Wickremesinghe’s administration has pursued an IMF-backed economic adjustment program, leading to some stabilization of economic indicators.
Sri Lanka stands on the brink of a crucial presidential election scheduled for September 21, 2024, as the country continues to grapple with the aftermath of a severe economic crisis. The situation remains dire for many Sri Lankans, with widespread poverty and ongoing economic difficulties underscoring the importance of the upcoming vote.
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| Young children being brought to the election rally, highlighting early engagement in the democratic process. |
According to a recent report by the International Crisis Group titled “Sri Lanka’s Bailout Blues: Elections in the Aftermath of Economic Collapse,” President Ranil Wickremesinghe has faced significant challenges since his appointment in July 2022. Wickremesinghe, who succeeded Gotabaya Rajapaksa after his resignation amidst mass protests, has made strides in implementing International Monetary Fund (IMF) reforms aimed at stabilizing the economy. These reforms have included measures to address critical shortages and restructure debt, with some progress evident in reduced inflation and increased currency reserves.
However, the report highlights that many Sri Lankans have yet to feel substantial relief from these reforms. Poverty rates have more than doubled since 2020, and government responses, including a new anti-poverty cash transfer system, have not adequately addressed the needs of many citizens, particularly women and youth. As a result, significant numbers of Sri Lankans have sought employment abroad, including many of the country’s most educated professionals.
The economic collapse of 2022, driven by a combination of low taxation, high deficits, and corruption, was exacerbated by global disruptions and policy errors from the previous Rajapaksa administration. The resulting crisis led to severe shortages and widespread protests demanding systemic political change and accountability.
Wickremesinghe’s administration has pursued an IMF-backed economic adjustment program, leading to some stabilization of economic indicators. However, the benefits have not been evenly distributed, with fiscal reforms disproportionately impacting poor and middle-income Sri Lankans, while elites have largely avoided significant sacrifices. The government’s failure to address corruption and mismanagement has further fueled public dissatisfaction.
As voters prepare to head to the polls, the election is shaping up to be a highly competitive three-way race. Wickremesinghe, running as an independent candidate supported by the Rajapaksa party, faces strong competition from Sajith Premadasa of the Samagi Jana Balawegaya and Anura Kumara Dissanayake of the National People’s Power coalition. Both challengers have promised to renegotiate the IMF agreement to alleviate the economic burden on ordinary citizens, though details of their plans remain vague.
The International Crisis Group’s report emphasizes that the election’s outcome will be crucial in addressing both the economic and governance issues facing Sri Lanka. For economic reforms to be effective and sustainable, they must be more equitably distributed and accompanied by greater efforts to combat corruption and improve transparency.
International creditors and the IMF are expected to play a significant role in supporting Sri Lanka’s recovery. Additional debt relief and flexibility in budgetary requirements may be necessary to ensure long-term stability and growth.
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