1. Overview

Sri Lanka’s political landscape is currently undergoing a significant transformation following the election of Anura Kumara Dissanayake, a left-leaning political figure. The elections, held on Saturday, 21 September 2024, resulted in Dissanayake securing 42.31% in the first round, while his main competitor, Sajith Premadasa, garnered 32.76%. As no candidate achieves over 50%, the Election Commission moves to a second round, leading to Dissanayake’s victory with 5,740,179 votes.

2. Historical Timeline

The election follows the 2022 mass protests, which unseat the former president, Gotabaya Rajapaksa, amidst a severe economic crisis. The protests, known as the “Aragalaya” uprising, lead to Rajapaksa’s ouster as the country’s foreign reserves deplete, public debt climbs to $83 billion, and inflation skyrockets to 70%.
Following Rajapaksa’s resignation, Ranil Wickremesinghe is appointed as president, swiftly introducing austerity measures and securing an IMF bailout in March 2023. However, these policies disproportionately affect lower and middle-income citizens, leading to rising public dissatisfaction.

3. Profiling Political Parties

• National People’s Power (NPP):
  Led by Anura Kumara Dissanayake, the NPP is a left-leaning political coalition formed in July 2019. Rooted in socialism and left-wing populism, the NPP advocates for state intervention in the economy, lower taxes, and leftist economic policies, often positioning themselves as champions of working-class and lower-income groups.
• Samagi Jana Balawegaya (SJB):
  Headed by Sajith Premadasa, SJB adopts a centrist and reformist approach, focusing on public-private partnerships for economic growth rather than full privatization. Premadasa emphasizes industrial development, job creation, and social equity, aligning his party with progressivism.

4. Current State of the Economy

The Sri Lankan economy is currently showing moderate growth, projected to increase by 2.2% in 2024. Inflation has been declining, with the National Consumer Price Index (NCPI) at 0.25% in August 2024, indicating some stabilization. Unemployment stands at 4.5% in Q1 2024, but 25.9% of Sri Lankans remain below the poverty line. Income inequality and labor market concerns are persisting. Government revenues are on the rise, and the current account has reached a surplus. Tourism is experiencing a resurgence, with 1.01 million tourists visiting in the first half of 2024, a 62% increase from the previous year.

5. Dissanayake’s Economic Promises

Dissanayake is currently focusing on developing the manufacturing, agriculture, and IT sectors, aiming to mitigate the social impact of austerity measures. He pledges to leverage the IMF deal, while concentrating on reducing inequality through anti-corruption initiatives and good governance.

He is advocating for reverse privatization, aiming to retain public control over key industries and promote import substitution to reduce reliance on foreign goods. His policies include taxing the wealthy to fund social programs, conducting debt audits for transparency, and promoting an inward-focused economic model, contrasting with Wickremesinghe’s export-driven approach.

6. Speculated Future Economic Trajectory

The Sri Lankan economy is expected to continue growing at 2.2% in 2024, showing stabilization. As part of the IMF agreement, debt restructuring negotiations are nearing completion, though the public debt remains at risky levels. Growth is projected to rise moderately to 2.5% in 2025, although inflation and unemployment may also increase.
The Sri Lanka Development Update is forecasting South Asia to remain the world’s fastest-growing region, with 6.0% growth in 2024, primarily driven by India’s strong growth and economic recoveries in Pakistan and Sri Lanka.

7. Conclusion

Dissanayake’s economic strategies are currently focused on boosting domestic industries, alleviating the impact of austerity, and restructuring the country’s debt. However, the economic outlook remains mixed, with moderate growth anticipated alongside lingering vulnerabilities such as high debt, potential inflation, and increasing unemployment.