Central Bank’s autonomy challenged in budget 2017

2016-11-15

Certain controversial proposals in the budget 2017 are likely to have massive implications on the country’s financial system and the independence of the Monetary Board (MB) of the Central Bank, according to a leading economist in the country.

 The 2017 budget, which was presented to parliament last week, proposed to set up a National Payment Platform (NPP) implemented by the state-run Information Communication Technology Agency (ICTA) to facilitate all government and private sector online/electronic transactions.

 “The ICTA will also implement the National Payment Platform (NPP), which will facilitate persons, businesses and government to make peer-to-peer payments, including fund transfers and online payments for goods and services, using computing devices, including mobile devices,” Finance Minister Ravi Karunanayake said.

 According to economist and former Central Bank Deputy Governor W.A. Wijewardena, this is a clear case of the country’s finance minister trying to interfere in a “massive scale”, with the responsibilities of the Monetary Board of the Central Bank. 

“The Central Bank was established in 1950 to decide on the country’s monetary and banking policies independently without any interference from politicians. The payment system is the responsibility of the Monetary Board of the Central Bank,” Wijewardena told a post-budget forum in Colombo, organised by the University of Sri Jayewardenepura, last Friday.

 “The reason is that, when we make an electronic payment we should be satisfied that the payment we make reaches the person or institution we intended to,”he added.

 “For example, I pay taxes through cheques. So, when I make such payments, I need to be sure that my money goes to the account of the Director General of the Inland Revenue Department and not to an account in Nigeria or somewhere,” Wijewardena quipped.

 He reiterated that the payment system of the country should be designed and handled by the Monetary Board of the Central Bank. The Central Bank in collaboration with LankaClear, the national payment infrastructure provider, is said to be currently working on the country’s national payment system called ‘Sri Lanka Payment Gateway’. 
Wijewardena, who is also a widely-read newspaper columnist on economic matters, disapproved the finance minister’s high-handed approach towards trying to indirectly regulate the country’s banking sector, a duty that clearly falls under the Central Bank as the banking industry regulator. 

“Banks should be regulated by the Central Bank. The finance minister says I’ve taken a decision to increase capital for banks. I don’t believe this sets a good precedent,” he remarked.  In what appeared to be an apparent attempt to push the banking industry to consolidate, Karunanayake in the budget 2017 proposed to double the minimum core capital level of the banking sector to Rs.20 billion from the current Rs.10 billion.

 “Such consolidation of banks will enhance the size of the banks, facilitate the fund raising from diversified sources, enhance risk taking capacities and enable banks to participate in large state and private sector projects to a greater degree than at present and derive scale benefits with regard to operational costs,” he said. 

The Central Bank under the Mahinda Rajapaksa administration launched a programme to consolidate the country’s banking sector by force but it was abandoned by the Sirisena-Wickremesinghe government, who said mergers and acquisitions in the banking sector should take place voluntarily. 

  Wijewardena also criticized the finance minister’s move directing banks to lend to priority areas of the economy. 
  “This is not a job of the finance minister but of the Monetary Board of the Central Bank. For so many years the Central Bank has been asked to direct banks to provide loans to priority areas. India has been doing this since 1948. But after looking at them we decided we shouldn’t do it,” Wijewardena said. 

However, in 2004, an amendment was brought into Sri Lanka’s Monetary Law Act, directing the banking sector to lend 10 percent of its lending portfolio to the agricultural sector. 

“The banks haven’t been able to do that. The plan was for farmers to get these loans. But when you say agriculture, it also includes plantation industry,” he pointed out.

 Interestingly, the budget 2017 calls for banks to lend 50 percent of its loan portfolio to priority areas.

  “I direct banks to ensure that at least 10 percent of their lending portfolio is for agriculture, 10 percent for SME (small and medium-scale enterprises), 10 percent for exports, 10 percent for tourism, 5 percent for youth and 5 percent for women,” Karunanayake said in his budget speech. 

Wijewardena reminisced his days as Director of Rural Credit at the Central Bank and brought in an anecdote to show the ineffectiveness of such policy decisions.

 “When I was Director of Rural Credit at the Central Bank, we asked the banks to give loans to small businesses. So the banks said they had lent to over 600 small-sized rice mills. We knew this was impossible as Sri Lanka didn’t even have so many rice mills.

 But the files of these loans with the banks even contained photographs of these mills. So I had to visit these rice mills in person to uncover the truth. As you may have guessed most of the addresses didn’t have rice mills,” he remarked. 

Meanwhile, making what appears to be a community reinvestment proposal, Karunanayake directed the banks to lend at least 15 percent of their deposits within the same areas they were raised for business development.
 “This is a business decision the banks should take and not one to be taken by the finance minister. The job of the finance minister is to make the people in these areas eligible to borrow,” Wijewardena noted 

“Under these circumstances, if banks couldn’t find people qualified to borrow, what will eventually happen is, the relatives and friends of the bank managers will get loans,” he quipped.   The finance minister’s move to recommend to the Credit Information Bureau (CRIB) to not provide credit history of those creditors with a cumulative loan size up to Rs.500,000, also drew criticism during the forum, which was attended by academics, politicians and university students.

