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Sri Lanka: IMF presses new government to implement austerity

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Sri Lanka: IMF presses new government to implement austerity


By Saman Gunadasa 
25 February 2020

An International Monetary Fund (IMF) team reviewed the economic policies of the new Sri Lankan government of President Gotabhaya Rajapakse government and issued a cautionary statement requiring compliance with its drastic austerity measures.

In the statement of February 7, the IMF mission head for Sri Lanka, Manuela Goretti, pointed to Sri Lanka’s repeated breaches of the prescribed fiscal deficit targets, risks associated with mounting foreign and domestic debts and, in veiled language, criticised the government’s tax cuts.

“Given the high level of public debt and refinancing needs in the country, ensuring macroeconomic stability called for fiscal consolidation, prudent monetary policy, and sustained efforts to build international reserves,” Goretti stated. She called for the implementation of “ambitious structural and institutional reforms” including the privatization and commercialization of state-owned bodies.

The so-called “prudent monetary policy” means keeping to the IMF’s fiscal target. The previous government of President Maithripala Sirisena and Ranil Wickremesinghe obtained a bailout loan amounting to $US1.5 billion in June 2016 and promised gradual reduction of the fiscal deficit to 3.5 percent of gross domestic product (GDP) in 2019. This was later extended to 2020.

The government adhered to the IMF’s demands by slashing price subsidies and imposing taxes on essentials, driving up prices which severely affected the living conditions of workers and the poor. This triggered a wave of strikes and protests.

However, the fiscal deficit still shot up to 6.3 percent of GDP in 2019 and the projected rise in 2020 is 7.9 percent, more than double the IMF target. Goretti blamed this year’s increase on “newly implemented tax cuts and exemptions”, other accumulated expenditure and the “low mobilization of revenue.”

The IMF official also said the “Net International Reserves fell short of the end-December target” for 2019 “by about $100 million amid market pressures after the presidential elections and announced tax cuts by the new government.”

The Rajapakse government is desperately trying to patch up the ailing economy, which registered just 2.6 percent growth in 2019—the lowest since 2002. Responding to a section of big business, the government declared the need for “a stimulation program,” by reducing the value added tax (VAT), and corporate and income tax. These taxes had been implemented under IMF-proposed amendments to the Inland Revenue Act. The revenue loss to the government due to tax cuts has been estimated at 500-800 billion rupees by the treasury.

Only big business was benefitted from the VAT reduction and other tax concessions. While it is usually not opposed to concessions to big business, the IMF wants to tighten the screws, as happened during the crisis in Greece, to squeeze the masses for the repayment of loans to international banks.

The IMF statement declared: “Given risks to debt sustainability and large refinancing needs over the medium term, renewed efforts to advance fiscal consolidation will be essential.” It called for greater “efficiency in the public administration,” which will mean job losses, and greater “revenue mobilization,” which means high tax collection.

According to the IMF, Sri Lanka’s estimated foreign debt will reach a staggering 64 percent of the GDP this year, while public debt will exceed 91 percent. According to the Central Bank, the government will have to pay $4.8 billion to service its external debt this year, and on average, $5 billion a year over the next four years. Repayments on private sector debt will be another $1.2 billion.

Significantly, the IMF did not mention the final installment of its existing loan amounting to $145 million. At the end of 2018, the IMF withheld the sixth installment of its loan when President Sirisena attempted to remove then-Prime Minister Wickremesinghe. The installment was only released in November last year. Though the final amount is small, the government depends on the approval of international institutions like the IMF to raise more loans on the global money market.

As the IMF team discussion concluded, Prime Minister Mahinda Rajapakse told parliament on February 5 that the fiscal deficit would be reduced to four percent this year, indicating the government will bow to IMF demands.

Central Bank governor, W.D. Lakshman, told a conference of the Ceylon Chamber of Commerce on February 10 that “there are difficult decisions that ought to be made by the political leadership.” He declared that “the IMF should not be treated as an enemy” and called on the government to seek another IMF program.

The cash-strapped government is also looking for a delay in the repayment of foreign loans. During his visit to New Delhi early this month, Mahinda Rajapakse asked India for a three-year moratorium on loan repayments. He told the Hindu: “If the Indian government takes this step, then other governments might agree to do the same thing, including China.” Sri Lanka has loans amounting to $6 billion from China.

