the UN Human Rights Council in Geneva.  

Government managers have urged DMK leaders to wait for the draft resolution to be finalized, pointing out that it is slated to come up for a vote only on March 23. They have said India will have to tread with care as both China and Pakistan will not back the resolution on the Tamils' rights `violations'. Full Story>>>

Sri Lanka's Killing Fields: War Crimes Unpunished

Warning: This content contains disturbing and distressing descriptions and film of executions, atrocities and the shelling of civilians.

Channel 4Sri Lanka's Killing Fields: War Crimes UnpunishedWed 14 Mar 2012

In 2011 Channel 4 exposed damning evidence of atrocities committed in the war in Sri Lanka. Jon Snow presents this powerful follow-up film, revealing new video evidence as well as contemporaneous documents, eye-witness accounts, photographic stills and videos relating to how exactly events unfolded during the final days of the civil war.

The film forensically examines four specific cases and investigates who was responsible.

SRI LANKA: Sincere ignorance and conscientious stupidity

 March 15, 2012
Nilantha Ilangamuwa 
What the London based Channel 4 is showing the World again on Sri Lanka is not a new phenomenon for this country. This kind of barbaric knavery has a long history. At that time those victims were alone, no one had seen them. The guardian turned away for the time. As this writer pointed out last week; our culture and rule of law did not overlap each other but always tried to apagoge each other.  This cultural contradiction has been used as a strategy by regimes to 'undermine peoples' rights for a long time. They play with human beings to gain absolute power. And we lost thousands of people in the cause of nothing but kept in power particular selected families. The long term game was and is still, being played by those families, perhaps the present regime to a worse degree. We did not see ability to adaptation to law and order or society based on equal opportunity for all. As a result those families that manipulated absolute power motivated the public to kill other members of the public.  Read More…

No Comment by UN on Killing Fields of Sri Lanka, UK Speaks of Accountability

By Matthew Russell Lee

UNITED NATIONS, March 15 -- The day after the premiere of an hour long documentary showing UN staff in Sri Lanka who called in the GPS coordinates of a UN hub that was then shelled by the government, the spokesman for Secretary General Ban Ki-moon told Inner City Press "I haven't seen this documentatry, I don't have any comment on it." Video here, from Minute 9:43.

  Inner City Press asked about the appearance in the documentary of General Shavendra Silva, now on Ban's Senior Advisory Group on Peacekeeping Operations, calling a "frontal assault" on Putumattalan which killed 1500 civilians "very successful" - how can Ban accept his as an adviser? Again there was no response.

Click here to view: for Silva from Minute 21:56, for UN staff from 5:50.

  Minutes earlier Inner City Press asked UK Permanent Representative to the UN Sir Mark Lyall Grant, this month's Security Council president, about the film:

Inner City Press: on UK Channel 4 last night there was a broadcast called “Killing Fields” which [is] about Sri Lanka, this seems to have caused quite a storm in the UK, depicting what they call war crimes, and depicting the DPR of Sri Lanka here, who’s now a UN Senior Advisor on Peacekeeping, as being at the scenes of one of the crimes and saying it was highly successful. I wanted to know what’s the UK Government’s reaction to this new showing, and both within the UN and elsewhere, what’s the response?

Amb. Lyall Grant: in my national capacity, you asked about Sri Lanka. Our view has always been that accountability is extremely important, including in Sri Lanka. There have been a number of international commissions, there have been some Sri Lankan commissions. We believe that all allegations of human rights abuses should be investigated, and those who are held accountable and are found to be guilty of those crimes should be brought to justice. That remains our position but I’m not going to comment on certain individuals against whom allegations may have been made and I haven’t seen the report that you mentioned last night on British TV.

  Video here, from Minute 22. Minutes later the UK Mission informed Inner City Press that Alistair Burt had issued a statement, which is now on the web, here.

  Burt cites to a weak resolution pending in the Human Rights Council in Geneva. Within the UN, almost always on background, there are suggestions at the UN that l'affaireSilva can be solved by substituting Palitha Kohona, who was also involved in the so-called White Flag killing of surrenderees and has overseen the Sri Lankan Mission's vituperative defense while not producing Silva to answer questions. 