As Wijewardena pointed out, the CRIB only provides records about borrowings and the banks have the discretion to take those records into consideration in their decision-making process to provide loans to creditors.

 “When we started the cap was Rs.25, 000 but then we brought it down to 5000 because a lot of microfinance loans go unpaid,” Wijewardena, who was the first General Manager of the CRIB, said. -

Budget 2017: Significant improvement if not marred by policy inconsistencies and interference with the Monetary Board 

Finance Minister Ravi Karunanayake delivering the Budget Speech

Tuesday, 15 November 2016

A significant improvement in Budget 2017

The Budget 2017, presented by Finance Minister Ravi Karunanayake in Parliament on 10 November, is a significant improvement from his first Budget for 2016. In fact, there was no Budget for 2016 since most of the Budget proposals had to be withdrawn even before the Budget was approved by Parliament. The worst outcome was that instead of aligning itself with the goals of the economic policy statement delivered by Prime Minister Ranil Wickremesinghe in Parliament just two weeks before the Budget, it went against it with completely counterproductive policies. For instance, the Premier had announced that the goal of the Government was to change the tax structure of the country from the current overwhelming share it had for indirect taxes to direct taxes. PM had announced a target of changing it from the current indirect to direct at 80:20 to 60:40 in 2020. The Budget was to lay the foundation for this goal but it changed the ratio in the opposite direction coming up with a ratio of 87:13. The latest actual Budget outturn has been a little better with a ratio of 84:16. The reason for it had been the failure of the Ministry of Finance to have the Value Added Tax or VAT amendments passed in Parliament in time, thereby losing six months of VAT collection. The Budget 2017 has projected a further improvement with a ratio of 82:18. However, it is still far from what the Prime Minister wanted to have. These implications of the Budget 2016 to the Government’s economic policy statement were discussed by this writer in an article in this series earlier (available at: http://www.ft.lk/article/499447/Budget-2016--Has-it-laid-foundation-for-implementing-the-policy-outlined-in-EPS-of-Yahapalana-Government?-%E2%80%93-Part-3).

Howlers, in the Budget 2016

There were some howlers in the Budget 2016. One instance was taking the imputed rent value of the buildings belonging to educational and health authorities as non-tax income on one hand and expenditure on education and health on the other. This treatment that resulted in inflating both the expenditure and revenue of the Budget was contrary to the principles laid down in the Government Finance Statistics Manual of the IMF. This was discussed by this writer in another article in this series (available at: http://www.ft.lk/article/507663/Budget-2016-and-education-and-health-expenditure--Playing-numbers-games-isn-t-in-accord-with-good-governance-principles---Part-5 ). 

The promising medium term outlook in the Budget 2017

Given these weaknesses in the Budget 2016, it is encouraging that the Budget 2017 has made an attempt at reducing the Budget deficit over the medium term and improving the revenue of the Government to attain that goal. Accordingly, the Budget deficit is now projected to fall to 3% of GDP by 2020 from the current 4.6% of GDP to 3%. Accordingly, the Government debt too is to fall from 75% of GDP in 2017 to 65% by 2020. If the Government is able to attain this, it is a sizable budgetary improvement which is known in economic parlance as ‘fiscal consolidation’. It is thus the duty of all the parties in the unity Government to support the Ministry of Finance in attaining this goal which is good for the long-term development of the country.

However, the good side of the Budget 2017 has been marred by a number of howlers, inconsistencies and unhealthy interventions which the Minister of Finance should not do.

Proposal to give free tablets to A/L students and teachers

One such howler is the proposal to give a free tablet to every Advanced Level student and every teacher teaching for that examination. The obvious objective would have been to increase digital literacy among students who are to join the labour market in a few years’ time and helping teachers to keep themselves updated. Objective-wise, it is laudable since the digital literacy of Sri Lankans, as revealed by the latest survey conducted by the Department of Census and Statistics, has been just 27% of the population as at mid 2015 (available at: http://www.statistics.gov.lk/samplesurvey/ComputerLiteracy-2015Q1-Q2-final%20.pdf ). This is a national average and in the case of the estate sector, the computer literacy is just 8% of the relevant population segment. However, an encouraging sign is that those in the age category of 15-19 that represent the students in A/L classes, the computer literacy is the highest at 57%; there again, that number is almost wholly made up of those who have proficiency in English. So, Sri Lanka’s issue is not lack of computer literacy among A/L students; its issue is lack of adequate knowledge of English to harness it fully. 

