On March 31, massive protests broke out in Colombo, with people laying siege to President Gotabaya Rajapaksa’s private house in the capital’s Mirihana district. The Jubilee Post junction, which was beautified and renovated to ensure a smooth commute for the president between his home and office, turned into the main protest spot. The next day, the government declared a public emergency. It, however, failed to deter people from intensifying their protests.
As the economic situation continues to deteriorate, cracks have emerged in the ruling coalition. Gotabaya dropped his brother Basil, who was the finance minister, from the cabinet. Basil was spearheading the government’s attempts to borrow from countries such as India and China, and also from international lending institutions. Ali Sabry, who replaced Basil, quit within two hours of taking oath as minister.
Sri Lanka, which was all set to go to the International Monetary Fund (IMF) for getting its debts restructured, is now caught in a disastrous tailspin. “Our foreign reserves were plundered and we no longer have money for imports. This is caused by the adamant behaviour of the government, including the Central Bank governor. The crisis is happening only because of our wrong choices and poor policy-making,” said Umesh Moramudali, an economist at the University of Colombo.
After the resignation of all 26 cabinet ministers except Prime Minister Mahinda Rajapaksa, the Central Bank governor Ajith Nivard Cabraal, considered close to the Rajapaksas, too, stepped down. The quick resignations of key financial policy-makers and the continuing political turmoil seem to have further complicated Sri Lanka’s negotiations with international financial institutions.
While there are huge public protests against the government, the Rajapaksas appear to be firm about staying on. On April 6, as the parliament met for the second consecutive day to debate the ongoing crisis, chief government whip Johnston Fernando told the house that Gotabaya would not resign under any circumstances.
But Gotabaya’s determination to continue has further angered the people and the opposition. “There is no vision or policy. This is a social catastrophe,” said opposition leader Sajith Premadasa. “People lack bare essentials. They have lost their livelihoods. We, in the opposition, believe that we possess the requisite acumen to deal with this terrible crisis. Everyone will have to swallow the bitter pill. However, there is light at the end of the tunnel, if we follow innovative solutions.”
Premadasa, who heads the Samagi Jana Balawegaya party, has refused to join the “unity government” called by Gotabaya on April 4. “We will not take part in any administration when this set of people remain. People want them to go. Being a responsible opposition, we will not deceive our people. The ruling party is corrupt and is full of malpractices,” said Premadasa. The opposition and the Tamil parties also demand the scrapping of the 20th amendment of the constitution, which gives the president absolute executive power.
In the 2020 parliament elections, the Rajapaksas had won a two-thirds majority, a first in Sri Lankan history. With Gotabaya as president and Mahinda as prime minister, it was perhaps the strongest government ever, giving people hope. “But the government failed miserably to deliver,” said Jagath Wickramanayake, a Colombo-based lawyer. He said the only solution to the ongoing crisis was Gotabaya’s resignation and the abolition of the 20th amendment. “We should go back to the 19th amendment which curtails the powers of the president to some extent,” he said.
Anger sans barriers: Opposition leader Sajith Premadasa talks to the media during a protest in Colombo on April 3 | AFP
As Gotabaya continues to act like the all-powerful executive presidents in the past like J.R. Jayewardene, political observers foresee a power shift. “As the president refuses to step down, there is the possibility of a minority government,” said political analyst Ranga Kalansooriya.
The Rajapaksas have already lost their majority in the parliament, with many of their allies declaring themselves as independents. As many as 30 members belonging to different parties of the ruling coalition have announced their decision to stay independent. Another 12 lawmakers from Mahinda’s Sri Lanka Podujana Peramuna, too, have followed suit. Former president Maithiripala Sirisena’s Sri Lanka Freedom Party has also chosen to quit the ruling alliance, undermining the government’s stability. “If the government cannot furnish the numbers, a proposal will be made to call for a debate on who should be the new prime minister,” said Kalansooriya. But the Rajapaksas are unlikely to give in without a fight.
The Tamil parties in the parliament, meanwhile, have adopted a wait-and-watch policy. “The US is trying to reduce India’s influence in Sri Lanka. The geopolitics of the Indo-Pacific could influence the situation in our country. Our priority, however, remains a permanent solution for the Tamils,” said Jaffna MP Sivagnanam Siritharan.
The beleaguered Gotabaya government is now seeking help from all possible quarters. After securing loans and credit lines from India and China, it has approached Bangladesh for financial support. With the IMF taking its time to respond to Sri Lanka’s pleas, the country is getting increasingly worried about repaying debts worth $4 billion which are due this year, including an international sovereign bond of $1 billion maturing in July.
Former Central Bank governor W.A. Wijewardena, however, said financial help from countries like India and China was just short-term trade credit, which would not help Sri Lanka find a solution to the economic crisis. “The credit we got from India is worth less than a month’s import requirement,” he said. The help from the IMF, in this context, would be more crucial. He said a new loan from the international agency might help ease the situation as it allowed the Central Bank to manage its balance of payments. But it will work only in the long term, while Sri Lanka desperately requires short term solutions as well.
One important reform the IMF has suggested in the past is to allow the Central Bank to function independently under a law enacted by parliament. But the bill was shelved when Gotabaya took over. Wijewardena said such a law would ensure the independence of the Central Bank. “By this way, it can provide productive and constructive advice to the government,” he said. The IMF also wants Sri Lanka to reconsider its existing economic and financial policies, right from the disastrous tax cuts to the decision to ban chemical fertilisers.
The Central Bank, meanwhile, has got a new governor—Nandalal Weerasinghe, a former deputy governor of the bank. He was also an alternate executive director of IMF, and Sri Lankan officials believe that he is the best man to negotiate a favourable deal. Weerasinghe, who is currently in Australia, said he would return on April 7. “But I have already started work,” he said. “My primary intention is to have discussions with the IMF and to appoint advisors for debt restructuring as a priority.”