In line with IMF demands, the government has already called on the private sector to invest in the government-owned production facilities such as the graphite mine in Kahatagaha. Industry and Commerce Minister Wimal Weerawansa told the media on February 10, that inactive SOEs such as the Eastern Valaichchenai Paper Mills, North Saltern and Ceylon Ceramic Corporation factory at Oddusudan are being “revived” as Public Private Partnerships (PPP). “Revival” will mean savage cost-cutting.

Facing a desperate financial crisis, the government sought parliamentary approval last week to lift the debt ceiling from 721 to 1,088 billion rupees. It also requested a 367 billion rupees supplementary budget for urgent expenditure, blaming the previous government for its economic woes. However, it had to withdraw these requests last week at the last minute when the opposition United National Party rejected the proposals.

President Rajapakse is planning to dissolve parliament in the first week of March and hold a general election at the end of April. He is aiming at winning a two-thirds parliamentary majority to change the constitution and strengthen the president’s authoritarian powers. The extra money was in part to fund programs to win votes.

The IMF in its review predicted that Sri Lanka’s growth rate would rise this year and could reach 3.5 percent. However, economic commentators are pessimistic, warning of a deepening crisis amid the global downturn and geopolitical tensions. Sunday Timescolumnist Nimal Sanderatne warned on February 9: “Once again the Sri Lankan economy is facing severe external shocks.”

The IMF austerity program and worsening economic crisis will translate into major attacks on workers and the poor, setting the stage for a resumption and escalation of sharp class struggles in Sri Lanka as part of the growing global upsurge.

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நடக்கும் ஆட்சியில் பல பல இலவசங்கள், எல்லோருக்கும் வேலை வாய்ப்புக்கள் என அடுக்கடுக்காக உறுதிமொழிகள். இதில் எங்கே austerity சாத்தியம்? 

மாறாக, அமேரிக்கா மற்றும் ஐரோப்பிய ஒன்றியம் quantitive easing போன்று தான் சாத்தியம். 

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15 hours ago, ampanai said:

நடக்கும் ஆட்சியில் பல பல இலவசங்கள், எல்லோருக்கும் வேலை வாய்ப்புக்கள் என அடுக்கடுக்காக உறுதிமொழிகள். இதில் எங்கே austerity சாத்தியம்? 

மாறாக, அமேரிக்கா மற்றும் ஐரோப்பிய ஒன்றியம் quantitive easing போன்று தான் சாத்தியம். 

QE என்றால் அரசாங்கம் சும்மா காசை பிரதி எடுத்து தள்ளுவது என்று அர்த்தம்.  அதனால் காசின் பெறுமதி இன்னும் குறையும்.  

சிங்கள தொழிலாள வர்க்கம் பெருமளவில் பாதிக்கப்படும்.  மற்றும் கல்வி தொழிலும் தனியார் மயமாக்க இரகசிய திட்டங்கள் நடை பெறுகிறது.

இலவச சலுகைகள் அடுத்த தேர்தல் மட்டுமே.  அதிகாரம் முற்றும் கைக்கு வந்த பின் தான் சிக்கன திட்டங்கள் வெளிவரும்.

கடனிலும் பார்க்க வட்டி குட்டி போட்டு கண் பிதுங்கி போய் உள்ளது அரசாங்கம்.

கவனிக்க:  கோத்தா பதவிக்கு வந்த பின் இராணுவத்தை சிங்கள மக்கள் பகுதிகளுக்குள் அனுப்பினார்.  இப்போது வாகன நெரிசலில் இருந்து காப்பாற்ற தெருக்களிலும் இராணுவத்தை நிறுத்த அலுவல் நடக்கிறது.  Militarization of South in anticipation of revolts is happening.

Study in Sri Lanka?

The Sri Lankan government has announced bold plans to reform the country’s university sector, including giving special status to a select group of private institutions and opening up the country to international branch campuses, in a move that critics say will “escalate the marketization of higher education.”

The policy changes include establishing a “free education investment zone” that will provide tax breaks for international universities setting up overseas outposts, under the condition that their academic staff will also support local universities.

THE%20Logo%20%282016%29_3_0_0.jpgHowever, student places at these campuses would be reserved for “overseas students and nonresident Sri Lankan students who are able to pay in foreign currency,” with students in other parts of South and East Asia the main targets, the government said. Just 5 percent of Sri Lankan students would be offered scholarships to study there.

