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Sri Lanka's parliamentary elections on November 14th mark a pivotal moment for the island nation as it navigates a complex economic recovery and a potential shift in political power. The election was called by President Anura Kumara Dissanayake, whose National People's Power (NPP) party aims to secure a majority in the 225-seat legislature, enabling the implementation of anti-poverty programs and crucial reforms. This election takes place amidst the ongoing recovery from a severe financial crisis that saw the removal of former President Gotabaya Rajapaksa in 2022.
Dissanayake's victory in the presidential election in September, where he secured 42% of the vote, further underscores the significance of this parliamentary election. With only three parliamentarians in the outgoing assembly, Dissanayake's NPP needs to gain 113 seats to effectively implement its policy agenda. The NPP, a relatively new party founded in 2019, stands in contrast to Sri Lanka's traditional political landscape, often dominated by established family dynasties. Dissanayake's party faces competition from Sajith Premadasa's United People's Power (Samagi Jana Balawegaya), which came in second during the presidential race. However, the splintered opposition, struggling to regain ground after previous losses, faces a significant challenge. Many veteran politicians from the former ruling party, the Sri Lanka Podujana Peramuna (SLPP), have chosen to sit out this election.
The election's outcome holds immense importance not only for the political landscape but also for Sri Lanka's fragile economic recovery. The country is currently implementing a $2.9 billion bailout program from the International Monetary Fund (IMF), a crucial step following the default on its external debt in 2022. This crisis, driven by economic mismanagement, tax cuts, and the repercussions of the COVID-19 pandemic, led to hyperinflation, foreign currency shortages, and a collapse in the tourism industry, a significant revenue source for the nation. President Dissanayake's campaign initially focused on revisiting the IMF deal, though he has since committed to its terms. While he initially promised to reduce high income taxes imposed under the program, his emphasis has shifted towards balancing economic stability with pro-poor policies aimed at reducing income inequality.
Investors are closely monitoring the situation, expressing concerns that renegotiating the IMF terms could hinder future disbursements and disrupt Sri Lanka's progress toward a primary surplus target of 2.3% of GDP by 2025. A parliamentary majority for the NPP would mark a historic moment, as it would be the first time a leftist, Marxist-leaning coalition holds control over both the presidency and parliament in Sri Lanka. This outcome could lead to a dramatic shift in policy-making, potentially ushering in a more socialist approach to governance. Dissanayake's stance against political corruption and his focus on reforming welfare policies resonate with a public weary of the country's entrenched political elite and recent economic hardships.
However, a failure to secure a majority could leave Dissanayake reliant on coalition partnerships, potentially complicating his reform efforts and slowing down policy changes. Opposition leader Premadasa has vowed to pressure Dissanayake to uphold promises of tax relief, while the conservative New Democratic Front, led by supporters of former President Ranil Wickremesinghe, remains a significant contender. With the new parliament set to convene on November 21st, Dissanayake is expected to use the throne speech to outline his administration's key policy priorities. The election is anticipated to be less contentious and more subdued than previous ones, partly due to the opposition's weakened position and a general lack of enthusiasm for traditional parties.
A potential victory for Dissanayake could significantly realign Sri Lanka's international relationships. Given the country's recent dependence on foreign aid, Dissanayake's administration might seek new avenues for economic partnerships, potentially increasing cooperation with both China and India. The election results will have far-reaching consequences for Sri Lanka's political and economic future, shaping the country's trajectory as it navigates the challenges of recovery and reform.
Source: Sri Lanka snap elections: What’s at stake for the island nation dealing with economic crisis