(Bloomberg) -- Two years after an economic meltdown almost doubled the rate of poverty in Sri Lanka, the island nation is holding an election to choose a new president. The Sept. 21 vote is shaping up to be a referendum on painful austerity measures that were imposed under a $3 billion bailout from the International Monetary Fund. The race could be tight, with incumbent Ranil Wickremesinghe facing off against two rivals who want to open fresh talks with the IMF.
What triggered Sri Lanka’s crisis?
In late 2019, newly elected President Gotabaya Rajapaksa carried out tax cuts that slashed state revenues just months before the pandemic devastated the economy, with international flights grounded and successive lockdowns ordered. Remittances from Sri Lankans working overseas dried up as many lost their jobs.
The result was a historic debt default, a sharp economic contraction and runaway inflation that reached 70%. The crisis spawned a protest movement aimed at curbing the powers of the presidency, eradicating graft and bringing Rajapaksa’s family to task for its role in bankrupting the country. Wickremesinghe took power in 2022 after the protests forced Rajapaksa’s resignation.
What is Wickremesinghe’s legacy?
Wickremesinghe’s government agreed in 2023 to the IMF bailout, with the funds to be disbursed in tranches over 48 months. As part of the program, the government raised taxes, hiked utility bills and put some state enterprises up for sale. The measures have helped to slow inflation to a low single-digit percentage rate this year. Borrowing costs have fallen, the economy has been growing faster than expected and progress on a debt restructuring has helped to unlock further funding from the IMF and other lenders.
Who are the contenders in Sri Lanka’s presidential vote?
Nominations for a record 39 candidates were accepted by the country’s Elections Commission, but four candidates have emerged as the front runners.
The incumbent Wickremesinghe represents policy stability, but victory for him is far from assured as the austerity measures have been deeply unpopular. He has defended the policies and is seeking a mandate to maintain the IMF program and keep the economic recovery on track.
Sajith Premadasa is the main opposition leader in parliament and heads a breakaway group that splintered from Wickremesinghe’s party in 2020. He wants to lower taxes from the rate agreed to with the IMF to ease the economic pain for households.
Anura Kumara Dissanayake, known by his initials AKD, is the only major candidate who doesn’t belong to an established party. His Marxist Janatha Vimukthi Peramuna party — known for violent uprisings in the 1970s and 1980s — has drawn in new supporters from the nationwide protest movement that coalesced in 2022. He is campaigning on a platform of clean governance and eliminating corruption and has vowed to reopen the IMF negotiations. His party opposes the debt restructuring framework agreed with the multilateral lender.
Namal Rajapaksa, nephew of the deposed president and son of former strongman Mahinda Rajapaksa, is running as the scion of Sri Lanka’s most powerful political family in what analysts see as an attempt to rebuild its brand with voters. He is wooing young people worried about a lack of jobs and high living costs.
What are the international stakes?
The region’s two main powers, India and China, will be watching the election outcome closely.
Since 2009, when Sri Lanka ended a brutal civil war with the separatist Tamil minority, the South Asian island nation has cultivated ties with Beijing. China has poured billions of dollars into the country, investing in ports, roads and a “lotus tower” that looms over the capital Colombo.
The Chinese money helped to develop Sri Lanka’s infrastructure, and saddled the country with debts that partly contributed to the 2022 crisis. Dissanayake’s leftist backers have called for more scrutiny of investment deals with foreign countries to avoid a repeat of the debt troubles.
China’s growing economic influence over Sri Lanka has caused unease in India. In February, Dissanayake held a high-profile meeting with Indian External Affairs Minister Subrahmanyam Jaishankar, in a sign of his growing recognition overseas. The top presidential candidates have all said they would pursue a balanced approach to international relations. None have proposed pivoting away from China.
Who is expected to win?
There are no credible opinion polls in Sri Lanka, but local media and analysts have suggested it will be a tight contest between Wickremesinghe, Premadasa and Dissanayake. Some said it may go to a run-off for the first time since 1982.
Premadasa enjoys support from many poorer Sri Lankans and members of the Tamil minority. Dissanayake is seen as the key challenger to the political elite, drawing support for his pledge to fulfill the demands of the 2022 protest movement that swept Rajapaksa from power.
How will Sri Lanka’s election work?
Polling is set to begin at 8 a.m. local time. Some 17 million eligible voters will rank candidates by order of preference. If none secures 50% of first-place votes, the election goes to a run-off in which voters’ second and third preferences are counted. The candidate with the highest number of total votes will then be declared the winner.
If a victor emerges in the first round, then vote-counting is likely to be wrapped up within 24 hours. A run-off would cause a delay in the final result, and if a winner is determined by a narrow margin, it could prompt calls for recounts and allegations of vote rigging. A smooth transition of power is not guaranteed.
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