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The chaotic scenes outside the Negombo prison on Monday. Pix by M.A.Pushpa KumaraAs Govt grapples with prison riot fallout; debate looms over IMF exitGovt source says investigation will also focus on a political angle, given the high-profile drug-related arrests and corruption crackdownWith IMF deal in final lap, a section of the government argues against fresh agreement, citing freedom to steer the economyEconomist warns of pitfalls in going it alone without IMF, says economy could be in danger if discipline and rigorous reforms are not continued By our ST Political Desk 12-07-26This week saw the National People’s Power (NPP) government jolted out of its sense of complacency following the incidents at the Negombo Prison which left 29 people, including eight prison officials, dead. It’s the worst such incident since the NPP took power in September 2024 and one that has found the government wanting on many fronts. While all the details of what led to the unrest at the prison, which later escalated into a full-blown revolt by the prisoners, are still not clear, the sequence of events shows that loss of lives of this scale could have been avoided had the authorities acted swiftly and called in reinforcements before matters got out of control.The violence began on Sunday afternoon with a clash between two groups, leading to the deaths of two prisoners, with 35 inmates being injured. The clash, according to prison sources, was related to the exposure of a drug trafficking operation within the prison. One group had been engaged in smuggling drugs, mobile phones and other prohibited items into the prison while the other group is said to be made up of informants who tip off authorities on illegal activities taking place inside the prison. While Sunday’s incidents were settled to some extent, matters took a turn for the worse on Monday morning when the prisoners revolted openly and brutally attacked prison officers during breakfast time. Police and Special Task Force (STF) personnel were called in to quell the unrest, and in the ensuing gunfire, around 20 prisoners were killed.The confusion over the evolving situation seems to have left those in government also in the dark going by the comments of Justice Minister Harshana Nanayakkara, under whose purview the Prison Department’s functions fall. He arrived at the scene on Monday morning and, when questioned by reporters, said he only had sketchy details of what was happening and had been unable to check social media for the latest developments, which left many wondering if he, as the minister, had no better sources for ascertaining facts. On Tuesday the minister briefed Parliament on the incidents but said that full details could only be obtained after a full investigation. Preliminary investigations have revealed that what led to the initial unrest was a clash between two groups of prisoners.“One thing that must be emphasised is that this was a clash between two groups and not a clash between prison officers and prisoners. The incidents of Sunday night were resolved, and the matter had been brought to a close, and things were back to normal, but on Monday morning a group of prisoners turned on the prison officers, and they were brutally attacked. Two of the officers were first attacked, and when another group went to assist them, they too were attacked in a brutal manner,” he said.As has been the go-to theory of most in government whenever some unrest takes place, the minister said he believes the group involved had intended to disrupt the ongoing crackdown on drug dealers and underworld operations and particularly steps that have been taken to prevent prison from being used for illegal activities. “Those involved in the violence damaged the CCTV cameras and the security system. This shows they wanted to stop the monitoring within the prison,” he said.A government official said they are investigating if there was a political angle to this incident as well, given that the government is cracking down on high-profile drug dealers as well as against corruption by politicians in past governments. “This could be an attempt to derail our work and cause a wave of prison unrest,” the official said, speaking on condition of anonymity.Following the incident, the main opposition Samagi Jana Balawegaya (SJB) has led calls for Minister Nanayakkara to resign and initiated a No-Confidence Motion (NCM) against him, alleging that he failed to ensure the safety of prison officers and prisoners.On Friday, Opposition and SJB Leader Sajith Premadasa signed the no-confidence motion, which accuses Minister Nanayakkara of failing to fulfil his responsibility regarding the safety of prison officers and inmates who died in the Negombo Prison clash.SJB General Secretary Ranjith Maddumabandara claimed intelligence reports regarding possible unrest within the Negombo prison had been ignored.“Had the authorities acted promptly, the violence would not have escalated to this level, and many lives could have been saved,” he said, adding that the minister in charge of the subject must take responsibility and step down.While the full details of what led to the tragic incidents remain sketchy, the Cabinet approved the appointment of a special committee to conduct a formal and comprehensive inquiry and submit a report outlining its causes, remedial measures and steps to prevent similar occurrences in the future.The committee is to be headed by retired Supreme Court Judge Priyantha Fernando, while retired Additional Solicitor General Milinda Gunathilaka PC and Mohan Weerakoon PC are its other members.Meanwhile, the government will have to address concerns raised by the United Nations as well as international human rights organisations over the treatment of prisoners and their living conditions.Soon after the incidents, the UN Resident Coordinator Marc-André Franche issued a statement in which he underscored the need for better prison conditions.