Supply driven policies won’t work

The Budget 2017 has allocated Rs. 5 billion for this project, about twice the annual administration budget of a medium size university. It, therefore, poses three basic problems for the Government. Firstly, given the large number of eligible students in A/L classes which is swelling year after year and teachers who are attached to those classes, surely, the Government cannot give a good quality iPad to them. Hence, it has to go for a low quality tablet which will have a very short lifespan. Consequently, students who are happy at the time of the distribution of the tablet will be annoyed when they realise that those tablets cannot give them good service. Secondly, this type of free handouts will impose a huge drain on the Government’s resources in the future since the number would be swelling every passing year and once given, it could not be withdrawn even when the Government would find it difficult to fund it in the future. Thirdly, these are known supply driven policies and if there is no demand for them, they would be abused by the recipients totally defeating the laudable objective of the Government. In a story in YouTube, a daughter presents her father with an iPad as a birthday gift. Later, when she inquires from his how he had been using it, father shows her how he had been using it as kitchen cutting board (available at: https://www.youtube.com/watch?v=nPGY2T9r1Ok ). This is a warning about what would exactly happen to this ‘supply-driven policy’ in the Budget.

Levy on financial transactions

An example of the ‘Budget proposal inconsistency’ is the proposed levy on financial transactions. Accordingly, the Budget 2017 proposes to levy a fee of 0.05% on every financial transaction which works out to Rs. 5 per Rs. 10,000 worth of transactions. The Budget has not defined what these applicable transactions but has simply revealed that the Government expects to raise about Rs. 8 billion out of this levy. If it is applied to all the financial transactions that go through the financial services industry, the tax base in 2015 happened to be enormous at Rs. 95 trillion, roughly nine times higher than the country’s GDP. It is growing at a rate of 20% per annum generating an estimated tax base of some Rs. 137 trillion in 2017. At 0.05%, this tax base would generate some Rs. 68 billion as non-tax revenue to the Government. Surely, banks and other financial institutions cannot absorb such a big amount of money they pay as levy to the Government and they have to pass it onto the customers. Then, it would discourage large companies to pay their salaries through electronic modes of payment and individual householders to pay their bills and payments through online payment systems.

Discouraging the use of cash

In another Budget proposal, the Government has announced that it would impose a levy of 2% when bank customers withdraw more than Rs. 5 million from banks. This is again a huge tax, amounting to Rs. 100,000 per Rs. 5 million withdrawn from the bank. Since current accounts do not earn interest, this tax is unaffordable for large companies. The objective of this proposal is to encourage Sri Lankans to use digital payments as much as possible. But the above tax proposal will tax then heavily when they use digital payments as encouraged by the government. What would a rational person do in these circumstances? It is obvious. He would withdraw less than Rs. 5 million and make all his payments by using cash. Thus, the modernisation of the country’s financial system by introducing digital banking will come to a halt with two contradictory policies. The Association of Professional Bankers or APB used this as the theme of their annual sessions continuously in the five year period since they sincerely believed that that was the gateway for Sri Lanka’s banking sector in the future.

The Monetary Board should be an independent body

The Budget 2017 has also sought to encroach into the functions of the Monetary Board of the Central Bank of Sri Lanka by proposing certain proposals coming within the purview of the Monetary Board. This is against the objective of creating the Monetary Board and the Central Bank by Parliament in 1949. That objective was to allow an independent Monetary Board to manage the country’s monetary and financial systems, free from intervention of politicians or outside parties. These two functions are too precious to be left to the politicians who have personal agendas. Hence, the Monetary Law Act MLA made provisions to safeguard the position of Monetary Board members; Once appointed by the President on the recommendation of the Minister of Finance and in consultation with the Constitutional Council, they cannot be removed while they hold office at the whims and fancies of the Minister of Finance. If he desires to do so, there is a specific procedure stipulated in MLA. Further, unlike the other public sector corporations and institutions in Sri Lanka, the Monetary Board is the only entity to which the Minister of Finance cannot issue general or specific directions. However, if there is a dispute between Monetary Board and the Minister with respect any particular desire of the latter, the Minister could still have his say being carried out by the board by issuing a directive in writing to the board in terms of section 162 of MLA. But, when he issues this directive, he has to inform the board that the Government will take full responsibility of the consequences of carrying out that directive. This provision was used only on one occasion in Sri Lanka through the history of the Central Bank. That was when Prime Minister   Wijayananda Dahanayake issued a directive to the Monetary Board to reduce interest rates in 1959 so that he could win the forthcoming Parliamentary elections. In the subsequent election, the Government took full responsibility for the consequences of reducing interest rates, because his government was thrown out and he himself lost his seat in Parliament. Hence, a Minister of Finance should not take this golden provision in MLA lightly.

