(Adds additional funding in para 14)
By Uditha Jayasinghe
COLOMBO, March 21 (Reuters) - When Ranil Wickremesinghe
took over as Sri Lanka's president in July after a popular
uprising ousted his predecessor, the South Asian island nation
was engulfed in its worst economic meltdown in 75 years.
Since then, Wickremesinghe has managed to a keep a lid on
mass protests, improve supplies of essentials and on Monday,
secured a nearly $3 billion bailout from the International
Monetary Fund (IMF) that opens the door to restructuring about
$58 billion of debt and receive funding from other lenders.
He has done that despite a deeply unpopular government, his
own party commanding just one seat in the 225-member parliament
and having to rely for support on the party of the man he
replaced.
Hours-long power cuts and queues for fuel that led to the
downfall of former President Gotabaya Rajapaksa are gone, thanks
partly to a fuel rationing system. Tourists are returning,
remittances are recovering and foreign exchange reserves are
rising, though the economy is still contracting.
But due largely to significant hikes in income taxes and
power tariffs that were needed to get the IMF on board, the
government of the 73-year-old is no favourite of the people.
According to a "Mood of the Nation" poll run in February by
private think-tank Verité Research, the government's approval
rating was 10%, the same as in October but higher than an
all-time low of 3% in June, when Rajapaksa was in power. Only 4%
were satisfied with the way things were going in Sri Lanka, down
from 7% in October but higher than 2% in June.
There are no known approval ratings for Wickremesinghe as
president.
"He's ready to face the 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,
him carrying forward his agenda, bringing forth the reforms,
once the results start showing, I think the people will come out
in open support of him."
Born into a prominent family of politicians and
business-people with large interests in the media, the lawyer
and six-time prime minister has little support beyond wealthy
urban voters. His ability to make policy depends to a great
extent on the support of the Sri Lanka Podujana Peramuna party,
largely controlled by the Rajapaksa family.
For now, Wickremesinghe is enjoying that support, and he
said on Sunday that his country was on the right track.
"There's fuel now, there's electricity, there's fertiliser
and by April, there will be enough rice and other foodstuff," he
said at an event in Colombo.
"We will no longer be declared a bankrupt nation, but a
nation that can restructure its debts."
The bailout is expected to catalyse additional external
support, with funding expected from the World Bank and the Asian
Development Bank to the tune of $3.75 billion, the IMF said in a
statement.
APOLOGY WHERE NEEDED
In recent months, Wickremesinghe successfully negotiated
economic support from top lenders China, India and Japan,
culminating in the IMF bailout.
He flew to Japan in October to apologise for the
cancellation of Japanese-funded projects under Rajapaksa, which
convinced Tokyo to back Sri Lanka's request for the IMF bailout.
The Paris Club of creditors, which includes Japan, earlier
this year gave financing assurances to support the IMF deal.
A Japan-funded $1.8 billion light-railway project, which was
suspended in 2019, is among infrastructure projects that Sri
Lanka is now trying to restart.
But Sri Lanka still needs to renegotiate its debt, a
potentially drawn-out process where Wickremesinghe, who is also
the finance minister, will have to deal with demands from China,
India and other creditors.
He still has to turn around the economy, which shrank 7.8%
in 2022 and is expected to contract by 3% this year.
Implementing further reforms under the IMF programme,
reducing record-high interest rates and controlling inflation
will also continue to pose challenges for Wickremesinghe, who
has faced trade union strikes after the tax and power hikes.
Critics say Wickremesinghe's economy-first approach ignores
political and systemic reforms - like stronger anti-corruption
measures and more transparency in government decision-making -
as demanded by mass protesters who banded together as the
"Aragalaya" movement last year.
"One year on, there is no real structural change in
governance or system change," said Bhavani Fonseka, senior
researcher at Colombo-based Centre for Policy Alternatives.
"The president does take this line that his priority is
addressing the economy over everything else, but you can’t have
that silo-ed approach and think people are going to be okay with
it."
A crisis-weary public may still have to absorb years of
continuing hardship as Sri Lanka tries to fix its economy during
the four-year IMF programme, warned Jayadeva Uyangoda, a senior
political analyst.
"Wickremesinghe has managed to neutralise the Aragalaya and
that was a major success, but the economic and social crisis
goes on," he said.
"Economic stability will take at least another couple of
years."
(Reporting by Uditha Jayasinghe; Editing by Krishna N. Das and
Raju Gopalakrishnan)