“This tragedy highlights the importance of continued investment in Sri Lanka’s prison system. Overcrowding, outdated practices and poor conditions in places of detention have long been recognised as critical challenges across prison systems in Sri Lanka and worldwide. Sri Lanka’s engagement with international human rights instruments relevant to the treatment, safety, and well-being of persons deprived of their liberty continues to provide a valuable framework in this regard,” the UN Resident Coordinator said.While welcoming the establishment of an independent committee to review the circumstances surrounding the incident and the importance of its findings contributing to concrete and lasting improvements in the conditions of detention facilities, Mr Franche said the UN reaffirms its continued support in this endeavour, including through technical cooperation to strengthen prison safety, improve conditions of detention, and support the wellbeing of correctional personnel.“Prison officials perform demanding and difficult work in service of the State and the public, and their loss is deeply felt. The inmates who died or were injured were under the care and protection of the State. Those who serve the penitentiary system and those held within it deserve greater protection. Ensuring that protection is a fundamental responsibility of the State,” the UN official said in the statement.The Department of Prions has functioned without a commissioner general for over a year now since Thushara Upuldeniya, who held the post, was suspended and later arrested over allegations relating to the release of an inmate from Anuradhapura Prison under the presidential pardon granted for Vesak Poya last year.Since then the post has been held on an acting basis, with the government unable to make a permanent appointment pending the case against Mr Upuldeniaya. While the case against him continues in the Magistrate’s Courts, the Human Rights Commission of Sri Lanka (HRCSL) ruled in April this year that the arrest and suspension of Mr Upuldeniya were not carried out in accordance with proper legal procedures and that his fundamental human rights were, therefore, violated.In its investigation, the Human Rights Commission found that the CID had failed to conduct a proper and adequate inquiry prior to the arrest. It also observed that sufficient and accurate information had not been presented to the Magistrate’s Court.The fact that this important department has remained headless cannot be doing much to strengthen its administration. This is an aspect the committee appointed to look into the Negambo unrest will also have to address.Two years into office, the NPP has made little progress on prison reforms that it promised in its 2024 election manifesto. Some of these pledges included preventing all forms of torture inside prisons, expanding facilities within prisons, including special facilities according to international standards, referral of persons convicted of minor offences to community programmes without incarceration, improving the efficiency of institutions involved in the criminal justice system to avoid prolonged detention as remand prisoners, and paying special attention to the welfare of prisoners and preventing all forms of violence against them in prisons. Tragically, one of the worst cases of prison violence in the country leading to deaths and injuries has resulted under a government that came to ensure system change but now seems very much bogged down in the same systems that have been in place for decades.Fresh talks with IMFMeanwhile, on the economic front, this column reported last week regarding the calls being made for the government to start negotiations with the International Monetary Fund (IMF) regarding a successor programme for the country once the current Extended Fund Facility (EFF) arrangement concludes in March 2027. The IMF has so far disbursed approximately US$2.4 billion to Sri Lanka under its ongoing US$3 billion EFF programme. Sri Lanka’s programme performance will be formally assessed in the context of the Seventh Review of the EFF, expected to take place in September. Foreign Minister Vijitha Herath, however, told the Sunday Times last week that it was “too soon” to speak of a new IMF programme.The Sunday Times also learns that there is a view within sections of the Finance Ministry that Sri Lanka should end its association with IMF programmes once the current EFF arrangement ends. Those advocating moving away from the IMF believe the country is now strong enough to stand on its own and argue that investors will always be reluctant to invest in Sri Lanka when it is subject to an IMF programme. They also claim that the country’s credit rating will remain low among international credit rating agencies when the country is subject to an IMF arrangement and that the government will have little say in the direction it is steering the country’s economy. They also point out that the government’s popularity has taken a serious hit among the public owing to it being unable to provide enough economic relief to the people and that not being subject to an IMF programme will free up the government to provide much needed economic relief to the public. A government source said there is no need to continue with the IMF.A senior economist with extensive experience in macrofiscal policy and international financial institutions, though, noted that the period leading up to the programme’s