Unsavoury interferences with the Monetary Board

There are several proposals made in the Budget which come within the purview of the Monetary Board. One is the proposal to increase the capital of commercial banks, specialised banks and primary dealers. Another is to specify a loan to value ratio when commercial banks lend money to customers by way of leasing or hire-purchase schemes. A third is the proposal to direct the Credit Information Bureau or CRIB not to issue loan certificates for loans less than Rs. 500,000. This is against the CRIB Act because neither the Central Bank nor the Minister of Finance could issue such a direction to CRIB’s board of directors who are appointed by the individual members. A fourth is the proposal to set up a Sri Lanka payments gateway outside the Central Bank by using the software resources of the Information and Communication Technology Agency or ICTA. This is a serious proposal since it comes within the purview of the Central Bank. Further, according to banking sources, the Minister of Finance is planning to set up this payments gateway when the Central Bank has been making preparations to set up such a payments gateway by using its own outfit, namely the LankaClear which is charged with the responsibility of clearing cheques and facilitating online payments. Fifth, there is a proposal to introduce a threshold of leasing to commercial banks thereby taking them effectively out of the leasing market. Sixth, the Minister of Finance is planning to introduce mandatory credit allocations to commercial banks in accordance with priorities which he has identified. Seventh, it is also proposed to issue a directive to commercial banks that they should lend at least 15% of the deposits they mobilise in a particular area to within that area itself. The last two proposals will lead to corruption because bank managers would devise ingenious methods to allocate funds to their fathers in law and sons in law. This is the experience which India had with such mandatory credit allocations.

It is still not too late to rectify the errors

These are serious issues and it is hoped that the Government would take appropriate action to correct these howlers, inconsistencies and undue interferences with the Monetary Board before it is passed in Parliament.

(W. A Wijewardena, a former Deputy Governor

of the Central Bank of

Sri Lanka, could be reached at waw1949@gmail.com)

What Trump’s Win Teaches Sri Lanka

Photograph from NBC News

Donald Trump’s surprising electoral victory last week gives us Americans a lot to think about.  One takeaway is particularly relevant for Sri Lanka.  Over the last eight years, President Obama did not prosecute Bush Administration officials implicated in post-9/11 violations of international law.  His failure to adequately address Bush-era torture means that now, under President-elect Trump, the U.S. could soon revisit its darkest chapter in recent history.  This lesson has implications for Sri Lanka.  Trump’s win teaches us that the Sri Lankan government must deliver on accountability now, while it can, to foreclose a return to Sri Lanka’s darkest past.

After 9/11, the Bush Administration launched a counterterrorism program that flagrantly violated U.S. human rights commitments, diminished our standing in the world, and did not make us safer.  In 2014, the Senate Select Committee on Intelligence produced a damning report that concluded the CIA’s interrogation and detention practices were far harsher than disclosed.  One detainee died of hypothermia after he was held partially nude and chained to a concrete floor.  After repeated waterboarding, another became “completely unresponsive, with bubbles rising through his open, full mouth.”  Detainees were kept awake in stress positions for up to 180 hours and subjected to “rough takedowns,” where they were hooded and dragged naked up and down corridors while being punched and slapped.  Contrary to proponents’ claims, the torture report found these methods were “not an effective means of acquiring intelligence.”  The CIA never audited its techniques for effectiveness, and it destroyed interrogation videotapes to shield the program from review.

President Obama admitted the U.S. “tortured some folks” but dodged calls for accountability, saying, “we need to look forward as opposed to looking backwards.”  He did not create a public truth commission to expose the horrors of extraordinary rendition, black sites, enhanced interrogation techniques (torture by another name), Abu Ghraib, or Guantanamo.  His administration did not prosecute Bush Administration officials who perpetrated, approved, or provided legal cover for torture.  The White House redacted names and blocked most of the Senate torture report from public release.  The Justice Department repeatedly invoked state secrets privilege to block civil litigation by torture victims.

Upon entering office, President Obama signed an executive order closing black sites and requiring interrogations to comply with the Army Field Manual (AFM), which prohibits degrading methods like waterboarding, hypothermia, mock executions, forced nudity and sexual humiliation.  A 2016 military spending bill (the NDAA) codifies that executive order, but gaps remain.  Researchers worry the AFM could be interpreted to permit cruel methods like prolonged solitary confinement and sleep and sensory deprivation.  The AFM does not regulate extraordinary rendition, wherein persons could be sent abroad to face torture by foreign governments.  Further, nothing stops a future secretary of defense from modifying the AFM; the NDAA in fact requires a complete review every three years.

With no prosecutions in eight years, there is little in the public consciousness to repudiate past horrors.  To this day, all that most Americans know comes from Hollywood’s depictions, from Kiefer Sutherland in 24 to Jessica Chastain in Zero Dark Thirty.  These shows glamorize CIA agents and suggest, contrary to fact, that torture worked and saved lives. It is thus no surprise Trump supporters listened when he said, “Torture works, OK folks?”

President-elect Trump has vowed to “bring back a hell of a lot worse than waterboarding,” claiming that even if it does not produce reliable intelligence, “they deserve it anyway, for what they’re doing.”  