A 700-acre area in Horana, near the capital of Colombo, has already been identified for this zone, but progress has stalled because of public protests.

The government has also pledged to increase student places in existing institutions by 7,500, or 25 percent, and convert several higher education institutes into universities. Less than 20 percent of students who qualify for university attend due to a cap on places. However, the government said that it would not provide any additional funding for either of these policies.

The country also proposes to grant some private, not-for-profit institutions, which do not have full degree-awarding powers, “chartered university status.” Five institutions have already been recommended for this, which would require any degree programs offered to be approved by the University Grants Commission and for the governing board to include the secretary of higher education as a member.

Harshana Rambukwella, director of the Postgraduate Institute of English at the Open University of Sri Lanka, said that successive governments had tried to implement similar changes but the current administration, formed in November, was more likely to succeed.

He added that “the marketization and privatization of higher education” in Sri Lanka had been ongoing for 20 years, but this was “likely to accelerate and progress much more aggressively” under the proposals.

“The changes that are proposed represent a fundamental reorientation of higher education in the country, where it will essentially be determined by market forces,” he said.

However, Rambukwella questioned whether the country would be able to attract international universities and students and said that he was concerned that the quality of higher education in Sri Lanka would diminish “quite severely,” given that the government will provide only “minimal investment” for the new policies.

“All of this has been packaged as broadening access to higher education in Sri Lanka, but in reality the establishment of a free education zone will achieve nothing of the sort, because it’s not going to cater to local demand,” he added.

John Rogers, director of the Colombo-based American Institute for Sri Lankan Studies, was also “skeptical” of whether Sri Lanka’s branch campus model could “deliver the standards and compete with the Gulf and Malaysia.”

He added that the proposal to grant chartered status to private institutions that charge tuition fees was likely to face “intense political opposition."

“At the moment, fully fledged universities under the UGC can’t charge fees for undergraduate courses … although the political opposition will assume that that is the ultimate aim of the government, because the government wants to increase the number of undergraduates by 25 percent and not spend any more money,” he said.

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Over 200,000 teachers strike in Sri Lanka


By our correspondents 
29 February 2020

More than 200,000 public school teachers and principals across Sri Lanka held a one-day strike on Wednesday to demand a resolution to long-standing salary issues, improved working conditions and an end to government attacks on free education.

Part of the teachers protest march

The strike, which was called by an alliance of unions, including the Ceylon Teachers Service Union (CTSU), which is controlled by the Janatha Vimukthi Peramuna (JVP), and the Ceylon Teachers Union (CTU), was an attempt to dissipate rising anger among teachers.

At a February 14 protest rally in Colombo, teacher union officials demagogically promised to call indefinite strike action but instead limited Wednesday’s walkout to a one-day sick-leave campaign. Tied to the capitalist state, the unions are hostile to any mobilisation of teachers or other workers in a political struggle against the government.

Wednesday’s strike was the largest industrial action in Sri Lanka since President Gotabhaya Rajapakse came to power in November and indicates seething opposition to the ongoing social attacks on workers by consecutive Sri Lankan governments. Over the last three months, strikes have erupted in the plantations and at the state-owned Kahatagaha mine. Over 15,000 workers sacked by the Rajapakse government are also maintaining an ongoing protest in Colombo near the Presidential Secretariat to demand reinstatement.

The political establishment has responded to the strikes by promoting Sinhala chauvinism against Tamils and Muslims in an attempt to divide workers. Running parallel with this communalist propaganda, the Tamil parties have stepped up their nationalist rhetoric.

Despite this, about 90 percent of public school teachers across the ethnic divide actively participated in Wednesday’s stoppage. Almost all public schools in the war-ravaged North and East, the central plantation districts and other parts in the country were shut down. About 3,000 teachers from all districts of the island held a protest march and rally outside the education ministry in Colombo.

Hundreds of police officers armed with tear gas, batons and water cannon were mobilised ready to attack the protesting educators. Police manhandled teachers when they attempted to remove barriers blocking the entrance to the education ministry. In Jaffna, the northern provincial capital, hundreds of teachers protested and in Vavuniya students and parents joined the teachers’ demonstrations.

