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Sri Lanka On The Brink of ‘Economic Anarchy’

Sri Lanka will have issues on accessing government money if the stalemate is not resolved by the end of the year.

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Sri Lanka
Members of a civil society group attend a silent protest to demand democracy, after Sri Lankan opposition leader Mahinda Rajapaksa was appointed prime minister when President Maithripala Sirisena dismissed Ranil Wickremesinghe, in Colombo, Sri Lanka. VOA

Two men each claim to be the prime minister. Lawmakers are exchanging blows in Parliament. A former finance minister says Sri Lanka is on the brink of an “economic anarchy.”

Welcome to Sri Lanka, where the political crisis is getting worse by the week.

The trouble started when President Maithripala Sirisena, fed up with disagreements with his prime minister over money, an alleged conspiracy plot and unresolved issues of wartime crimes against civilians, fired Ranil Wickremesinghe and his Cabinet and replaced them with a government headed by a popular former strongman, Mahinda Rajapaksa.

But lawmakers balked and twice passed a no-confidence motion. Sirisena, however, refuses to accept that his choice of prime minister has been defeated.

Sri Lanka, parliament, political
Sri Lankan President Maithripala Sirisena waves to supporters during a rally outside the parliamentary complex in Colombo, Sri Lanka. VOA

Sirisena government can’t be legal

Jehan Perera, head of the local analyst group National Peace Council, said that the government appointed by the president can’t be called legal because Sirisena had not sought a parliamentary vote when he dismissed Wickremesinghe.

“It can be called illegitimate because provisions for a confidence vote in Parliament are being blocked by the president’s own party through their riotous behavior,” Perera said, referring to a brawl last week that was followed by another pandemonium in the chamber when Rajapaksa loyalists refused to let the speaker conduct proceedings.

Wickremesinghe says his dismissal is invalid because he still holds a majority in the 225-member Parliament. The dismissal is also disputed because of the latest constitutional change, which lawyers say has taken away presidential powers to dismiss the prime minister.

sri lanka, parliament
Sri Lankan former President Mahinda Rajapakse addresses journalists at his residence in Colombo, Sept. 22, 2018. Rajapakse has been appointed the Sri Lanka’s new prime minister. VOA

Life goes on

Despite all the drama and two rival prime ministers, life hasn’t collapsed, thanks to the efficient bureaucracy that keeps the wheels of administration turning.

Even though there is no Cabinet recognized by Parliament, and despite warnings by Wickremesinghe supporters that state officials should not take orders from an “illegal government” of Rajapaksa, bureaucrats continue to work with the president who is the chief executive and the ministers appointed by him, officials said on condition of anonymity because they are not authorized to speak to the media.

Budget dilemma looms

However, decisions regarding new projects or purchases involving large sums of money are on hold.

The absence of a recognized government has delayed the budget for 2019. Mangala Samaraweera, who was finance minister in Wickremesinghe’s Cabinet, said that there will be no legal way of spending money in the coming year without a parliament-approved budget.

sri lanka
Sri Lanka’s ousted Prime Minister Ranil Wickremesinghe reacts during a news conference in Colombo, Sri Lanka, VOA

Sri Lanka’s Constitution says that control over public finances lies with Parliament and no funds can be released without a warrant signed by the finance minister and approved by the legislature. That means all government payments starting from January can be deemed illegal, Samaraweera says.

Sri Lanka is on the brink of an “economic anarchy and chaos as never experienced before.”

“The cavalier and irresponsible actions of the president … based on personal animosities and precipitating a series of illegal acts, places at risk Sri Lanka’s ability to meet its immediate debt obligations,” he said.

Sri Lanka has to repay $1 billion of its foreign loans in early January, which is also in the prerogative of Parliament to approve.

Sri lanka
Sri Lanka’s former President Mahinda Rajapaksa, front left, is sworn in as prime minister before President Maithripala Sirisena in Colombo, Sri Lanka. VOA

Wickremesinghe’s lawmakers have presented a motion to the speaker seeking to block funding to the prime minister’s office, which if passed, would curtail Rajapaksa’s functions.

“As far as the people are concerned, they are witnessing the normal functioning of the country,” insisted government spokesman Keheliya Rambukwella.

Also Read: Regional Political Turmoil Reflects India-China Rivalry

However, he conceded that Sri Lanka will have issues on accessing government money if the stalemate is not resolved by the end of the year. Sirisena called snap elections for Jan. 5, but the opposition challenged the decision, and the dispute is in court. (VOA)

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India Still Projected To Be The Fastest Growing Economy Among G-20 Nations

India is still projected to be the fastest growing economy in FY20 among the G-20 nations, says Finanace Minister

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Economy, Nirmala Sitharaman
FM Nirmala Sitharaman stated that India is still projected to be the fasteat growing economy. Wikimedia Commons

Finance Minister Nirmala Sitharaman on Monday said in the Lok Sabha that growth has decelerated, but there is no slump and India is still projected to be the fastest growing economy in FY20 among the G-20 nations.

She said the government has been taking several measures to address moderate levels of fixed investment rate in the economy, plateauing of private consumption rate and a modest export performance, with a view to increasing the GDP growth.

In a written reply, Sitharaman said India’s economic growth decelerated but its economy is still the fastest growing among G-20 nations and that the goal of $5 trillion economy will be achieved by 2025.

In a written reply to a question from N.K. Premachandran, MP from Kerala, that despite some recent deceleration in growth, India’s economy was still projected by the World Economic Outlook to grow at the fastest rate among G-20 countries in 2019-20.

“During the last five years, the government has implemented major reforms to build the investment climate in the country for becoming a $5 trillion-dollar economy,” the minister said.

The World Economic Outlook (WEO) of October 2019 projects a significant slowdown in world output and trade in 2019. Yet India, despite some recent deceleration of GDP growth, is still projected by WEO to grow at the fastest rate in 2019-20 among G-20 countries, she said.

On a question whether the government has analysed the impact of implementation of the Goods and Services Tax (GST) on economic slowdown, Sitharaman said the GST reform stands out as the most important measure for improving ease of doing business in the country.

“Further, in the World Bank’s Ease of Doing Business 2020 Report, India’s ranking improved by 14 positions to 63 in 2019 from 77 in 2018 after GST was implemented in 2017,” Sitharaman said.

Indian Economy
Despite the deceleration in economy due to declining GDP , India is still projected by WEO to grow at the fastest rate in 2019-20 among G-20 countries. Pixabay

On the impact of implementation of foreign trade agreements and economic slowdown, she said the government publishes an economic survey of the country on an annual basis analysing various aspects of the economy, including trade agreements and state of the economy. “The government has also been engaging with various stakeholders to understand their concerns and taking appropriate measures for the economy,” she said.

Sitharaman said while taking reform measures, the administration has kept inflation low, fiscal spending disciplined and current account deficit manageable to ensure macroeconomic stability for a healthy investment climate in the country.

India’s economic growth slowed down to 5% in the Q1 and is expected to have declined further in the second quarter for which official data is expected later this month.

In her statement Sitharaman further said the 15% corporate tax rate for new domestic manufacturing companies announced in September was “amongst the lowest in the world”.

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For other domestic companies not availing of any tax breaks, the rate was cut from 30% to 22%.

She also pointed out the recent move to reduce corporate tax rate from 30 percent to 22 per cent complemented by a cut in the repo rate by 135 basis points during 2019 by the Reserve Bank of India and mandating of banks to link their lending rates with external benchmarks for reducing the cost of capital for investors. (IANS)