Sri Lanka appoints new president next week amid political and economic meltdown

  • Sri Lanka teeters in worst crisis since independence
  • Parliament votes for a new president on July 20 – Speaker of Parliament
  • The resignation of the president and prime minister to pave the way for a unity government
  • Central bank governor says instability could hurt IMF talks
  • Opposition leader says ready to form government

COLOMBO (Reuters) – Sri Lanka’s parliament will elect a new president on July 20, speakers said on Monday, after protesters stormed the residences of the incumbent and prime minister who offered to resign amid an economic meltdown.

President Gotabaya Rajapaksa, who oversaw the relentless crushing of the Tamil Tiger rebels as defense minister, is set to resign on Wednesday. His brothers and nephew resigned as ministers earlier as Sri Lanka began to run out of fuel, food and other necessities in the worst crisis since independence from Britain in 1948.

Parliament Speaker Mahinda Yaba Abiwardena said in a statement that Parliament will reconvene on Friday and vote to elect a new president in five days.

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The statement added, “It was agreed during the party leaders’ meeting that was held today that this is necessary to ensure the formation of a new government from all parties in accordance with the constitution.”

“The ruling party announced that the prime minister and the cabinet are ready to resign to appoint an all-party government.”

Prime Minister Ranil Wickremesinghe, whose private home was set on fire by protesters, has said he is stepping down. His office said Rajapaksa had confirmed his resignation plans to the prime minister, adding that the government would resign as soon as an agreement was reached to form an all-party government.

The central bank governor told Reuters that political instability could harm negotiations with the International Monetary Fund on a rescue package. Read more

Governor B Nandalal Weerasinghe has indicated he will stay in office although he said in May he might resign if there is no political stability in the island nation of 22 million people.

Leaders of the protest movement said the crowds would occupy the residences of the president and prime minister in Colombo until they eventually resigned from their posts. Over the weekend at the president’s home, protesters jumped into the pool, lay on a four-poster bed, scrambled on a treadmill, and tried on sofas. Read more

Calm reigned in Colombo on Monday as hundreds of people toured the secretariat and the president’s residence and toured colonial-era buildings. The police made no attempt to intervene.

“We are not going anywhere until this president leaves and we have a government that is acceptable to the people,” said Judd Hansana, 31, who has been at a protest site outside the residence since early April.

Another protester, Dushantha Gunasinge, said he traveled 130 kilometers (80 miles) to Colombo, walking part of the road due to the fuel crisis.

“I’m so tired I can barely speak,” said the 28-year-old, sitting outside the president’s office. “I came on my own along this path because I think we need to see it through. This government needs to come home and we need better leaders.”

Police said they received 17.8 million rupees (about $50,000) found by a group of protesters at the president’s residence on Saturday. A video of the kids making money went viral on social media.

UN Secretary-General Antonio Guterres has called for a smooth transition of government and “sustainable solutions” to the economic crisis.

“a complete mess”

Opposition leader Sajith Premadasa, whose SJP has 54 seats in the 225-member parliament, said he was ready to intervene in the government.

“We as the opposition are ready to provide leadership to stabilize the country and rebuild the economy,” he said. “We will appoint a new president and prime minister and form the government,” he added.

Rajapaksa and Wickremesinghe were not at their residence when protesters stormed into buildings and have not been seen in public since Friday. It was not clear where Rajapaksa was, but the Wickremesinghe media team said in a statement that it had held a meeting with ministers in the prime minister’s office on Monday.

Wickremesinghe’s private home in a wealthy Colombo suburb was set on fire, and three suspects were arrested.

Constitution experts say that once the president and prime minister resign, the lower house speaker will be appointed as acting president before parliament votes on a new president to complete Rajapaksa’s term that would have ended in 2024.

Sri Lankans have mainly blamed Rajapaksa for the collapse of the tourism-dependent economy, which has been hit hard by the COVID-19 pandemic and the ban on chemical fertilizers that have hurt agricultural production. The frame was later reversed.

The public finances of the government were paralyzed by the mounting debts and exorbitant tax breaks offered by the Rajapaksa regime. The foreign exchange reserves were quickly depleted with the increase in oil prices.

The country was left with only dollars to import the fuel, which was heavily rationed, and long queues formed in front of shops selling cooking gas. The overall inflation rate was 54.6% last month, and the central bank warned that it could rise to 70% in the coming months.

The political crisis has pushed government bonds, already distressed, to new lows. The 2025 bonds are down as much as 2.25 cents on the dollar while most are now less than 30 cents, or 70% below their face value.

The IMF deal could take place this year or next, but for bondholders, the restructuring is likely only in 2024 or 2025, not next year, said Lutz Rohmer of Capitolum Asset Management, which holds Sri Lanka’s dollar bonds.

“It’s a complete mess,” Rohmer said. “Expectations are that the transition of power will be more chaotic and it will take longer to reach an agreement.”

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(Reporting by Oditha Jayasinghe and Deviot Ghoshal); Additional reporting by Mark Jones and Karen Stroecker in London and Michelle Nichols in New York. authored by Krishna in Das; Editing by Christopher Cushing, Raju Gopalakrishnan and Nick McPhee

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