  Ban Ki-moon shook Silva's hand, and berated his own staff in front of Sri Lankan president Mahinda Rajapaksa. War crimes unpunished, indeed.

US resolution offers bailout to Rajapaksa: Brian Senewiratne

 [TamilNet, Thursday, 15 March 2012, 17:42 GMT]
The US-tabled resolution, which has more to do with geopolitics than human rights, “effectively offers Rajapaksa a way of ending international criticism and the danger of government leaders and its Armed Forces facing war crimes charges,” says Brian Senewiratne, a renowned physician and an Australia based Sinhala expatriate in a 41-page long document released on Thursday. “Concerned people, in particular the expatriate Tamil community, waiting for the UN ‘to do something’, are living in a dream world. The UN and its bodies do not act this way. They never have – an abysmal record of failure, which is not about to change.” However, the latest follow-up documentary by the Channel-4 could be even more damaging for the GoSL than the previous one, according to Dr. Brian Senewiratne. 

Extracts from the document by 80-year-old Dr. Brian Senewiratne, a Sinhala member of the Bandaranaike family and a long-time defender of the Eezham Tamil cause, follows:

Dr Brian Senewiratne

The bombshell has just been dropped, the (UK) Channel 4 News documentary “Sri Lanka’s Killing Fields: War Crimes Unpunished”, a follow-up to the shocking video “Sri Lanka’s Killing Fields” aired in June 2011. 

The Channel 4 “Sri Lanka’s Killing Fields: War Crimes Unpunished” was shown to a packed audience on 11 March 2012, during the International Human Rights Film Festival in Geneva. It ends with, “Can the cries of thousands of Tamils continue to fall upon deaf ears?”
This latest video could be even more damaging for the GoSL, not only because it shows the cold-blooded execution of the 12 year old son of the Tamil Tiger Leader, Velupillai Prabakaran, executed point-blank, with a gun held not more than a few feet from his bare chest, but also involves the UN itself.

• UN Human Rights Council meeting - Another Farce

One of the features of the UN has been its abysmal failure to develop any effective systems for the protection of human rights following the Universal Declaration of Human Rights in 1948. What has been striking is the sheer hypocrisy that has attended diplomatic conferences and covenants on the subject. Full story >> 

As UK Film Shows Sri Lankan General Silva Bragging of Killing 1500 Civilians, What Will UN &Ban Ki-moon Say?

By Matthew Russell Lee

UNITED NATIONS, March 15 -- During the killing of tens of thousands of civilians by the Sri Lankan government in 2009, the UN withheld its own count of casualties, withdrew its international staff and even played a role in luring to surrender people who were then summarily executed.

  The UN Secretariat never called for a ceasefire, and the UN Security Council never had a formal meeting on the mass killings. Now one of the military leaders of the campaign, Brigadier General Shavendra Silva, has been made a part of Secretary General Ban Ki-moon's Senior Advisory Group on Peacekeeping Operations, and Ban has had nothing to say beyond "it's up to member states."

  Silva appears in UK Channel 4's "Sri Lanka’s Killing Fields: War Crimes Unpunished," which premiered last night on television in the UK, and re-appeared overnight on YouTube. For now, click here to view, especially from Minute 23.

  The documentary focused on four particular war crimes, including an assault on Putumattalan which killed at least 1,500 civilians. 

  The direct assault was carried out by the 58th Division under the command of Shavendra Silva, who appears on screen describing it as "very successful."

  While the Sri Lankan Mission to the UN has in a letter sent to Ban's spokesman's office and select UN scribes attacked Inner City Press for writing about Silva, claiming as subsequently did some in the UN Asia Group that Silva's 58th Division is not directly indicted in the UN Panel of Experts report, this new footage including Silva's bragging should put an end to that.

  With so much talk at the UN about accountability, how can the general who led and bragged about the killing of 1,500 civilians continue as an adviser to the UN on peacekeeping? We'll see.