Teachers protest in Jaffna

The teachers’ struggle in Sri Lanka is part of an international resurgence of the working class. Hundreds of thousands of teachers in the US, Canada, France, Poland, Argentina and India have taken strike action since 2018 in defence of free education and for decent wages and living conditions.

Last year, Sri Lankan teachers conducted a series of struggles, including a two-day strike in September. The teacher unions, however, called off the scheduled five-day strike in September after two days, accepting a bogus promise by the previous government that it would pay an interim allowance, starting in January this year.

The unions did everything to sabotage this week’s industrial action and doing nothing to mobilise teachers. In some schools the unions did not even inform teachers about the walkout and protest. While a majority of educators in Sri Lanka do not belong to the unions out of disgust with their betrayals, many teachers participated in Wednesday’s walkout.

Previous demands also included and increase in government spending on public education to 6 percent of gross domestic product, restoration of the 2016 pensions scheme and an end to ongoing increases in non-teaching duties.

Teachers protest march

Desperate to avoid any confrontation with the government, the union alliance abandoned these and several other demands, limiting Wednesday’s strike to an appeal to the government to pay the previously promised interim allowance.

When the Rajapakse government came to power, the new education minister, Dulles Alahapperuma, initially promised to pay the allowance but then backtracked. On Wednesday, he told the media that although the government supported payment of the interim allowance, teachers would have to wait until the next government is formed and a new budget presented.

President Rajapakse is planning to dissolve parliament next week and hold a new general election. He hopes that the Sri Lanka Podujana Peramuna (SLPP), which is led by his brother Prime Minister Mahinda Rajapakse, will win a two-thirds parliamentary majority. The cash-strapped Rajapakse regime is determined to impose the burden of the country’s deepening economic crisis on Sri Lankan workers and the rural masses.

Addressing the protesting teachers on Wednesday, CTSU secretary Mahinda Jayasinghe repeatedly declared that the trade unions had “never betrayed” any teachers’ struggles. Another nervous union bureaucrat demagogically declared, that the unions would no longer be a “messenger” for the education minister’s “bogus promises.”

Hostile to the union leadership, some protesters shouted, “Enough of talks, what’s the next action?” A group of teachers also rushed to the education ministry gate shouting: “We need a final answer. We can’t go back without solution. We’re tired of bogus talks. Let’s move for an indefinite strike.”

CTU leader Joseph Stalin claimed that although an education ministry official had been sent for talks, “We are not ready for a discussion and will call a five-day strike from the 23rd of next month.”

Many teachers disbelieved Stalin’s claims, shouting “It’s too late.” Several called out that they were “ready to strike, starting tomorrow.” Sensing that things could get out of control, the union leaders quickly called off the protest but many protesters did not leave the area.

When one teacher questioned union officials and demanded to know why they were delaying the strike for a month, CTSU secretary Jayasinghe rushed towards him, declaring, “We take this decision with the agreement of all the trade unions. If you don’t agree with that then leave the union.”

Jayasinghe’s threatening response exposes the anti-democratic nature of the unions. In a face-saving move, teacher union officials then declared that they would call a strike on March 16.

A despicable role is also being played by the Joint Teacher Services Union (JTSU), which is led by the fake-left Frontline Socialist Party. It held a separate protest stunt involving about 100 of its members in the same area prior to the CTU and CTSU mobilisation. The JTSU protesters attempted to enter the ministry premises but were blocked by the police.

Police confront striking teachers outside education ministry in Colombo

The JTSU bureaucrats criticise the other teacher unions for accepting the previous government’s interim allowance and the education department’s moves to turn the sector into a “closed service.” However, the organisation presents no genuine alternative and insist that more protests will force the government to grant teachers’ demands.

The Teachers Group of the Socialist Equality Party (SEP) issued a statement and campaigned among teachers during Wednesday’s protest. The statement pointed out that militant action was insufficient and that teachers needed a political program based on a socialist perspective to win their demands.

The SEP teachers’ group statement said: “There is a firm determination among teachers to fight for the right to free education, adequate wages and the facilities needed to provide a quality education for students.

“Mere determination, however, is not enough. It is essential to clearly identify the real challenges facing teachers, to develop a strategy to overcome them, and to build up new organisational forms in order to carry out that strategy.

The Rajapakse government, the statement warned, was planning to cut the budget deficit by half this year and had already started to gut free education and slash healthcare, jobs and wages.