expiry will be a decisive moment for the country’s economic trajectory. While acknowledging the progress made under the programme, the expert stressed that the country must now begin preparing for the critical decision of whether to continue with IMF engagement or proceed independently.President Anura Kumara Dissanayake has publicly stated that the ongoing IMF programme would be the last such arrangement for Sri Lanka, a position he articulated most prominently at the June 2025 “Sri Lanka’s Road to Recovery: Debt and Governance” conference in Colombo, where he framed it as part of restoring national sovereignty and self-reliance.The expert observed that while it would be ideal for Sri Lanka to move forward without entering another EFF arrangement, such a decision must be grounded in a rigorous assessment of the nation’s capacity to maintain adequate foreign reserves, service existing debt obligations, manage macroeconomic stability, and implement structural reforms aimed at achieving higher and more sustainable economic growth, particularly in the face of domestic and external pressures. The expert emphasised that this assessment must consider both emerging risks and potential future scenarios, rather than relying solely on current conditions. “If these fundamentals are not thoroughly evaluated in emerging and potential contexts before exiting the IMF support, the consequences could once again be extremely dangerous for the country,” he cautioned.Even if the government opts not to pursue a second EFF, the IMF offers several other facilities suited to different circumstances. The Stand-By Arrangement (SBA) provides shorter-term support for balance-of-payments pressures, though its conditionality is comparable in rigour to that of an EFF, while the Precautionary and Liquidity Line (PLL) is designed for countries with broadly sound fundamentals but remaining vulnerabilities. The IMF also maintains other instruments that may be relevant depending on Sri Lanka’s future macroeconomic position.These include the Flexible Credit Line (FCL), available only to countries with exceptionally strong policy frameworks; the Short-Term Liquidity Line (SLL), a backstop for countries with very strong fundamentals facing temporary liquidity needs; the Policy Coordination Instrument (PCI), a non-financial tool used by countries seeking IMF endorsement of their reform agenda; and the Resilience and Sustainability Trust (RST), which supports climate-related and long-term structural reforms, though RST financing requires a concurrent IMF-supported programme or a PCI and is therefore a complement rather than a standalone option. Under the lighter of these arrangements, the IMF’s role is more supervisory than interventionist, offering guidance and early warnings without imposing the stringent conditionality associated with an EFF or SBA, the expert elaborated.The expert noted that while a decision to forego further IMF support could be interpreted by global markets as a sign of resilience, this confidence is not guaranteed. It depends heavily on the government’s commitment to continue the fiscal discipline and structural reforms implemented under the current EFF—without the external enforcement mechanism the programme provides. “Sri Lanka’s history shows repeated episodes of fiscal slippage once external oversight is removed. Therefore, the country must demonstrate a credible, strong, self imposed fiscal framework if it intends to operate without IMF support.”The expert stressed that Sri Lanka should also accelerate the remaining reforms under the current programme, completing them as early as possible to strengthen the country’s macroeconomic foundation before 2027.“This is not a matter to be addressed in the final months of the programme,” the expert emphasised. The Finance Ministry and the Central Bank of Sri Lanka (CBSL) must begin joint discussions now and produce a comprehensive analytical report on Sri Lanka’s economic outlook for 2026 and beyond. These consultations should also involve other international financial institutions, including the IMF, the World Bank, and other multilateral and development partners. Early coordination is essential to assess the sustainability of foreign reserves and the balance of payments, evaluate debt servicing capacity and overall debt sustainability, and determine the country’s vulnerability to external shocks.It is noteworthy that recent IMF mission statements and press releases have placed greater emphasis on the progress achieved under the programme and the authorities’ reform commitments, while references to remaining risks are framed mainly in technical terms, such as debt sustainability, revenue mobilisation, external buffers, and the need to safeguard reform momentum through the electoral cycle. Unlike earlier communications during the height of the crisis, the IMF has not prominently highlighted specific macro financial risks facing Sri Lanka in its most recent public statements. While this more measured tone may reflect confidence in the current trajectory, it also underscores the importance of domestic institutions independently assessing the full spectrum of vulnerabilities, including those that may not be explicitly emphasised in external communications, he further remarked.The expert said the report submitted to the president must include detailed projections across three broad areas. On the monetary and external front, these should cover inflation trends, monetary policy direction, interest rate expectations, exchange rate pressures, and reserve adequacy. On the fiscal side, the report should assess the fiscal deficit trajectory, revenue mobilisation, public debt sustainability, as well as domestic and external