  The documentary also has former UK foreign minister David Miliband and former UN humanitarian chief John Holmes taking positions much more protective of civilians than what either did when they had power. Holmes, for example, resisted calling for a ceasefire.

  On the May 2009 trip to Sri Lanka with Ban Ki-moon and his outgoing political chief Lynn Pascoe, which Inner City Press went on and covered, Holmes on the record on the plane bemoaned all the e-mail pleas he was receiving from Tamils, saying "I just delete them."

  After from Colombo Inner City Press reported the quote, Holmes demanded that it be removed, using other journalists from UK-based media organizations to pressure Inner City Press. Maybe he misspoke. Now in a cushy academic job, Holmes says Sri Lanka got away with it. Yes: with the UN's and OCHA's help.

  Holmes refusal in 2009 to call for a ceasefire stands in contrast to his successor Baroness Valerie Amos' stance on Syria. But is this a personal or political difference?

  Inner City Press asked the UK Mission to the UN "does the UK have a position on if it is appropriate that Sri Lankan Brigadier General Shavendra Silva serve on the UN Senior Advisory Group on Peacekeeping Operations, given the way he and his 58th Division are depicted in the S-G's Panel of Experts' Report on Sri Lanka, and in UK Channel 4 films, past and to be broadcast in the UK tomorrow night?"

  Midday on March 14, UK Mission spokesman Daniel Shepherd replied that the UK "highly values the Senior Advisory Group, and our own representative on it will work to help the Group come up with the best possible recommendations on the issues they are addressing. The Chairperson of the SAG has, following consultation with other SAG members, advised Major General Shavendra Silva that his participation is not appropriate or helpful for the purposes of the Group. We understand that he will not participate in its deliberations."

  That is still by no means certain. Inner City Press covered the Asia Group meeting at which Sri Lanka tried to rally other countries in the Group to the defense of Silva; Ban Ki-moon has not spoken in support of Frechette.

  Despite the harrowing footage and the high number of civilians killed, the Sri Lanka issue does not have the traction of Syria, or even #Kony2012. As viewers, mostly in the UK, tweeted about the film on Wednesday night, many expressed disgust at Ban's UN and said that if Sri Lanka had a lot of oil, the West would have intervened as it did in Libya.

  But there are others not directly interested in oil who have held back on Sri Lanka, perhaps due to the specter of terrorism. To a three organization panel at the UN on March 14, Inner City Press asked if Silva's position as UN adviser on peacekeeping, and Ban Ki-moon silence, were appropriate.

  The representative of Amnesty International said that advisers should be "vetted" for war crimes. But the representative of Human Rights Watch, when asked Wednesday on UN TV, had nothing to say on the topic.  Video here, at end.  HRW has previously refused to even summarize its boss Ken Roth's meeting with Ban Ki-moon, saying that to do so might undermine HRW's "access." Access for what?

  There are many for whom it is convenient that the killing of tens of thousand of civilians in Sri Lanka in 2009 slip into the past without accountability.

  There is a weak resolution pending in the Human Rights Council in Geneva; there are suggestions at the UN that l'affaire Silva can be solved by substituting Palitha Kohona, who was also involved in the so-called White Flag killing of surrenderees and has overseen the Sri Lankan Mission's vituperative defense while not producing Silva to answer questions. 

  Kohona and Silva appeared together at the UN to show a government film purporting to rebut the first Killing Fields documentary, which itself was not screened in the UN. As exposed by Inner City Press in video, Ban Ki-moon made time to watch the government "rebuttal" before he ever watched Killing Fields I.  What will Ban say about Killing Fields II? 

  Ban Ki-moon shook Silva's hand, and berated his own staff in front of Sri Lankan president Mahinda Rajapaksa. War crimes unpunished, indeed.