He proposed fighting ISIS by “taking out” family members of suspected terrorists.  While Trump backtracked on those claims after intense criticism, he quickly doubled down.  Time will tell what he will do once in office, but Republican control of the House of Representatives and Senate may clear hurdles to reinstating aspects of the torture program.

President Obama sidestepped accountability to strike a conciliatory tone with supporters of the previous administration.  He claimed “nothing will be gained by spending our time and energy laying blame for the past” and stressed America would “right its course in concert with our core values” going forward.  Eight years later, the U.S. may be on track to resume torture under President-elect Trump.  By failing to prosecute those that “waged war against the law itself,” the Obama Administration did not do enough to deter future officials from resurrecting that approach.  Nor was there a benefit to allowing false narratives to stand.  Proponents of the Bush-era programs remain ready to reassert their discredited theories that torture works.  Sacrificing accountability for short-term unity did not soften such views.

What does this mean for Sri Lanka?  The Sri Lankan government must resist temptation to postpone justice for another day.  It must prosecute those most responsible for war crimes and crimes against humanity in the prior administration, even if doing so seems politically fraught in the short term.

Soon after taking office in January 2015, Foreign Minister Mangala Samaraweera told a Washington audience: “Unlike the previous government we are not in a state of denial, saying that such violations have not happened. We believe such violations have happened, and the extent to which it has happened has to be finally decided by the mechanism we set up. We are ready to ensure that those who have violated human rights in Sri Lanka will be brought to justice through such a mechanism.” He further stated, “without accountability, without reconciliation, Sri Lanka cannot move forward.”

The current government committed to a “comprehensive approach” to deal with the past when it co-sponsored UNHRC resolution A/HRC/30/L.29 last year.  Yet, since then, it has made little headway in setting up the special court it promised.  It has not introduced legislation to create the court or codify international crimes under domestic law.  Both the President and the Prime Minister have backtracked on Sri Lanka’s promise to staff the court with international judges, defense lawyers, prosecutors, and investigators.  The President appointed suspected war criminals Jagath Dias and Sarath Fonseka to senior posts and criticized corruption investigations of Gotabhaya Rajapaksa.  Administration officials unilaterally announced a fifthtransitional justice mechanism, a forensic tracing unit, that will further delay the court the government wants sequenced last.  With no mandated U.N. oversight beyond March 2017, it is reasonable to ask if the government is delaying action on accountability to dodge that commitment entirely.

The question for Sri Lanka is this:  what will this administration do to ensure the darkest period of its recent past cannot reoccur?  Recent killings of two Jaffna University students by police, the abduction and torture of a Tamil man in Mannar by the CID, and continued Army surveillance and harassment of women activists in the north and east suggest it has not done enough.

By failing to prosecute, the United States now risks a return to torture.  Taking our story as a cautionary tale, Trump’s win teaches the current Sri Lankan government that it must deliver on accountability now, while it can, to prevent a return to Sri Lanka’s darkest chapter.  Following its own maxim that Sri Lanka cannot move forward without accountability, the government must resist the urge to shortchange justice to temporarily appease those across the political aisle.

Yahapalana MPs Now Boldly Advertise Duty Free Vehicles For Sale In The Open Market

November 15, 2016

Ruling United National Party party member, member of the Sectoral Oversight Committee on Legal Affairs (anti-corruption) and committee member on Public Finance and current Galle District MP Wijepala Hettiarachchi has got caught red handed advertising his brand new Toyota Land Cruiser to be sold in the open market, where he used his tax concessionary terms extended to members of parliament to import duty free vehicles.

Wijepala Hettiarachchi MP

According to the Sri Lanka Customs import papers the actual cost of the imported vehicle is stated as Rs 9.2 million even though MP Hettiarachchi has advertised to sell it for Rs 39.5 million.

Unlike others he has even used the print media and websites to boldly advertise the vehicle for sale in the open market.

A whopping sum of Rs 33,457,500.00 is the total loss to the government as the stated amount in the customs import papers that has been waived off for this purpose.

According to Sri Lanka’s pioneering MP Monitoring Website (Manthri.lk) Wijeyapala has only participated 40 times in parliament.

Readers can compare the Engine Number and the Chassis Number of the vehicle in the advert (for sale of Toyota Land Cruiser imported on MP permit) with the same information provided in the import declaration presented for Customs purposes and the tax-waiver granted for this vehicle

The relevant Customs Declaration presented for this vehicle is re-produced below:

Read More

Will the government’s policy lead to mass dispossession of farmers?

2016-11-16

The first subject heading in Finance Minister Ravi Karunanayake’s 2017 budget speech was Agriculture which he said was a priority “given its importance to the economy, society and way of life.” He spoke of transforming agriculture from “low-yielding, low income, few crop dependent subsistence agriculture to commercial agriculture, raising income levels and developing small scale producers into big exporters.” A variety of proposals followed which, we are led to understand, are intended to uplift the lot of the 2.5 million strong farming community, most of whom cultivate small plots of a couple of acres at most.   

