Steadying Sri Lanka's economy to be Dissanayake's immediate challenge

Leftist leader Anura Kumara Dissanayake, who was elected President of Sri Lanka on Sunday, has enjoyed a wave of support in recent months as an economic meltdown forced widespread hardships upon the island nation.

“This victory belongs to all of us. Together, we stand ready to rewrite Sri Lankan history. The unity of Sinhalese, Tamils, Muslims, and all Sri Lankans is the bedrock of this new beginning. The New Renaissance we seek will rise from this shared strength and vision. Let us join hands and shape this future together!” he urged via X.

Manifesto plans outlined by the President-elect include reworking a debt restructuring programme at the core of the International Monetary Fund's $2.9 billion bailout and a pledge to slash taxes that would impact fiscal targets raised worries among investors and market participants about his economic policies.

Political analysts however indicate that his immediate challenge would be to steady the economy “in the face of anxieties felt by business and financial groups about his Marxist and revolutionary background”.

Will he renogotiate IMF loan?

The National People’s Power coalition has vowed to reopen negotiations with the International Monetary Fund over its $3 billion bailout struck by the outgoing administration. The tough austerity measures and tax hikes that President Wickremesinghe imposed to secure the IMF bailout made him deeply unpopular with voters.

The existing programme will require Sri Lanka to meet certain economic targets before the IMF approves the next tranche of funding, estimated at about $350 million. However the international body has indicated its willingness to conduct talks with the new administration once it is in place. 

Backers of the new President suggest that he will seek modifications without throwing out existing terms. Some members of his party also oppose the debt restructuring terms agreed with the nation’s creditors.

(By arrangment with livemint.com)