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The UNP protest this week against the escalating cost of living 
appears to have triggered an early outbreak of election fever. 

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No probe on Ranil, say Police

Night arrest of wrong woman angers President; UNP says talks will continue sans leader

Acting Police Chief H. M. G. B. Kotakadeniya told The Sunday Times last night there were no investigations into Opposition Leader Ranil Wickremesinghe's alleged links to the LTTE an allegation that provoked a walkout by Mr. Wickremesinghe from Friday's talks aimed at reaching consensus on constitutional reforms.

The UNP said yesterday that until full investigations were completed into Mr. Wickremesinghe's alleged LTTE links and his name was cleared, he would not attend the talks.

The state-run Lake House newspapers have published repeated lead stories alleging that the UNP leader on a recent visit to Singapore held talks with a businessman connected to the LTTE.

The sister-in-law of this businessman identified as Charles Gnanakoon was taken in by the Kollupitiya Police at 11 'o clock at night and kept at the station till 3 the next morning. 

At Friday's talks when Mr. Wickremesinghe raised this matter, it drew a critical remark by President Chandrika Kumaratunga, who said she was against any woman being arrested at night.

Kollupitiya Police took in the wife of Jayantha Gnanakoon for questioning on Thursday night on a front page report published in the state-controlled Daily News which alleged that her brother-in-law Charles Gnanakoon was a "Tiger leader" who is in charge of LTTE shipment of arms and that he had met Mr. Wickremesinghe in Singapore recently, for two hours.

The Sunday Times learns that Jayantha Gnanakoon's wife, a Sinhalese, had been detained at the police station for four hours at the police station where her statement was recorded, and she was later released.

Kollupitiya Chief Inspector C. E. Wedisinghe told The Sunday Times they were actually looking for the wife of Charles Gnanakoon, but had apparently taken in his sister in law.

Asked about the arrest of Jayantha Gnanakoon's wife, the acting IGP said last night that the house of Jayantha Gnanakoon at Kollupitiya was raided on a tip-off that Charles Gnanakoon's wife had come there.

Mr. Wickremesinghe raised the twin matters Ms. Gnanakoon being questioned and the Daily News report accusing him of being in contact with the LTTE leadership at Friday's PA-UNP talks.

Mr. Wickremesinghe has said that Charles Gnanakoon Continued from page 1

was in and out of Sri Lanka and while in Singapore Mr. Gnanakoon had called him and come to see him for a few minutes. 

Mr. Gnanakoon was someone known even to Singapore Prime Minister Goh Chok Tong and if he (Mr. Wickremesinghe) wanted to talk to the LTTE he would do so with Anton Balasingham, the UNP leader told the President.

He then referred to the questioning of Ms. Jayantha Gnanakoon and said that as the police had begun an investigation into his meeting with Mr. Gnanakoon, and until the police found any evidence against Mr. Gnanakoon, he would keep out of the PA-UNP talks.

The President in reply said she was against any woman being taken into police custody at night.

UNP General Secretary Gamini Atukorale told The Sunday Times yesterday Mr. Wickremesinghe would not come for the talks, until he was cleared of all allegations. However, other UNP members would continue the talks.

When the matter was brought up by Mr. Wickremesinghe at Friday's PA-UNP talks, President Kumaratunga reportedly said she was unaware of it. In an apparent bid to calm down Mr. Wickremesinghe she called the Police Chief and sought clarification on the matter but there was no clear answer, Mr. Atukorale said.

Meanwhile, businessman Charles Gnanakoon has sent a letter of demand to Lake House, saying he would take legal action if the newspaper did not withdraw the allegation.

Two others mentioned in the reports, Malik Samrawickrema and Lalin Fernando, have also sent letters of demand to Daily News. Mr. Samarawickrama in his letter of demand has Rs. 200 million as damages.

The walk-out by Mr. Wickremesinghe and the UNP delegation came after the two parties held extensive discussions on two issues the transitional provisions relating to the executive presidency and land policy in the devolution proposals. A committee was appointed to discuss the matter further.

Earlier on Friday the President and other PA leaders held three hours of talks with TULF leaders relating to three key issues the unit of devolution, referendum on the North-East merger and land policy.

The President reportedly told the TULF, she was willing to accommodate their proposed amendments if the UNP also agreed. Responding to this, Mr. Atukorale said the UNP was not willing to change its stand on constitutional reforms to meet the demands of different parties.


Why five for YP?

The government has decided to make an ex-gratia payment of Rs.500,000 to Dulcie de Silva, widow of former parliamentarian, deputy minister Y.P de Silva.