Sri Lanka's Killing Fields: War Crimes Unpunished, Channel 4, review

Telegraph.co.uk

Sri Lanka’s Killing Fields: smoke billows from a civilian no-fire zone shelled in 2009. Photo: EPA

By James Walton

7:00AM GMT 15 Mar 2012

Sri Lanka’s Killing Fields: War Crimes Unpunished (Channel 4) was a follow-up to last year’s harrowing film about the end of the war against the Tamil Tigers — a film that came complete with footage of shelled hospitals and summary executions. Faced with the resulting global outrage, the Sri Lankan government promised a full inquiry. So, has it now admitted the truth?

The answer, you might not be startled to hear, is no. An official report has acknowledged for the first time that civilians died — but not that this was in any way the government’s fault. Last night, Jon Snow promised evidence both of more war crimes and of President Rajapaksa’s responsibility for them. In neither case did he break his word.

For a while, it felt as if the programme was proceeding almost too carefully. (At one point, a forensic pathologist was asked to study photographs of mutilated citizens so as to confirm that their injuries were “consistent with shelling”.) But the reason for such caution was soon clear. The original film had been denounced in Sri Lanka as a sloppy piece of reporting. Here, so little was left to chance that any similar objections will surely be impossible to sustain, although, as we saw when the Sri Lankan government was given the right to reply, that didn’t stop them trying.

Certainly by the end, there seemed no doubt that the government had indeed set up special no-fire zones for Tamil civilians — and then fired on them with heavy weaponry. According to a secret UN report, the “probability” that the government had done the shelling was “100 per cent”.

Even so, anybody hoping for the triumph of natural justice was in for a disappointment. When we last saw President Rajapaksa, he was cheerfully greeting the Queen at last year’s Commonwealth Heads of Government Meeting in Australia. He also looked pretty happy that the next conference will be held in Sri Lanka.

Tamil Nadu fishing boat sunk allegedly by Lankan navalmen

 PTI | Mar 15, 2012, 
RAMESWARAM: In yet another mid-sea attack, Sri Lankan naval personnel allegedly hurled petrol bombs at a group of fishing boats from here, sinking one of them and damaging 20 others near Katchatheevu in the Palk Strait, officials said on Thursday.

The fishermen, who had put out to sea from here, came under the attack around midnight last night while they were fishing near Katchatheevu, fisheries department officials said.

They said the Sri Lankan naval personnel hurled petrol bombs at two boats. One of the vessel owned by one Arumugam sank while another narrowly escaped. Four occupants of the sunk boat were rescued by the others and brought to the shore.

Twenty other boats suffered damage when the Lankan Navalmen attacked them with a variety of missiles inlcuding bricks, rocks, they said.

The incident comes close on the heels of the March 10 attack allegedly by Sri Lankan naval personnel in which 16 fishermen were injured.

India then had asked its mission in Colombo to take up the issue of attack on the fishermen with the authorities in Sri Lanka.

Condemning the latest attack, Rameswaram Fishermen Association president N Devadoss demanded that external affairs minister S M Krishna take up the issue with the United Nationsand lodge a strong protest. 

UNHRC resolution: why India needs to get a voice against Sri Lanka

FirstposFirstpostby G Pramod Kumar Mar 15, 2012
by G Pramod Kumar Mar 15, 2012

In the last two days, the entire Tamil Nadu block of MPs in the Indian Parliament was up on their feet asking India to take a stand against Sri Lanka for their alleged human rights violations and war crimes.

The MPs were very simple and straightforward in their demand: support the upcoming resolution in the UN Human Rights Security Council (UNHRC) in Geneva that asks Sri Lanka to implement the recommendations of a domestic report on the war and address alleged human rights violations.   Full Story>>>

Callum Macrae and the Haunting of Sri Lanka

 15 March 2012

Emanuel Stoakes

Independent journalist and researcher based in the UK, who writes primarily on issues connected to human rights

In Geneva, the current session of the United Nations Human Rights Council is playing host to a fierce diplomatic battle largely overshadowed in the British press by the mounting atrocities in Syria and the deepening crisis in Afghanistan.

