Sri Lanka is going to poll today on 21^st September for the first time since the mass protest “Agralaya” and the economic crisis of 2022. The election comes at a critical stage, and it is regarded as a referendum on economic reforms meant to put the country on the road to recovery. The country’s soaring inflation, extravagant cost of living and poverty have left the voters in a state of disarray. The electorate is seeking to emerge from its economic crisis. More than 17 million voters are expected to cast their votes in the election of 2024.

President Ranil Wickremesinghe of the United National Party who took the role of leading the country out of economic crisis is hoping for another term. He faces strong competition from Anura Kumar Dissanayake of National People’s Power (NPP) and Sajith Premadasa of Samagi Jana Balawegaya. A total of 38 presidential candidates are in the fray.

"With the country seeking to emerge from its economic collapse, this election serves as a crucial moment for shaping Sri Lanka’s recovery trajectory and restoring both domestic and international confidence in its governance," said Soumya Bhowmick, an associate fellow at Observer Research Foundation.

Past Elections and their Trends

In the past elections, the priorities were on National Security. The 2010 election following the end of a three-decade-long civil war was heavily influenced by Mahinda Rajapaksa’s military victory over LTTE in 2009. He used the nationalist, Sinhalese and Buddhist sentiments to garner a landslide victory. Along with it were initiatives of post-war infrastructure growth which held his rule. Critics argue that this was the start of the increasingly authoritarian rule marked by consolidation of power and entrenching dynasty politics. In 2015, Maithripala Sirisena, defected from Rajapaksa’s government to challenge Rajapaksa. Sirisena won with a promise of reducing nepotism and authoritarianism and reconciliation with the minority Tamil. This can be traced from the 19^th Amendment which attempted to reduce Presidential Power. However, the Easter Attacks in 2019 became a major part of criticism from the opposition. This fueled the Rajapaksa family’s return to power with the same national security sentiment.

Reason for the economic collapse in 2022

At the end of the Civil War in 2009, Sri Lanka’s Government focused on the domestic market instead of trying to boost foreign trade. This significantly lowered the export income of the country while the import cost was growing. At the end of 2019, Sri Lanka was losing its foreign reserve and the tax cuts introduced in 2019 lost the government more than $1.4 billion a year in revenues. In early 2021, the government tried to ban the import of chemical fertilizer and switch to organic fertilizer to tackle the foreign currency shortage issue. This resulted in crop failures. They had to supplement the food shortage from abroad, making its foreign currency shortage even worse. In early 2022, Sri Lankans experienced power cuts, and shortages of basic goods like fuel. Inflation was at an all-time high of 50%. In May 2022, Sri Lanka failed to pay interest on its foreign debt for the first time in history. In June 2022 the sale of petrol and diesel was banned for non-essential vehicles. Schools and offices were closed. The government blamed the COVID-19 pandemic which affected Sri Lankan tourism, a major source of income for the country. However, experts think policy decisions were the main reason behind this collapse. Public debt reached more than $83 billion and inflation soared to 70%. The long-term under-taxation, weak exports and poor policy errors, along with the COVID-19 pandemic led to the economic crisis.  Mass protests broke out causing the President to flee the country.

How is the present economic situation?

In March 2023 the interim government led by Ranil Wickremesinghe sought economic assistance from IMF. An agreement for a $3 billion Extended Fund Facility was finalized to “restore Sri Lanka’s macroeconomic stability and debt sustainability, safeguard financial stability, and step up structural reforms to unlock the country’s growth potential”. The condition was anti-corruption reform. Before that in 2022, it had received the assistance of $600 million from the World Bank. In early 2023 the country introduced higher taxes of 12.5% to 36% for higher earners. It increased the VAT to 18% from January 2024. It agreed to reform state-owned enterprises which were incurring losses. In June 2024 Sri Lanka agreed with the Official Creditor Committee to restructure the debt it owed from 17 countries, including India, Japan, and China. The inflation rate has dropped to 5.9% in February 2024. The GDP growth has become positive 5.3% in Q1FY2024 compared to the lowest negative 17.1% in Q1FY2020. The Sri Lankan rupee has been gradually appreciating. The tourism industry saw arrivals double in 2022 and revenue of $2 billion. According to the Central Bank data, Sri Lanka’s gross official reserves rose to $5.9 billion in August 2024.

2024 election

The 2024 elections are special for Sri Lankan people. It is the first election following the Mass protest and has followed the people’s demand for mass reforms. Some people, especially the privileged class appreciate the reforms. However, the majority of Sri Lankans are reeling from the crisis and the austerity measures introduced by the IMF-led recovery program. Policies also include divesting state-owned enterprises by selling shares of state banks to public and private investors to stabilize finances and reduce government liabilities. These measures have increased poverty and inequality in the country. However, the Central Bank continues to point to the reduced inflation as a sign of respite. A UNDP report published in March 2024 said approximately six in 10 (or 55.7%) of all people are multi-dimensionally vulnerable in at least three of the 12 weighted indicators of access to health, education, employment, and income.

This premise of recovering from the Economic crisis and reforming the country’s economy while the rising inequality makes the 2024 election unpredictable. Different from the traditional national security narrative this election has a people-centric agenda of economic stability and inequality at the core.