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22nd April 2001
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As the country celebrated the New Year and Easter, 
government dropped a bombshell on Sunday night 
by announcing another fuel price hike. This filling station
employee hurriedly pasted the new price tag which 

would have given motorists a jolt on the first 
working day of the New Year. 
Pic by Iresha Waduge

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Mirrror Magazine

Huge arms build-up by Tiger rebels

Friday's gun battles between the Navy and Sea Tigers in the deep seas off Mullaitivu have confirmed Government fears about a massive LTTE arms build up.

The LTTE logistics convoy, which Navy's Fast Attack Craft intercepted some 32 nautical miles off the North Eastern shores, has been transferring a shipload of ammunition. It had been loaded on to LTTE boats from a ship that lay anchored in international waters only a hundred miles from the coast.

Initial suspicions that the three boatloads Navy destroyed, and the one bombed by an SLAF MIG 27 centred on whether it was explosives, artillery shells or ammunition.

But confirmation that it was a shipload of ammunition came after Navy officials in Trincomalee interrogated a few of the LTTE suspects they captured. The Navy captured nine of them. Barring one who was at the Military Hospital in Palaly, the eight were at the Navy's Eastern Area Headquarters in Trincomalee. They were handed over to a state intelligence agency yesterday.

The Navy yesterday handed over three bodies of guerrillas to the ICRC to be handed over to the LTTE. The bodies were collected during confrontation in the high seas where the Navy captured nine guerrillas.

See Situation Report

Oversized VIP team swells

The giant team of cabinet ministers and deputies is to be further enlarged with the appointment of five new deputy ministers soon, political sources said.

This means Sri Lanka will have one of the biggest cabinets in the world with 46 ministers and 41 deputy ministers at a time when the government is calling for cost cutting and belt tightening.

The Deputy Ministers to be appointed are the MEP's Bandula Gunawardena, along with the PA's Athula Nimalasiri Jayasinghe and Dilan Perera. They will be joined by two new deputy ministers from the NUA and the CWC, in line with a pledge given to them by President Kumaratunga on the eve of a crucial vote on the Budget recently.

The NUA's nominee is likely to be U.L.M. Mohideen and the CWC's Muttu Sivalingam.

A deputy minister gets a salary of Rs. 28,000 in addition to a variety of perks and privileges. 

The main opposition UNP recently fired off a statement, accusing the government of further increasing fuel prices to maintain an extra-large team of ministers and deputy ministers.

Ranil faces revolt

Opposition UNP leader Ranil Wickremesinghe is facing a revolt in his own ranks with an influential section wanting him to step down.

The main criticism against him is for reportedly blocking moves to defeat the Government when the final vote on the budget was taken on April 11. It was passed with 116 MPs voting in favour and 107 against. UNPers who had sought the help of opposition MPs to bring about a defeat say Mr. Wickremesinghe did not support the move.

But Mr. Wickremesinghe's supporters say the UNP leader disapproved the move since that might have led to a dissolution of Parliament. Though the Constitution debars a dissolution of Parliament till one year after General Elections, it empowers the President to do so on matters relating to fiscal issues. Mr. Wickremesinghe who was in Norway, The Sunday Times learns , was warned about moves against him by Speaker Anura Bandaranaike through a telephone call. Mr. Wickremesinghe who returned to Colombo yesterday afternoon directed his staff to arrange for a string of meetings with MPs described as loyal to him. Last night, messages were being sent out to at least 36 MPs, for meetings with Mr. Wickremesinghe. They have been asked to come in batches of five at a time.

Meanwhile, another group of MPs is on a campaign to collect signatures to summon an emergency meeting of the UNP Parliamentary Group. They would require the signatures of more than half of the 89 UNP members in Parliament to have the meeting summoned. The purpose is to ask Mr. Wickremesinghe to step down.

Another criticism levelled against Mr. Wickremesinghe relates to his private secretary Sugath Chandrasekera, a one time police officer and bodyguard, who retired to join Mr. Wickremesinghe's staff. They allege that Mr. Chandrasekera, a new comer to the party, was blocking free access to the UNP leader. They are demanding disciplinary action against him. 