The statement explained that the “fundamental barrier” confronting teachers was the reactionary role being played by the trade unions. It pointed out that the deepening economic crisis of Sri Lankan capitalism was part of the global crisis of capitalism crisis.

The SEP teachers’ group statement called on teachers to break from the unions, which are tied to the capitalist system, and build independent action committees to rally the support of all teachers, as well as parents and students, in unity with other workers in Sri Lanka and internationally in the fight for a socialist program.

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    • மஹிந்த ராஜபக்ஷவே மீண்டும் பிரதமராக வர அதிகம் வாய்ப்புள்ளதாக முன்னாள் நாடாளுமன்ற உறுப்பினர் தர்மலிங்கம் சித்தார்த்தன் தெரிவித்தார். மன்னாரில் இன்று (09) இடம்பெற்ற நிகழ்வில் இதனை தெரிவித்தார். மேலும், “இம்முறை தேர்தலில் மிக பெரும்பான்மையாக மஹிந்த தரப்பினர் வருவார்கள். மூன்றில் இரண்டு பெறும்பான்மையைப் பற்றிக் கதைத்தாலும் அவர்களுக்கு 120 – 130 வரையான ஆசனங்கள் கிடைக்கும் என நம்புகின்றார்கள். இருந்தாலும் அவர்கள் அரசியல் அமைப்பின் 19வது திருத்ததை இல்லாமல் செய்வதுடன், அவர்களின் கட்சியில் உள்ள விமல் வீரவன்ச, உதய கம்மன்பில போன்றவர்கள் 13ம் திருத்தச் சட்டத்தையும் இல்லாமல் ஆக்கும் நோக்கத்துடன் இருப்பவர்கள். ஆனாலும், இந்தியா ஒரு போதும் இதற்கு அனுமதிக்காது. இப்படியான சூழலில் தமிழ் பிரதிநிதித்துவத்தை குறைத்துவிட வேண்டும் என்ற நோக்கில் பல கட்சிகள் வடக்கு கிழக்கில் இறக்கிவிடப்பட்டுள்ளார்கள். அரசாங்கத்தைச் சேர்ந்த கட்சிகளே பல கட்சிகளாக தேர்தலில் வாக்குக் கேட்கின்றார்கள்.” – என்றார். https://newuthayan.com/பிரதமராகும்-வாய்ப்பு-ம/
    • இவர்கள் தமிழின விரோத இந்தியாவின் கைக்கூலிகளாகாவே அறிக்கைகளை விடுகிறார்கள்!
    • வேற்றுச்சேனை கிராமம் மட்டக்களப்பு மாவட்டத்தின் போரதீவுப்பற்று பிரதேச செயலாளர் பிரிவில் உள்ளது. அங்கு வாழும் குடும்பங்கள் அனைத்தும் இந்து மதத்தினர். இங்கு இருக்கும் சக்திவாய்ந்த. அக்கோயிலுக்கு ஒரு நிலையான கட்டடம் இல்லை. இரண்டு உயரமான வேல்கள் உயரமான சீமெந்தினால் கட்டப்பட்ட மேடையில் நிலைக்குத்தாக நிறுத்தப்பட்டுள்ளன. இந்த நிலையில் அண்மையில் திடுதிப்பென்று வாகனங்களில் பௌத்த தேரர்கள் வந்தார்கள. இக்கோயிலும் அதைச் சூழவுள்ள காணியும் பௌத்த பீடத்திற்கு சொந்தமானவை எனக் கூறினார்கள். இந்த சம்பவம் தொடர்பில் அந்த ஊரைச் சேர்ந்தவர்கள் விபரித்துக் கூறினர். இந்தக் கோயில் ஒரு புராதன கோயில். எங்களது ஊர் வளர்ச்சியைக் காணாத ஒரு ஊர். ஒரு ஆரம்பப் பாடசாலை கூட இல்லை. இந்த கோயில்களும் அதன் தெய்வங்களுமே எமக்குத் துணை. ஆண்டாண்டு காலமாக நாங்கள் வழிபாடு நடத்துகிறோம். வேளாண்மை அறுவடை முடிந்த பின் ஒரு பொங்கல் வைத்து வைரவரை வழிபடுவோம்.