The Government remained steadfast in its attempts to revive the economy last week in the face of a series of strikes launched by trade unions while major Opposition political parties continued their agitation for Local Government elections, now rescheduled by the Elections Commission for April 25. 
Along with the news that an agreement with the International Monetary Fund (IMF) would be ratified shortly as announced by President Ranil Wickremesinghe in Parliament recently, there were signs from several quarters that the economy was slowly but steadily entering a phase of recovery.
The first pointer came with the appreciation of the Sri Lankan rupee against the United States dollar. The selling rate for a dollar was 325 rupees at the end of last week, down from 350 rupees a few weeks ago. This appreciation is the result of a combination of multiple factors, economists say.
These include tighter controls on the flow of foreign exchange, restriction of imports, limitations imposed in servicing debts and an overall reduction on Government expenses achieved through tighter fiscal control. However, further fluctuations of the rupee against the dollar have been predicted.
Among other positive features noted last week was a notable increase in worker remittances from overseas which amounted to US$ 407 million in February. This was a significant increase from US$ 205 million in February last year and only slightly less than the US$ 437 million a month ago.
With the February figure, Sri Lanka has received US$ 844.9 million in workers’ remittances in 2023, an 82 percent growth from the same period last year. If the current uptrend in workers’ remittances persists, this income could top US$ 5 billion this year and become a significant source of revenue.
Sri Lanka’s workers’ remittance inflows lost steam in 2021 and hit a low in 2022 as the number of people migrating for foreign jobs plummeted due to the pandemic. However, last year also saw a record 320,000 people migrating and remittances from them are beginning to realise only now.
Similarly encouraging statistics were noted from the tourism industry. Sri Lanka received US$ 170 million from the tourism trade in February, slightly up from US$ 169 million in February last year. Sri Lanka has seen a promising 210,000 visitors to the country in the first two months of 2023.
Sri Lanka lost an estimated US$ 9 billion from tourism in 2020 and 2021 due to the pandemic, which contributed directly to the foreign currency crunch the country had to face. Those in the sector say that future prospects for the industry remain bright as arrival numbers are picking up every week. 
Sri Lanka had received over 30,000 tourists in the first week of March alone with Chinese visitors returning to the top 10 source markets. China reopened its borders in the first week of January after three years of border closures and lockdown measures and this augurs well for Sri Lanka.
Despite these positive developments, the Government will maintain a cautious approach towards the stringent fiscal measures it had initiated. This will apply especially to import controls which will continue for now but be reviewed, State Minister of Finance Ranjith Siyambalapitiya said this week.
It is estimated that such control saved the economy US$ 2 billion over the past few months. Minister Siyambalapitiya also noted that, based on industry and social requirements, the Government had already relaxed several import restrictions imposed at the height of the economic crisis last year.
Meanwhile, several trade unions on Monday began a campaign of strikes protesting against what they claimed were increases in income taxes, bank interest rates and electricity rates. Participating in the strike were port workers, employees of state banks and doctors employed in Government hospitals.
At the time of writing, the strike was ongoing with several unions planning to continue their campaign. The participating unions have claimed that the strike was a success but the Government maintains that services were maintained at an adequate level in most institutions affected by the strike.
The Government Medical Officers’ Association (GMOA) said they have launched their strike in the Western, Central, Southern and Eastern provinces. GMOA Secretary Dr. Haritha Aluthge said the union will engage in continuous trade union action, if the Government does not respond positively.
The Government has responded by declaring several services as essential services. United National Party (UNP) Parliamentarian Vajira Abeywardena warned that the assets of a person, if found guilty of violating the Essential Services Act No 61 of 1979, could potentially be confiscated.
In the meantime, Government and Opposition political parties, the latter’s trade unions being actively involved in the strike campaign, continue their tussle over Local Government elections. This is after the Elections Commission (EC) announced April 25 as the new date for the nationwide poll.
The EC’s decision to announce this date followed an Interim Order from the Supreme Court to a fundamental rights petition submitted by Samagi Jana Balavegaya (SJB) General Secretary Ranjith Madduma Bandara. It ordered the Finance Ministry Secretary to release funds allocated for the poll.
That the Government and the Opposition have different viewpoints about the need and the feasibility of conducting local elections became apparent last week when Premanath Dolawatte, a Parliamentarian from the ruling Sri Lanka Podujana Peramuna (SLPP) raised an issue of privilege in Parliament.
Dolawatte said the Minister in charge of the subject of Finance is responsible to Parliament which controls public finance and that the Interim Order by the Supreme Court attempts to prevent the implementation of these laws and makes the control of public finance by Parliament a nullity.
The matter was referred to the Parliamentary Committee on Ethics and Privileges. A few days later, State Minister of Finance Shehan Semasinghe requested Deputy Speaker Ajith Rajapaksa who was presiding at the time to issue instructions to authorities not to implement the court’s Interim Order.
Dolawatte’s claim that the Interim Order of the Supreme Court interfered with his Parliamentary privileges and State Minister Semasinghe’s response requesting that Government agencies be asked not to act on the order, raised a storm of protest from Opposition parties in Parliament.
Some Opposition Parliamentarians inquired as to what the Government’s next step was and whether there were plans to summon judicial officers before Parliament to respond to the claim that a Parliamentarian’s privileges were interfered with. No such measures have been announced.
At the time of writing, it is unclear as to whether further instructions have been issued to State agencies involved in conducting the election. Commentators have noted that this issue could be a ‘test case’ on the issue of separation of powers between the Executive, Legislature and the Judiciary.
As such, the uncertainty over the Local Government elections continues. This was also raised by EC Chairman Nimal Punchihewa who said that it was ‘unlikely’ the Secretary to the Ministry of Finance would be in a position to release all funds required to conduct the poll as planned on April 25.
“We as the EC, the constitutionally mandated authority to conduct elections on time are ready to put our views to the Supreme Court if and when the SJB moves the court to take further action in respect of the Treasury’s inability to adhere to the Supreme Court Interim Order,” Punchihewa said.
The EC would also meet this week to discuss the next course of action. EC Chairman Punchihewa said there was no legal impediment to announce yet another date to hold Local Government elections in the event of the Commission’s inability to conduct the election on April 25 as scheduled.
In a related development, the United States Ambassador to Sri Lanka Julie Chung also described the Local Government elections as being ‘critical’ to Sri Lanka. This was when she addressed the 2023 National Law Conference organised by the Bar Association of Sri Lanka in Colombo this week.
“The country’s proud history of free elections…give citizens the ability to advocate directly to the Government in partnership with civil society organisations, through qualified legal representation in an independent judiciary. That is why the Local Government elections are so critical,” Chung said.
These controversial developments over the course of last week suggest that both the Government and the Opposition have not deviated from their positions regarding the Local Government election. The Government wants the economy to take priority, the Opposition demands elections first.
If indeed Local Government elections are to be held on April 25, postal voting should commence and conclude very soon. Whether this eventuates or not will be a pointer as to the conduct of the polls. What is almost certain is that the next episode in this saga will be in the halls of the Supreme Court.
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