Sri Lanka’s main opposition Samagi Jana Balawegaya ruled out joining an interim administration ahead of parliament sittings this week and dicussions are expected between a breakaway group of the ruling coalition and President Gotabaya Rajapaksa today, political sources said.

This week the parliament is likely to be the battleground for the Deputy Speakers post after Ranjith Siyambalapitiya resigned over the weekend.

Opposition leader Sajith Premadasa ruled out joining an interim administration with President Gotabaya Rajapaksa.

“We not want to join an interim administration with rogues. We do not want to betray the protestors,” Premadasa told a May Day rally in Colombo.

“We only want to form a government with a people’s mandate.”

President Gotabaya Rajapaksa has called a meeting of a breakway group and his remaining Sri Lanka Podujana Party for May 02, SLPP general secretary Sagara Kariywasam was quoted as saying in Lankadeepa newspaper.

Sri Lanka Freedom Party General Secretary Dayasiri Jayasekera said his party would join all parties in an interim administration.

Breakway group of 40 member Wimal Weerawansa critized Premadasa on May Day for not joining an all party administration placing doubts over any moves for a planned no-confidence motion against the Prime Minister.

The opposition SJB has said it was planning both a no-confidence motion against the PM and an impeachment against President Rajapaksa though political analysts have cast doubt on the success of such moves.

There could also be a no confidence motion filed soon by the Tamil National Alliance against President Gotabaya Rajapaksa, which has no constitutional effect but may show the confidence he commands in the parliament.

Separately Prime Minister Mahinda Rajapaksa was quoted in Sri Lanka’s Island newspaper as saying he was willing to support fresh political moves made by President Gotabaya Rajapaksa.

SJB member Harin Fernando said last week that a no-confidence motion would expose those sitting on the fence.

Sri Lanka parliament’s Deputy Speaker Ranjith Siyambalapitiya resigned his position for a second time over the weekend.

If the position is contested in parliament it may test the Prime Minister Rajapaksa’s majority in parliament when the house sits on May 04.

The opposition camp is likely to field Anura Yapa for the position and Dilan Perera from the government political sources said. (Colombo/May02/2022)
https://economynext.com/sri-lanka-parliament-set-for-battles-this-week-as-main-opposition-rules-out-interim-deal-93748/

– Sri Lanka is discussing with China on how to proceed with debt following a suspension of payments as they are seen to be unwilling to re-structure debt as required under International Monetary Fund agreement, Media Minister Nalaka Godahewa said.

“The Chinese have said they will give a new loan to settle the debts. For us it is not a problem, but we do not know what the West would say,” Minister Godahewa told Colombo based foreign correspondents.

“They say you cannot have a different methodology for Chinese loans. Otherwise the principle is the same (extending the tenor)

“The Chinese are not yet as I understand it are not willing to re-structure the debt. They have done it for some countries under very special relationships.

“We are talking. The Prime Minister (of Sri Lanka) spoke the Chinese Prime Minister a few days ago. We We are pursuing.”

Chinese loans to Sri Lanka were around 10 percent of total debt and a key problem was sovereign bonds, Godahewa said.

When Sri Lanka’s economists printed money under flexible inflation targeting/output gap targeting (stimulus) despite operating a third rate pegged regime (flexible exchange rate) and created forex shortages China gave cut rate loans.

During the 2018 outpgap targeting crisis, China gave an 8 -year loan at around 5.35 percent with 3-year grace beating all commercial lenders.

Recent debt restructuring discussions in Zambia were delayed over the treatment of Chinese loans.

Sri Lanka also borrowed heavily through international sovereign bond including through an active liability management law after triggering forex shortages through output gap targeting.

In 2020 an extreme form of output gap targeting exercise was launched by the country’s economists triggering the worst currency collapse in living memory and social interest.

Now the country is scrambling for ‘bridging finance’ for import consumption while simultaneously seeking haircuts with the broken peg still creating forex shortages.

report in ECONOMYNEXT, May 2, 2022
https://economynext.com/sri-lanka-in-discussions-with-china-over-debt-treatment-93738/