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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.

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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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Despite Tariff War With U.S, China’s Economic Growth is Steady

The fight between the two biggest global economies has disrupted trade in goods from soybeans medical equipment, battering exporters on both sides and rattling financial markets.

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China
An employee working on the production line of an electronics factory is seen reflected on an equipment, in Jiaxing, Zhejiang province, China, April 2, 2019. VOA

China’s economic growth held steady in the latest quarter despite a tariff war with Washington, in a reassuring sign that Beijing’s efforts to reverse a slowdown might be gaining traction.

The world’s second-largest economy expanded by 6.4% over a year earlier in the three months ending in March, the government reported Wednesday. That matched the previous quarter for the weakest growth since 2009.

“This confirms that China’s economic growth is bottoming out and this momentum is likely to continue,” said Tai Hui of JP Morgan Asset Management in a report.

Government intervention

Communist leaders stepped up government spending last year and told banks to lend more after economic activity weakened, raising the risk of politically dangerous job losses.

Beijing’s decision to ease credit controls aimed at reining in rising debt “is starting to yield results,” Hui said.

Consumer spending, factory activity and investment all accelerated in March from the month before, the National Bureau of Statistics reported.

The economy showed “growing positive factors,” a bureau statement said.

A delivery worker pushes boxes of goods at the capital city's popular shopping mall in Beijing, April 4, 2019. The U.S. and China opened a ninth round of talks Wednesday, aiming to further narrow differences in an ongoing trade war.
A delivery worker pushes boxes of goods at the capital city’s popular shopping mall in Beijing, April 4, 2019. The U.S. and China opened a ninth round of talks Wednesday, aiming to further narrow differences in an ongoing trade war. VOA

Recovery later this year

Forecasters expect Chinese growth to bottom out and start to recover later this year. They expected a recovery last year but pushed back that time line after President Donald Trump hiked tariffs on Chinese imports over complaints about Beijing’s technology ambitions.

The fight between the two biggest global economies has disrupted trade in goods from soybeans medical equipment, battering exporters on both sides and rattling financial markets.

The two governments say settlement talks are making progress, but penalties on billions of dollars of each other’s goods are still in place.

China’s top economic official, Premier Li Keqiang, announced an annual official growth target of 6% to 6.5% in March, down from last year’s 6.6% rate.

Li warned of “rising difficulties” in the global economy and said the ruling Communist Party plans to step up deficit spending this year to shore up growth.

Beijing’s stimulus measures have temporarily set back official plans to reduce reliance on debt and investment to support growth.

Also in March, exports rebounded from a contraction the previous month, rising 14.2% over a year earlier. Still, exports are up only 1.4% so far this year, while imports shrank 4.8% in a sign of weak Chinese domestic demand.

China
Chinese leaders warned previously any economic recovery will be “L-shaped,” meaning once the downturn bottomed out, growth would stay low. VOA

Auto sales fell 6.9% in March from a year ago, declining for a ninth month. But that was an improvement over the 17.5% contraction in January and February.

Tariffs’ effect long-lasting

Economists warn that even if Washington and Beijing announce a trade settlement in the next few weeks or months, it is unlikely to resolve all the irritants that have bedeviled relations for decades.

The two governments agreed Dec. 1 to postpone further penalties while they negotiate, but punitive charges already imposed on billions of dollars of goods stayed in place.

Even if they make peace, the experience of other countries suggests it can take four to five years for punitive duties to “dissipate fully,” said Jamie Thompson of Capital Economics in a report last week.

Chinese leaders warned previously any economic recovery will be “L-shaped,” meaning once the downturn bottomed out, growth would stay low.

Also Read: ‘Credible Threat’ Leads To Closing of Denver-Area Schools

Credit growth accelerated in March, suggesting companies are stepping up investment and production.

Total profit for China’s national-level state-owned banks, oil producers, phone carriers and other companies rose 13.1% over a year ago in the first quarter, the government reported Tuesday. Revenue rose 6.3% and investment rose 9.7%. (VOA)