Looked at together with the prime minister’s policy statement of October 27 and other proposals elsewhere in the speech, there is reason to question whether this transformation would take place. Or, whether the envisaged measures would in fact result in the exact opposite – the mass dispossession farmers, compelled to abandon farming and sell off their plots out of indebtedness.  

 
Are the small scale, subsistence agriculture farmers Karunanayake speaks of, the same set of people that would benefit from the commercial agriculture that is to be encouraged, and for which all the incentives are being provided? Or are these two different sets of people? Is there reason to believe that the beneficiaries of the loan interest subsidies, tax relief, infrastructure such as warehouses, cool storage etc on offer in this budget would be for big corporations with the kind of capital required for commercial-scale agriculture (agri-business), and not the poor people in the countryside growing paddy or vegetables on small plots – which is the image associated in this country with the word ‘farmers?’   

Most agricultural lands are owned by the State, with farmers cultivating them on some form of lease or permit. Over the past several years there have been reports from time to time of the government’s distribution of freehold title to people who have been occupying various lands and properties on some basis, short of outright ownership. The budget 2017 too speaks of transferring ‘public housing to dwellers who have lived in such houses for more than 15 years’ and giving each plantation family seven perches of land ‘with clear title deed’ in order to ‘alleviate their conditions from the line rooms.’ Handing out land title to various groups was carried out under the previous regime too but has accelerated now. On the face of it these measures look people-friendly and welfare-oriented, but deceptively so. The rationale behind them lies elsewhere.  

It’s no secret that the government is in thrall to the World Bank and IMF, and policy is being dictated by conditions set down by them. The increased tax burden on ordinary people is a direct result of austere conditions imposed by the IMF in exchange for its $1.5 billion loan. The government’s neo-liberal policy thrust on matters relating to land and other key resources is dictated by the WB imperative to integrate with the world market. The budget’s encouragement of a shift in cultivation away from paddy towards producing fruits and vegetables for export comes from the WB’s script.   

In relation to land resources, the WB advocates full privatization – meaning fully marketable, freehold title, while irrigation water is viewed as ‘a private good’ that should be directed by market forces. For years it has pushed for the creation of a ‘Land Market’ in Sri Lanka that would make it possible for small land holdings to be sold and consolidated to enable commercial-scale economic activity. While receiving title may seem attractive momentarily, for farmers already burdened with debt it may well spell doom, as it could be the prelude to dispossession – either as a result of being forced to sell or having land given as collateral seized, following default on debt.   
“Clearly, it is in order to get farmers off the land” says Chintaka Rajapakse, Moderator of the Movement for National Land and Agricultural Reform (MONLAR). The long-standing grassroots organisation opposes the government’s move to abolish the Land Reform Commission and set up a Land Bank that would bring all land under one authority, making it possible for the government to release it for the envisaged large scale cultivation and other projects.  

Rajapakse says the budget proposal to release 20,000 acres from the Maduru Oya right bank to provide minimum land plots of 1000 acres for commercial agriculture does not apply to the country’s millions of small scale farmers. They do not have the capital required for the envisaged mechanization and ‘high tech’ methods such as sprinkling chemicals from a helicopter etc. 
The social and political fallout of the government’s approach to key resources of land and water would be far reaching. Pushing people off the land without a proper alternative could be disastrous, says Ahilan Kadirgamar, a political economist with the Alliance for Economic Democracy - a group formed with the objective of ensuring that economic policies serve the people and are democratic. “What jobs will they have?” he asks. Work in FTZ garment factories and West Asian employment are not permanent, after 4 to 5 years these employees would normally return to the land, he notes. “When someone owns a small plot – say half or even quarter of an acre, he has some provision. When they suddenly have to come to the city, they would have to spend Rs. 3,000 for gas, whereas in the village they used firewood from their own garden. They might have a few vegetables, a decent fowl-run or a cow that would ensure the bare minimum to live, although they would have some other job as well. In the city, they would have no proper jobs, nor this kind of rural provisioning.”  

It may be seen that while the budget 2017 sections on agriculture are replete The FAO’s Voluntary Guidelines on the Responsible Governance of Tenure of Land, Fisheries and Forests endorsed by the UN Committee on World Food Security in 2012, clearly spells out these priorities when it says:  

“State should take measures to prevent undesirable impacts on local communities, indigenous people and vulnerable groups that may arise from, inter alia, land speculation, land concentration and abuse of customary forms of tenure. State and other parties should recognize that values, such as social, cultural and environmental values, are not always well served by unregulated markets.”  

RSF urges UN committee to question Sri Lanka's intelligence chief

Nov 15, 2016

Reporters Without Borders (RSF) and Journalists for Democracy in Sri Lanka (JDS) are dismayed to learn that Sri Lanka’s national intelligence chief, Sisira Mendis, who is accused of serious crimes against journalists during the final stages of its civil war, is on the Sri Lankan delegation that is meeting with the United Nations Committee against Torture (UNCAT) in Geneva today and tomorrow.

