Sri Lanka holds its breath as new PM fights to save economy

Colombia, Sri Lanka –

It has been nearly three weeks since Ranil Wickremesinghe took office as Prime Minister of Sri Lanka with a daunting mandate to lift the crisis-weary country from the brink of an economic abyss that threatens to tear it apart.

The five-time prime minister inherited a nation that was on the verge of bankruptcy and was saddled with such a large external debt that it had no money left for basic imports. Sri Lankans struggle to access basic necessities like food, fuel, medicine, cooking gas and even toilet paper and matches.

In his new work, Wickremesinghe leaves no doubt about what awaits him. “The next two months will be the hardest of our lives,” he told the nation fed up with long lines, soaring inflation and daily protests that seem to be spiraling out of control.

“We must be prepared to make sacrifices and meet the challenges of this period. »

Since the televised speech on May 17, the veteran politician, who is also finance minister, has entered into difficult negotiations with financial institutions, lenders and allies and United Nations agencies to fill the coffers and relieve impatient citizens.

He took the necessary steps like raising taxes and pledged to reshuffle the government that concentrates power under President Gotabaya Rajapaksa, a model that many believe has exacerbated the crisis.

He took over after days of violent protests last month that forced his predecessor, President Rajapaksa’s brother Mahinda, to resign and seek shelter from angry mobs at a naval base. Wickremesinghe is due to deliver a much-anticipated speech in parliament on Tuesday, which many hope will present a strategy to resolve the crisis.

But time may not be on its side because reforms are slow and people want results now. He is also a one-man party in Parliament – the only lawmaker from his party to hold a seat after suffering a humiliating defeat in the 2020 election.

“A person who has no political base has an unprecedented crisis to deal with,” said Dayan Jayatilleka, a former diplomat and political analyst.

Lines to buy fuel and cooking gas have stretched for miles (miles) every day, winding around city blocks as Sri Lankans brave heavy rains and scorching heat to buy essentials that cost triple more expensive than before. Often they have to wait for days, and many still end up empty-handed.

Jagath Chandana, 43, has been queuing on the outskirts of the capital, Colombo, with a canister to buy cooking gas for two days. “It was crazy. We are totally helpless. It seems even Ranil can’t solve the crisis. They (the politicians) are just talking but on the ground people are suffering,” he said.

For more than 50 days, protesters camped outside Rajapaksa’s office demanding that he resign.

They say economic mismanagement, policy mistakes like a hasty ban on imported chemical fertilizers that devastated crops, and a government full of Rajapaksa relatives caused the crisis. At the height of their power, six Rajapaksas held government posts – the crisis saw the exit of all but one. The other five still remain as legislators.

Sri Lanka has suspended repayment of nearly $7 billion in foreign debt due this year. He owes $26 billion through 2026 out of a total of $51 billion.

Foreign exchange reserves have shrunk to just two weeks of imports as Wickremesinghe prepares to secure a bailout from the International Monetary Fund. On Thursday, he said any bridge financing would depend on an agreement with the IMF and he hoped negotiations would be completed by the end of June. The government is targeting $5 billion for repayments and another $1 billion to boost the country’s reserves, Wickremesinghe said last week.

In such a volatile situation, Wickremesinghe was able to bring some transparency and rationality that the previous Rajapaksa clan-led administration lacked, Jayatilleka said.

But analysts also say it will be difficult for him to meet some of the challenges, especially as he also faces a messy battle to revise the constitution and strengthen the powers of parliament to deliver much-needed reforms.

“His proposals are good for the medium and long term. But people want immediate changes to happen and they don’t see,” said political analyst Jehan Perera, adding that some see Wickremesinghe as helping Rajapaksa stay in power.

As well as demanding a new president, protesters have for weeks been calling for a complete overhaul of what they say is a failing model of governance.

For nearly 45 years, Sri Lanka has been governed by a powerful executive presidential system. After a landslide election victory in 2019, Rajapaksa strengthened the system with constitutional amendments that further concentrated the powers of the presidency – a move that also alarmed critics at the time.

Wickremesinghe made a key and early speech to roll back some of the presidential powers. But such measures will not be easy and will require not only the approval of the Supreme Court, but also a two-thirds majority in Parliament.

Questions remain over whether Wickremesinghe would be able to push through reforms in the 225-seat parliament where Rajapaksa’s party holds a majority. Some opposition parties have already thrown their weight behind the reforms, but Wickremesinghe’s single position in the chamber could prove a major drawback. Or it could be an asset.

His party split in 2020 amid a leadership crisis, prompting most senior members to leave and form a new party – currently the country’s main opposition.

“He has the opportunity to play the role of a technocratic prime minister, with his expertise and experience, unrelated to any political party,” Jayatilleka said.

The scale of protests since Wickremesinghe took office has also diminished. Perera said it’s hard for people to keep the momentum high, but as long as the economic crisis continues, so will the protests.

As signs of financial hardship and hardship persist in Sri Lanka, some are growing hopeful that Wickremesinghe will stand with them through difficult times.

“He can’t work miracles, it will take time to resolve the crisis because previous ministers screwed up,” said carpenter Amila Prasanna. “He’s trying to solve the problems, one by one, and I’m sure he will do something,” he said as he waited in line for three days to buy petrol.

Pathi reported from New Delhi.

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