Mr. De Silva, died of natural causes in 1998 and his widow gets the normal pension.

The special payment was approved by the Cabinet and is to be made shortly, Parliamentary Affairs Minister Jeyaraj Fernandopulle said. 

Generally compensation is paid to families of those who die tragically in terrorist attacks or similar incidents.


CBK off to UK

President Chandrika Kumara-tunga yesterday left for Britain on a private visit.

Inflation up; economy steady

By Feizal Samath
The inflation rate this year is likely to almost double to seven to eight percent - due to rising costs of living, but the economy otherwise is balanced and well managed, Central Bank governor A.S. Jayawardena said.

In an interview with The Sunday Times, he said inflation by next December would rise to 10-12 percent on a year-on-year basis. 

Mr. Jayawardena noted that despite higher spending on the war and an escalation in world fuel prices, the economy would grow by 5-to-5.5 percent and still do better than last year when the economic growth was 4.3 percent. "Despite the extraordinary spending situation, due to the war, the government has been able to control expenditure and not resort to runaway spending," Mr. Jayawardena said.

He said the defence costs, according to latest Treasury estimates, were set to rise to 62 billion rupees this year from targeted 52 billion rupees and 49 billion rupees in 1999 while the budget deficit would rise to 8.5 percent from planned 7.6 percent. War costs rose due to increasing fighting particularly in the north where Tamil rebels have stepped up attacks against government forces in April, resulting in a new purchases of fighter aircraft, ships and other hardware.

Rising world oil prices have added to the problems. Local diesel and gas prices have been raised by nearly 40 percent this year while power went up by 10 percent in May. Private sector economists said they believe the government budget is off gear. "We believe economic growth would be down to 4.7 percent this year mainly due to lower construction activity while inflation would reach double digits from single digit levels," an analyst at a local brokerage, who declined to be named, said. He said the main problem was maintaining a reasonable budget deficit. "The government would be compelled to trim capital spending mainly on new roads to accommodate higher defence costs."

Bank Governor Jayawardena said recurrent expenditure was expected to rise by 20 percent to 249 billion rupees from targeted 18 percent or 227 billion rupees. Capital expenditure this year has been trimmed to 90 billion rupees from 103 billion rupees due to higher spending, Mr. Jayawardena said. He said a relief package announced recently to help low-income groups - which analysts say would cost six billion rupees - is expected to be financed essentially through additional revenues from import duties after a four percent depreciation of the Sri Lanka rupee last month.

"This relief package is not an additional burden on the budget. It will solely be financed from additional tax revenue," Mr. Jayawardena said. The governor noted there was no strain on budget revenues despite pressure on spending but analysts said the government was unlikely to get its targeted revenue from the part sale of Sri Lanka Telecom.

The government was hoping to raise US $300 million to US$ 400 million in international markets by selling a stake in Sri Lanka Telecom and use the money to finance the budget deficit and pay off other debts.

"We believe the government has downgraded earnings from this issue to less than US$ 300 million," the brokerage analyst said. Latest reports indicate the government may postpone the issue to early next year in view of adverse international publicity over the war situation.

"The economy could have done so much better if not for the war. We may achieve our 5-5.5 percent economic growth but the potential we have lost due to the war is considerable," Mr. Jayawardena said.


Mahanayakes have no faith in elections

By Shane Seneviratne & J.A.L. Jayasinghe
The Maha Nayakes of the Malwatte and Asgiriya Chapters have rejected the proposed referendum on the merger of the northeast saying they have lost confidence in the manner in which the elections are conducted.

The stinging criticism of the way elections are held was made when Minister G.L. Peiris met the prelates in Kandy at President Kumaratunga's request to seek their views on proposed reforms.

Dr. Peiris told the Mahanayakes the Government wanted to obtain a mandate from the people through a referendum on the merger. But the Ven. Rambukwelle Sri Vipassi Mahanayake Thera of the Malwatte Chapter and Ven. Udugama Sri Buddharakkitha Mahanayake Thera of the Asgiriya Chapter rejected the suggestion saying they had lost faith in elections because of the experiences in the recent past.

The Malwatte Mahanayake said he was opposed to the devolution proposal because he believed they would not be in the best interest of the country, while the Asgiriya Mahanayake said he needed time to closely study the proposals.

Dr. Peiris told the Mahanayakes the Government hoped to introduce the constitutional reforms in Parliament on August 8. But the Mahanayakes told him some 5000 Buddhist monks were expected to gather in Colombo next Friday for a protest on the proposed reforms.

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