அது ஒரு விழா. அதற்கென குறிப்பிட்ட நாள் இருக்கிறது. அது ஆனி மாதத்தில் வரும் பூரணையாகும். வழக்கம் போல அன்றும் பூசை நடந்தது. திடுதிப்பென்று வாகனங்களில் பௌத்த தேரர்கள் வந்தார்கள. இக்கோயிலும் அதைச் சூழவுள்ள காணியும் பௌத்த பீடத்திற்கு சொந்தமானவை எனக் கூறினார்கள். நாங்கள் எங்களது கோயிலின் வரலாற்றைக் கூறினோம். தமிழ்த் தேசிய கூட்டமைப்பு அபேட்சகர் சாணக்கியனும் அங்கு வந்து விட்டார் அவர் நிலைமைகளை விபரித்தார். எமது கிராமத்தவர்கள் ஒன்றுதிரண்டு எங்களது எதிர்ப்பைத் தெரிவித்ததும் அவர்கள் திரும்பிச் சென்று விட்டனர். இதையடுத்து இக்கோயிலின் முன்னோடிகள் வெல்லாவெளி பொலிஸாரால் களவாஞ்சிகுடி நீதிமன்றத்தில் இனிமேல் இவ்விடயங்களில் தலையிடக் கூடாதென சிலருக்கு எதிராக தடையுத்தரவு பெறப்பட்டிருப்பதாக அறிய முடிந்தது. இது பற்றி மட்டக்களப்பு மங்களராமய விகாராதிபதி வண.சுமனரத்ன தேரரைச் சநதித்து உண்மை நிலையை அறிய வினவிய போது அவர், “வெல்லாவெளி வேத்துச்சேனை கிராமத்தில் நடந்தேறிய விடயத்திற்கும் தனக்கும் எதுவித தொடர்பும் இல்லை என்றார். “பௌத்த மதத்தின் புராதன சின்னங்கள் இருந்தால் அதனை எப்படி அணுக வேண்டும் என்ற செயற்பாடுகள் பௌத்த துறவிகளுக்குத் தெரியாததல்ல. இப்படியான போலி நடவடிக்கைகளை யாருமே அனுமதிக்க முடியாது. நான் இவ்விடயத்தைக் கேள்விப்பட்டு பக்கத்தில் இருக்கும் சின்னவத்தை விகாராதிபதியோடு தொலைபேசியில் தொடர்பு கோண்டேன். சம்பவம் பற்றி விசாரித்தேன். அவரும் எனது நிலையிலேயே ஒன்றும் அறியாதவராக இருந்தார். ஆகையால் என்ன நடைபெறுகிறதென்று பார்ப்பதற்காக ஸ்தலத்திற்குச் சென்றேன். புதையல் தோண்டுபவர்களின் போலி நாடகமாக அது இருக்கலாம் என்ற சந்தேகம் எனக்கு அப்போதே தோன்றி விட்டது. ஆயினும் பொலிஸார் தலையிட்டிருந்ததால் அவற்றுள் நான் தலையிட விரும்பவில்லை. இதனை வேத்துச்சேனை மக்கள் சரியாக புரிந்து கொள்ள வேண்டும். இது எனது கோரிக்கை”. இவ்வாறு கூறினார் மட்டக்களப்பு மங்களராமய விகாராதிபதி வண.சுமனரத்ன தேரர். இதுபற்றி அப்பகுதி பிரதேச சபையின் தவைர் ரஜனி கருத்துத் தெரிவிக்கையில் “இக்கோயில் அமைந்துள்ள இடம் ஒரு பூர்வீகமானது. வேத்துச்சேனையை சேர்ந்த மு.அமுதன் என்பவருக்கு இக்காணி சொந்தமானது. இதற்கான உறுதி அவரிடம் உள்ளது. நடந்த சம்பவம் ஆச்சரியமானது. எனக்கு இவ்விடயத்தில் தலையிடக் கூடாதென நீதிமன்றத்தால் தடையுத்தரவு வழங்கப்பட்டிருக்கிறது. அதனால் இத்தோடு நிறுத்திக் கொள்கிறேன்” என்றார். அங்கு நடந்துள்ள சம்பவம் ஒரு போலி நாடகம் என்றுதான் மக்கள் தெரிவிக்கிறார்கள்.- https://www.ibctamil.com/srilanka/80/146818