financing requirements. Finally, it must address structural and social dimensions, including trade and investment policy, SOE reform progress, PPP policy and initiatives, social protection needs and social cohesion, climate related vulnerabilities, governance and anti-corruption reforms, and banking and financial sector stability. Critically, the assessment must also take account of the significant step-up in external debt-service obligations from 2028 onwards, and of Sri Lanka’s readiness to re-enter international capital markets at sustainable rates, which will depend in turn on continued improvements in sovereign credit ratings.These are the same areas evaluated by countries that successfully exited IMF programmes, and they reflect international best practice for determining readiness to operate without external support. These indicators will determine whether Sri Lanka is prepared to proceed without IMF support or whether another programme—EFF or otherwise—is necessary.Sri Lanka has made meaningful progress under the ongoing IMF programme, stabilising inflation, rebuilding reserve buffers, restoring fiscal discipline, and advancing structural reforms. These achievements deserve recognition, particularly given the severity of the 2022 crisis and the difficult policy choices required to navigate it. However, the expert stressed that progress does not equate to permanence. The economy remains exposed to external shocks, high debt servicing obligations, global financial volatility, and domestic shocks such as natural disasters, climate related disruptions, supply chain vulnerabilities, and geopolitical tensions that could affect trade, remittances and tourism. This is precisely why vigilance, consistency, and policy discipline must remain at the forefront of economic management.“Despite the progress that has been achieved, the economy could be in danger if discipline and rigorous reforms are not continued,” the expert said. He further noted that the period immediately after an IMF programme is often the most perilous, as countries tend to relax strong policies and controls, delay reforms, or pursue politically attractive but economically damaging measures once external oversight diminishes. Avoiding complacency is therefore as important as avoiding outright reversal, and the political commitment to reform must be sustained across electoral cycles rather than recalibrated to their rhythm. Sri Lanka must avoid this pattern by maintaining a rules-based policy framework and strong institutional governance; only by sustaining this discipline can short-term stabilisation be transformed into long-term resilience, safeguarding the country from renewed macroeconomic instability.If the government decides not to pursue further IMF support, the expert noted that Sri Lanka may need to anchor its external position through a diversified set of comprehensive trade and economic partnerships with major economies. Such arrangements could help cushion external shocks, stabilise investor confidence, and provide access to markets and financing. These arrangements typically involve trade concessions, currency swap lines, direct budgetary support, or long term strategic partnerships. They can provide stability, but they also require careful management of geopolitical alignment and carry long term strategic implications.Ultimately, the choice rests with the government, but it is essential that this decision is informed by the lessons of history and the country’s own past mistakes. Sri Lanka cannot afford to repeat the policy missteps that contributed to the 2022 crisis, nor can it assume that recent progress guarantees future stability. A disciplined, evidence based approach—grounded in fiscal responsibility, structural reform, and long term resilience—is critical if the country is to avoid slipping back into vulnerability once the current IMF programme ends.The expert reiterated that early, coordinated discussions between the Treasury, CBSL, IMF, World Bank, and other international financial institutions are essential. “Sri Lanka has come a long way, but the journey is far from complete. The country must remain vigilant, disciplined, and focused if it is to secure a stable and resilient economic future.”High-profile casesMeanwhile, a number of high-profile cases against those associated with former governments again came up before courts this week. The most notable was the case filed against former President Ranil Wickremesinghe and former President’s Secretary Saman Ekanayake over the alleged misuse of Rs. 16.6 million in public funds during a visit to the UK in 2023.When the case was taken up before the Colombo Fort Magistrate’s Court on Wednesday, the Criminal Investigation Department (CID) informed the court that investigations into the matter had been completed and the case files had been forwarded to the Attorney General for instructions. The AG’s Department requested the court to give a date in which to inform the AG’s position. Accordingly, the court postponed the case till September 30.Elsewhere, the Court of Appeal continued hearing the petition filed by former President Gotabaya Rajapaksa requesting an order preventing him from being arrested in connection with the investigation into the Easter Sunday terror attacks. When the case was taken up before the bench comprising Court of Appeal President Rohantha Abeysuriya and Justice Sarath Dissanayake, Deputy Solicitor General Suharshi Herath, appearing for the respondents, submitted that since some of the relief sought in the petition relates to constitutional provisions and argued the Court of Appeal had no jurisdiction to hear such matters. As such, she requested the court to forward the writ petition to the Supreme Court. Further hearing into the petition was postponed to July 23.The case filed against Yoshitha Rajapaksa under the Prevention of Money Laundering Act also came up before the Colombo High Court. Yasara Abeynayake, a former girlfriend of Mr Rajapaksa, was among those who gave evidence in court this week as the prosecution presented on properties Mr Rajapaksa is alleged to have purchased. Further hearing was postponed to July 17.