Asked for his comments, UNP deputy leader Karu Jayasuriya, said he did not wish to say anything. Political analysts believe the crisis might come to the fore when the UNP Parliamentary Group meets on May 10. 

See also Political Column 

Marie in NY for eye surgery

Marie Colvin, the award-winning London Sunday Times foreign correspondent who was wounded by shrapnel during fighting between Tamil Tiger rebels and government forces in Sri Lanka on Monday, has been flown to New York for surgery on an injured eye. 

Ms. Colvin, 45, arrived early on Friday morning at the Edward S Harkness Eye Institute at Columbia University Hospital. She will be under the care of Dr. Stanley Chang, one of the world's leading eye surgeons, a report from US said. Doctors in Sri Lanka allowed Ms. Colvin to leave Colombo on Thursday after she made a rapid recovery from a chest injury that resulted in a bruised lung. However, a piece of shrapnel remains embedded in her left eye. Her chances of recovering vision in that eye will not be known until after Dr. Chang operates early next week, it said. 

IMF package to boost economy

By Feizal Samath
The IMF and other donors are providing Sri Lanka a total of US$ 520 million under a comprehensive financial package aimed at shoring up the country's dwindling foreign reserves and boosting economic growth, government economists said yesterday.

The package, approved by the executive board of the International Monetary Fund at its meeting on Friday in Washington, is made up of a US $253 million stand by credit facility from the Fund plus US $ 270 million from other donors including the World Bank, the Asian Development Bank, the United States and Japan. "The quantum of US $ 270 million of donor support is in addition to current funding arrangements by donor institutions and individual countries," Central Bank's Economic Research Director Dr A.G. Karunasena said.

He said the IMF decision was like a "clean bill of health" to the economy and should encourage and improve private sector foreign investment flows into the country while raising foreign investment in the depressed stockmarket. "Usually when the IMF announces a package like this, it is a kind of a signal to others (donors and private investors) that the fund is endorsing the country's economic policies."

Economists said the weekend package was welcome relief to a country that had been struggling through a foreign exchange crisis since early 2000, precipitated by a rising war budget, high oil costs and a reduction in export proceeds. "As a result (of the crisis), gross official reserves dropped to less than 1.5 months of imports," the IMF said in a separate statement on the new funding arrangement.

Sri Lanka has been negotiating for a quick credit facility, in addition to a more long-term Poverty Reduction and Growth Facility (PRGF), with the IMF to tide over an immediate economic crisis. PRGF negotiations have been going on since last year while the stand-by credit facility was a newer development. The IMF stand-by credit will enable Sri Lanka to draw US$ 131 million immediately and the rest in three tranches spread across a 14-month period. Officials said portions of the other funds totalling US$ 270 m would also be drawn immediately and during the rest of the year.

This is the first IMF facility for Sri Lanka since 1991 when the government entered into a four-year Enhanced Structural Adjustment Facility (ESAF) as macro economic support. That programme ended abruptly before its scheduled end in September 1995. Economists said the fund was unhappy with economic management at that time and withdrew support. Since then the government has not negotiated a Fund facility until it began talks with the IMF last year on the PRGF, which has replaced the old ESAF programme. Central Bank officials said the PRGF was a longer three to five year programme in which funds between US$ 500 million and US$ 700 million could be obtained.

"We are hoping to get that facility by around May next year. The government has already provided a poverty alleviation programme to donors at the last development forum meeting in Paris, on which basis the PRGF would be provided," Dr. Karunasena said. The IMF, in its statement, said there was an urgent need by the government to accelerate privatization, strengthen the integrity of the banking sector and improve public administration, the financial position of public enterprises and the labour market.

The government in its economic management programme submitted to the IMF has said it planned to trim the budget deficit to 8.5 percent of GDP this year and to 6 percent of GDP next year in a bid to cut expenses through lower defence spending, civil service wage constraints, a freeze on new employment and strict controls on expenditure. Economists said the tight fiscal policies of the government left little manoeuvrability for the state in the case of rising crude oil prices or a sudden expansion of the defence budget. "If prices rise externally, the government would be forced to pass it onto the consumer under these tight measures without carrying part of the burden," one economist said.


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