By Uditha Jayasinghe
COLOMBO, March 21 (Reuters) – When Ranil Wickremesinghe took office as Sri Lanka’s president in July after a popular uprising ousted his predecessor, the South Asian island nation was gripped by its worst economic meltdown in 75 years.
Since then, Wickremesinghe has managed to contain mass protests, improve supplies of essential supplies and on Monday secured a nearly $3 billion bailout from the International Monetary Fund (IMF), which opened the door for debt restructuring and approximately $58 billion in revenue opens up funding from other lenders.
He has done so despite a deeply unpopular government that has only one seat in the 225-seat parliament and relies on the party support of the man he replaced.
Hours of power outages and fuel queues that led to the ouster of former President Gotabaya Rajapaksa are over, thanks in part to a fuel rationing system. Tourists are returning, remittances are recovering and foreign exchange reserves are rising, although the economy is still contracting.
But the 73-year-old’s government is not popular, largely because of significant increases in income taxes and electricity tariffs, which were necessary to get the IMF on board.
According to a Mood of the Nation poll conducted in February by private think tank Verité Research, the government’s approval rating was 10%, the same as October but higher than an all-time low of 3% in June, when Rajapaksa was in power was. Only 4% were satisfied with the way things were going in Sri Lanka, down from 7% in October but over 2% in June.
There are no known approval ratings for Wickremesinghe as President.
“He is ready to face people’s anger in the short term to ensure long-term stability and growth in the country,” said Dinouk Colombage, Wickremesinghe’s director of international affairs.
“Even though the President only has one seat in Parliament, he is pushing his agenda and pushing reforms forward, once the results are in, I think people will openly support him.”
The story goes on
Born into a prominent family of politicians and businessmen with wide exposure to the media, the lawyer and six-time prime minister has little support outside of wealthy urban voters. His ability to engage in politics depends in large part on the support of Sri Lanka’s Podujana Peramuna party, which is largely controlled by the Rajapaksa family.
For now, Wickremesinghe enjoys that support and he said on Sunday his country was on the right track.
“There is now fuel, electricity, fertilizer and by April there will be enough rice and other food,” he said at an event in Colombo.
“We will no longer be declared a bankrupt nation, but a nation that can restructure its debt.”
EXCUSE WHERE REQUIRED
In recent months, Wickremesinghe has successfully negotiated economic support from leading lenders China, India and Japan, culminating in the IMF bailout.
He flew to Japan in October to apologize for the cancellation of Japanese-funded projects under Rajapaksa, which convinced Tokyo to back Sri Lanka’s bid for an IMF bailout.
The Paris Creditors’ Club, of which Japan is a member, made pledges of funding in support of the IMF deal earlier this year.
A Japanese-funded $1.8 billion light rail project that was suspended in 2019 is among the infrastructure projects Sri Lanka is now trying to get back on track.
But Sri Lanka has yet to renegotiate its debt, a potentially lengthy process that will see Wickremesinghe, who is also finance minister, deal with claims from China, India and other creditors.
He has yet to reverse the economy, which shrank 7.8% in 2022 and is expected to shrink 3% this year.
Implementing further reforms under the IMF program, cutting record-high interest rates and controlling inflation will continue to pose challenges for Wickremesinghe, who has faced union strikes following tax and power increases.
Critics say Wickremesinghe’s pro-business approach ignores political and systemic reforms – such as stronger anti-corruption measures and more transparency in government decision-making – called for by mass protesters who formed last year as the “Aragalaya” movement.
“A year later, there is no real structural change in governance or system change,” said Bhavani Fonseka, senior researcher at the Center for Policy Alternatives in Colombo.
“The President is taking the line that his priority is to address the economy above anything else, but you can’t take that isolated approach and think people will be okay with that.”
A crisis-weary public may have to endure years of hardship as Sri Lanka tries to repair its economy during the four-year IMF program, warned Jayadeva Uyangoda, a senior political analyst.
“Wickremesinghe managed to neutralize the Aragalaya and that was a great success, but the economic and social crisis continues,” he said.
“Economic stability will last at least a few more years.” (Reporting by Uditha Jayasinghe; Editing by Krishna N. Das and Raju Gopalakrishnan)
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