Credit...Eric Lee for The New York Times President Trump was sitting in the Oval Office earlier this year with Secretary of State Marco Rubio when an idea came to him.How Marco Rubio Is Running Venezuela From AfarThe secretary of state effectively controls Venezuela’s finances, the distribution of its natural resources and its government. His grip on the country is a vivid manifestation of American power in the Trump era.By Tyler Pager and Anatoly KurmanaevTyler Pager, who covers the White House, reported from Washington and Caracas. Anatoly Kurmanaev, who covers Venezuela, reported from Caracas.Maybe he should dispatch Mr. Rubio permanently to Caracas, the Venezuelan capital, where U.S. commandos had carried out the proudest foreign policy achievement of Mr. Trump’s second term: the capture of Nicolás Maduro, the country’s president.Mr. Rubio could be the next leader of Venezuela, Mr. Trump suggested. And while the president’s aides say he was joking — and that he frequently teases Mr. Rubio about an overseas assignment — the fact is that Mr. Rubio does not need to move to Caracas.He already runs Venezuela from Washington.In the six months since U.S. forces blew open Mr. Maduro’s bedroom door and snatched him in the dead of night, Mr. Rubio has become the de facto viceroy of Venezuela, holding sway over a sovereign nation in a way that no American official has since L. Paul Bremer III arrived in Baghdad in 2003 to run U.S.-occupied Iraq.Mr. Rubio now effectively controls Venezuela’s finances, the distribution of its natural resources and its government, according to interviews with more than a dozen officials and people close to both governments in Washington and Caracas, who provided details about his involvement in steering the country’s policies. Many spoke on condition of anonymity to describe private interactions and internal discussions.While he has not visited Venezuela in person since the U.S. took over, the secretary of state is deeply involved in the country’s day-to-day operations, keeping in close contact with Delcy Rodríguez, who was Mr. Maduro’s vice president and now leads her country on an acting basis, with the imprimatur of the United States. The two exchange messages in Spanish on WhatsApp, trading gossip, birthday greetings and selfies.Despite the banter, the relationship between Mr. Rubio and Ms. Rodríguez is far from a partnership. It is a manifestation of Trump-era American power, in which the winner takes all regardless of sovereignty and international law.The Venezuelan government did not respond to a request for comment. The Trump administration did not address detailed questions about Mr. Rubio’s authority in Venezuela. Mr. Rubio has downplayed his role, and largely avoids discussing his work. He declined multiple requests for an interview.Tommy Pigott, a State Department spokesman, said in a statement that “with renewed cooperation and sound economic stewardship, Venezuela can re-emerge as a stable, prosperous partner whose citizens benefit from its vast natural wealth and strengthened ties with the United States.”The direct control over Venezuela’s public revenues, in particular, distinguishes Washington’s influence there from most other countries beholden to its military and financial might.The U.S. Treasury receives the revenue from most of Venezuela’s exports, then disburses it gradually to Venezuela through the country’s private banks, a relationship akin to parents handing out allowances to children. Mr. Rubio and his team set the conditions on what that money can be spent on, and by whom.This system has allowed Mr. Rubio to stop Venezuela’s most egregious corruption schemes. And it brings some benefits to the Venezuelan government, which uses the effective protection of the U.S. Treasury to receive revenues without being hounded by the numerous creditors seeking repayment of billions in unpaid debt.But the arrangement has also given Mr. Rubio immense leverage over Ms. Rodríguez, who depends on the money to pay workers and prop up the national currency.He also oversees the application of U.S. sanctions on Venezuela, deciding who gets to do business in the country and how. He has worked to reshape the oil sector and boosted the access of U.S. companies. For her part, Ms. Rodríguez runs important government appointments by him, such as the minister of defense.Since two earthquakes struck Venezuela last month, Mr. Rubio has sought to bolster the country’s interim government. The United States has sent 900 military personnel to Venezuela, committed nearly $400 million in aid and delivered crates of cash to the Venezuelan government.The earthquakes have complicated Mr. Rubio’s stated mission to return Venezuela to democracy (“It’s a setback in that regard,” Mr. Rubio acknowledged last month). But the country’s ability to recover is critical to Mr. Trump’s ultimate goal: securing Venezuelan oil for U.S. interests.The arrangement is deeply unusual, unfolding 80 years after the United States relinquished its last sizable formal colony, the Philippines.But Mr. Trump has made clear he wants to return to an era of American expansionism, musing about taking control of Greenland, Canada and the Panama Canal.He has found the most success in Venezuela. But there are risks.