Reporters Without Borders (RSF) and Journalists for Democracy in Sri Lanka (JDS) are dismayed to learn that Sri Lanka’s national intelligence chief, Sisira Mendis, who is accused of serious crimes against journalists during the final stages of its civil war, is on the Sri Lankan delegation that is meeting with the United Nations Committee against Torture (UNCAT) in Geneva today and tomorrow.

 

Then Deputy Inspector General Mendis oversaw two police units, the Criminal Investigation Department (CID) and the Terrorism Investigation Division (TID), during the final phase of the Sri Lankan civil war from March 2008 until June 2009. A UN investigation accused both units of torture and sexual violence during the period that Mendis was in charge.

 

Under Mendis, the CID and TID abducted, arrested, detained and tortured many journalists along with hundreds of other civilians. After release, many of these journalists fled the country fearing reprisals.

 

The well-known journalist J. S. Tissainayagam, the writer and publisher V. Jasikaran and his wife V. Valarmathy, and the journalist K. Wijesinghe are among the prominent media figures who experienced cruel treatment at the hands of the TID.

 

Dr. Thurairajah Varatharajah, who was detained by the CID in 2009 along with four other Tamil doctors, was subjected to inhuman treatment for being the main source of information from the war zone for international media outlets during the final stages of Sri Lanka’s bloody war, when no independent journalists were allowed to cover the fighting.

 

“RSF and JDS ask UNCAT to question National Intelligence Chief Sisira Mendis on the conduct of these police units under his command and to determine who was responsible for the crimes against journalists and violations of press freedom,” said Benjamin Ismail, the head of RSF’s Asia-Pacific desk.

 

“Mendis cannot deny being aware of what happened to these journalists and their sources while they were held on his watch. We have credible evidence that they were subjected to inhuman treatment while in detention and were intimidated following their release.”

 

The highly questionable conduct of the CID and the TID under the leadership of Mendis was detailed in a lengthy submission to UNCAT by the International Truth and Justice Project (ITJP), a Sri Lankan initiative that combats impunity for crimes against civilians and is funded by the Johannesburg-based Human Rights Foundation.

 

Sri Lanka is one of the 159 states that are party to the Convention against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment. As such, it is required to undergo regular review by the UN on how it is implementing the Convention and previous UNCAT recommendations.

SRI LANKA:INDIFFERENCE OF THE POLICE & THE POISONOUS ATMOSPHERE OF ETHNIC AND RELIGIOUS HATRED

( Don Priyasad, with Sinhale mike in hand,  threatening to kill Muslims standing  in front of the fort railway station)

(Press release)

15/11/2016

The Centre for Policy Alternatives (CPA) is deeply concerned by a spate of recent events with ominous portents for ethnic and religious harmony and reconciliation in Sri Lanka. These include the murder of two university students in Jaffna, the seeming exploitation by others of the disabled soldiers’ protest outside the Presidential Secretariat, the increasing use of hate speech against minorities by some members of the Buddhist clergy and by other protest groups, and by widespread anti-minority hate speech in social media. We are extremely concerned at the appearance of signs that, yet again, legal reforms aimed at improving our democracy and governance are being undermined by the forces of chauvinism and intolerance.

We find the deplorable language used by some Buddhist monks in particular – underpinned by unquestionably violent and un-Buddhist sentiments – that have been widely circulating on social media to be especially disturbing and shocking. This very small minority of violence-prone and foulmouthed monks are not only profaning a religion of peace, but also disgracing the memory of such champions of civility and reconciliation as the late Maduluwawe Sobhitha Thera, an architect and inspirer of the reforms now taking place. Moreover, many monks are actively involved in peace and reconciliation efforts at the community level, which work, due to its unsensational nature, does not attract mainstream or social media attention.

Ampitiye Sumana: threatening to cut a Tamil Govt officer to pieces

In many if not all of these incidents, there appears to be an element of orchestration, of deeper political agendas aimed at reversing the country’s current path towards peace, reconciliation, and reform, and especially where members of the clergy have been involved, police and civil servants have succumbed to the culture of deference rather than restore order. This poisonous atmosphere of ethnic and religious hatred is compounded by suspicion and rumours of collusion and political machinations, and most regrettably, by the appearance of indifference or at least a lack of capacity on the part of state institutions to enforce the rule of law without fear or favour.

Even if such rumours are without foundation, the allowance of any space for a perception of government impotence, indifference, or weakness to take root would only embolden those who wish to propagate hatred and division. Without the will or capacity to implement strengthened powers and institutional independence, there will be no point to the reforms, especially in relation to law enforcement, introduced by the Nineteenth Amendment to the Constitution only last year.