At present, an enormous delegation from the government of Sri Lanka are attempting to persuade member states of the Council to vote against a motion spearheaded by the US, calling for greater accountability from Colombo for multiple abuses allegedly committed by the army during the last days of its civil war. Applying counter-pressure, a collection of NGOs and advocacy groups are seeking to open the way for the island nation's wartime conduct to be independently investigated.Read Post 

A Sudden Stop Or A Balance Of Payments Crisis

 March 11, 2012 | 12:35 am | by sanjeewa -

By Dr. Arujuna Sivananthan

The consensus view is that Sri Lanka is in the midst of a Balance of Payment (BOP) crisis. It usually follows a period of large capital inflows and rapid economic growth. However, due to conflicting policy responses or policy slippage including irresponsible credit creation, an economy finds itself in a position where it struggles to pay for imports and service its foreign currency liabilities. Sri Lanka is fast approaching this point and the consequences of inaction should be apparent to everyone.
A BOP crisis can morph into a set of circumstances which is now referred to as a Sudden Stop and has been the subject of extensive academic research following the ‘Tequila’ and Asian economic crises during the mid and late nineties respectively.
A Sudden Stop is an economic phenomenon, and, is described as the sudden slowdown of private capital inflows into emerging market economies with an ensuing abrupt reversal of large current account deficits (CAD) into smaller deficits or surpluses. Economies also experience sharp contractions in output; and, credit to and spending by the private sector. There is also a real deprecation in the value of the local currency. Its start is defined to be when the annual change in capital flows drops one standard deviation below the mean.
A series of papers by Professor Guillermo Calvo of Columbia University and other academics study this feature and also conclude that such crisis can arise even in situations where the CAD is fully funded by foreign direct investment and fiscal prudence; a condition which the rating agency Fitch highlights in its latest report as eluding Sri Lanka. Sudden Stops and BOP crises have similar impacts in terms of devaluations of the domestic currency followed by periods of contracting output; however, the former is characterised by a deeper economic downturn.
A small domestic production base of tradable goods relative to their level of consumption, and the dollarisation of domestic debt increase the probability of a Sudden Stop. Unfortunately for Sri Lanka, both of these conditions are axiomatic with almost all its external liabilities consisting of sovereign debt. Loose fiscal policy is also a contributory factor. In Sri Lanka’s case the fiscal deficit seems stuck at 8 percent of national income and will not move unless we see a retrenchment in defence spending which takes up a fifth of government disbursements.
However, by securing long term funding through its foreign currency bond issues and opening up a higher proportion of its rupee bond market to foreign investors, Sri Lanka’s policy makers have sought to somewhat mitigate these risks.
Sudden stops can be followed a V-shaped recovery as evinced by the rapid increase in output following the Asian crises and an improving BOP without any new credit. A necessary condition for this is a large tradable goods production base. Unfortunately, with Sri Lanka, this condition is not satisfied. The ability to restructure short term foreign currency liabilities and assistance from multilateral organisations are also crucial.
Mitigating effects of a Sudden Stop are determined by the central bank’s reaction function including acting as a lender of last resort by releasing foreign exchange reserves in an effective manner. The conclusions of Calvo et al are that usual monetary policy rules can result in the excessive volatility of exchange rates, and, therefore, need to be supplemented by intervention in the foreign exchange market including pegging the exchange rate and controls on the capital account. That is, to impose restrictions on outward bound remittances.
Despite some remedial action by its policy makers, the inherent structural weakness of Sri Lanka’s economy does not lend itself to a V-shaped recovery from a BOP crisis or a Sudden Stop. This includes a small tradable goods production base. However, its biggest limitation in dealing with both lies in the fact that almost all of its external borrowings consist of sovereign debt. A situation which gives rise to its inability to service this will afflict not only its taxpayers and consumers, but, also materially increase the costs of all sectors doing business with the outside world. Unfortunately for Sri Lanka, it has already exhausted the obvious recourse to such situations, which is to seek a bailout from multilateral organisations.
Sri Lanka’s policy makers need to use every tool in their inventory to avert such a crisis; because, unfortunately, their ability to extricate its economy from the onset of one remains very limited indeed.