Sri Lanka’s political turmoil sows worries for recovery

A day after Sri Lanka’s president fled, Mohamed Ishad waited outside an immigration office near the capital, clutching a file of documents that he hopes will get his passport renewed so he can leave, too.

With the nation in the throes of its worst economic crisis, Ishad has no job, relies on relatives for financial help and sells vegetables to feed his wife and three children. He wants to go to Japan and find work there so he can send money back home.

Ishad is devastated to leave his family behind, but feels there is no choice — and no opportunity — in his country. “Living in Sri Lanka right now is not good — if you want a good life, you need to leave,” he said. Not only has the economy collapsed, but “there’s hardly a government functioning right now.”

Bankruptcy has forced the island nation’s government to a near standstill. It's once-beloved and now reviled former President Gotabaya Rajapaksa fled to Singapore before resigning last week. The acting president and prime minister, Ranil Wickremesinghe, is seen as his proxy and opposed by angry crowds.

Parliament is expected to elect a new president Wednesday, paving the way for a fresh government, but it is unclear if that’s enough to fix a shattered economy and placate a furious nation of 22 million that has grown disillusioned with politicians of all stripes.

The political ruckus has deepened worries that solutions to the crisis, including a crucial assistance from the International Monetary Fund, may be delayed.

“Right now, the eye is off the ball,” said Dayan Jayatilleka, a former diplomat and political analyst. “It’s like in the middle of a serious surgery, everybody from the top surgeon to the anesthesiologist, ran out of the operation room to start a revolution — but they need to come back and finish the surgery before the patient is dead.”

The IMF is monitoring the situation closely, but any bailout package will be contingent on Sri Lanka’s debt-restructuring strategy and political stability. “People are probably thinking, who do we talk to? Don’t you guys care about the economy? Will the real president please stand up?” Jayatilleka said.

For months, the country has been on edge, triggered by a foreign exchange crisis that has crippled imports of essentials like fuel, food and medicine. Doctors are warning people to not get sick while families are struggling to eat three meals a day in a country that was once an inspiration across South Asia for its expanding middle class and high per capita income.

Now, the government owes $51 billion in debt and is unable to make payments on its loans. Its currency has collapsed by 80%, making imports more expensive and worsening inflation. Sri Lanka has only $25 million in usable foreign reserves and needs $6 billion to stay afloat over the next few months.

“Gotabaya resigning is one problem solved -- there are so many more. They will continue if we don’t make the right choice in choosing our leaders,” said Bhasura Wickremesinghe, a 24-year-old maritime engineering student.

Among the presidential candidates are Dullas Alahapperuma, a former minister under Rajapaksa who is backed by some members of the ruling coalition; and Anura Dissanayake, a Marxist leader whose public support has grown during the crisis. One expected candidate, Sajith Premadasa, the leader of the main opposition party, has thrown his support to Alahapperuma.

The most contentious potential candidate would be Wickremesinghe, who could likely count on support of the governing party. Protesters have rallied for weeks to kick him out of office, accusing him of protecting the Rajapaksa dynasty. If he is nominated and chosen, it will be a “powder keg,” said Jayatilleka.

The six-time prime minister, who is also the current finance minister, was appointed by Rajapaksa in May to begin difficult negotiations with lenders and financial institutions. He has also promised to overhaul the political system to clip presidential powers. But his unpopularity grew as lines for fuel got longer, food prices surged and power cuts continued.

He recently called the protesters “fascists” and imposed a state of emergency after his office was seized and his private residence torched.

Wickremesinghe is the only lawmaker from his party to hold a seat in Parliament after it suffered a humiliating defeat in 2020, limiting his public support and political heft. Many don’t see him as a legitimate leader despite his seasoned political career and expertise, said Bhavani Fonseka, a senior researcher at Colombo-based Center for Policy Alternatives.

“This political uncertainty is a killer of the economy -- that has to be resolved fast and in a way that satisfies the people of the country,” said W.A. Wijewardena, a former deputy governor of the Sri Lankan central bank. An immediate roadmap is needed, focused on boosting exports, increasing revenue through new taxes and slashing expenditure, but none of this can be achieved if there is no stable government in place, he added.

Many people are aching for a tangible change in their lives right now, Fonseka said, and don’t care about the complex negotiations. “For them, it’s the basics of fuel and food — are they getting it or not?”

She said that whoever forms the government “cannot rule the way it was before, they will need to engage better with the public and protesters to show they are different.”

“But if it is someone who does not have the confidence or trust of the people, then the tumultuous protests will continue, and there won’t be any stability or solutions in near sight.”