While it is true that small acts of disruption and discord gain disproportionate attention today in the age of social media, this is nevertheless a remarkable reversal of the national mood of goodwill and cooperation last year when Sri Lankans of all communities came together to mandate a change of government and a process of post-war reforms. These disturbing events occur at a time when we are still less than halfway through the political and constitutional reforms that were popularly mandated. They imperil the establishment of the necessary foundations of reconciliation, justice, and good governance – which are the bedrock of our future peace, prosperity, and happiness – and threaten to take us back to a dark and rancorous era from which we were at last emerging.

Both the President and the Prime Minister have an obligation to provide strong and principled leadership against these invidious forces, to restate their commitment to the democratic values of pluralism and tolerance on which they were elected, and ensure that police and civil servants are given the confidence to enforce the law in the face of intimidation and threats of violence. We are reminded again of the fact that legal and institutional reforms are meaningless without the reform of political culture and practices, and in this regard, strong leadership by political leaders is indispensable. We hope too that religious and social leaders, as well as citizens, would publicly register their strong displeasure at the unacceptable behaviour of these disruptive individuals and groups.

Unless these incidents, and those who perpetrate them notwithstanding their social status, are dealt with firmly but fairly and with due regard to the seriousness of the real threat they pose to the democratic way of life, they have the potential to spiral out of control. No sensible Sri Lankan – the decisive majority of whom voted for reform and reconciliation not once but twice only a year ago – wishes our country to return to the past of conflict and enmity. The clear desire of all our peoples for a better quality of democratic governance, and the ongoing process of reforms to sustain it, cannot and must not be dissipated due to complacency and weakness in the face of intimidation by the purveyors of hate and harm.

15 November 2016, Colombo, Sri Lanka

Buddhist Monk In Batticalao Abusing Officials, I’m Silenced – Minister Mano Ganesan Tells Civil Society

November 15, 2016 |

Minister of National Coexistence Dialogue and Official Languages and Colombo District Parliamentarian Mano Ganesan called the Sinhala civil society to have a look at the Batticaloa Buddhist monk Ampitiye Sumanarathana of Mangalarama Temple who abused the Grama Sevaka Niladhari few days ago.

The minister in an open letter to the Sadharana Samajayak (National Movement for Social Justice), Professor Sarath Wijesooriya, Sisira Jayamaha, Palitha Lihiniyakumara, R.S.Jayarathna, J.C. Waliamuna Rev.Father Ried Shelton Fernando, Lal Wijenayake, Dr. Jayantha Dhanapala, Saman Rathnapriya, Gamunu Wijerathne, Richard Thanippuliarachchi and Wasantha Kulathunge, urged to have look a at the 2.23 minute video where the monk is abusing the government servant.

“What shall we do on this? What is your stand? I am a Cabinet minister in this government. Besides, I am the Minister for National Coexistence Dialogue and Official Languages. I am not impotent. I demand action,” he lashed out.

He said he has seen worst cases than this during the last regime.

“I have come through the murderous path of the former regime. Therefore I will not think twice to open my mouth. But I am requested to maintain patience.

“The usual theory is that, “such are isolated incidents. And they need to be ignored. If responded such would disturb the good governance path of the government”. Therefore, anybody in robe and also in uniform go scot-free. They have the impunity.

“If I demand action it will be easily twisted as a Tamil against Sinhala Buddhists. But if the right thinking Sinhalese are going to maintain silence we will have no option. When Respectful Ven. Sobitha Thera formed his organization National Movement for Social Justice (NMSJ), and announced it at a media conference at the library services hall, I was seated on his right. I translated the name title of his organization in Tamil. Now we are not there as we are engaged in other activities. But I am glad you gentlemen are carrying his flag steadily.

While opposing and campaigning against corruption, why don’t NMSJ also campaign against the racism and in this case here filthy racism? Let us face the fact. BBS general secretary was taken to courts some time before, when it occurred in the south between Sinhala based political and social forces. But when such hate speech and communal action of such kinds occur against the Non-Sinhala Buddhist, they are tolerated. It is an indirect license to communalism against minorities. Hooligans are given informal nod to continue with their hate campaign. “Jathiwadaya Walakweeme Panatha” (Counter-Communalism Act), is the sensible idea.

But we need to push for it. We need acts to counter terrorism as well as counter communalism too. Weeks before, an innocent Tamil family was manhandled and threatened by the mob led by a monk in Rathmalana.

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Ex-army instructor sentenced to death over pregnant wife’s murder



November 15, 2016


A former sports instructor of the Sri Lanka Army (SLA), who was found guilty in connection with the assault and murder of his pregnant wife, was sentenced to death by the Anuradhapura High Court today (15). 

He had been accused of assaulting his wife and burying her afterwards in the Mahawilachchiya area in March, 2003. Delivering the verdict in the case, the High Court sentenced the suspect to death. 

 On the charge of concealing the body of the victim, the 41-year-old was sentenced to an additional seven years rigorous imprisonment and a fine of Rs 5,000.