ECONOMYNEXT – Sri Lanka’s President Gotabaya Rajapaksa appointed Ranil Wickremesinghe as Prime Minister amid the worst currency crisis in the history of the country’s central bank making it the sixth time he got the post.
Wickremesinghe pipped main opposition leader Sajith Premadasa of the Samagi Jana Balawegaya to the post, as he delayed insisting that Rajapaksa resign.
Premadasa wrote to President Rajapaksa hours before Wickremesinghe was sworn in saying he was willing to take up the post subject to four conditions.
Wickremesinghe was first Prime Minister under Ranasinghe Premadasa, Sajith’s father and steered the country after his assassination through an election that his United National Party lost.
Wickremesinghe returned to office in 2001, after a currency crisis which saw the rupee collapse and the economy contracted for the first time since records began.
Sri Lanka has an intermediate regime central bank set up in the style of Argentina’s in 1950s by a US money doctor and its currency has fallen from 4.70 to the US dollar to 380 so far in the worst performance among South Asian monetary authorities.
He gained credibility as a economic whiz after the economy recovered strongly with low inflation and a strong currency under a tight International Monetary Fund backed program and privatization.
However his party suffered in both opposition and after it returned to power in 2015 when two currency crises triggered by the central bank in the pursuit of output gap targeting triggered monetary instability and slowed growth.
One Member Party
A bomb blast in Easter of 2019 helped bring Rajapaksa’s back to power. Wickremesinghe’s UNP suffered a humiliating defeat failing to directly win any seat as the SJB brokeway and took most of its vote base. He came to parliament on a residual vote total.
Under Rajapaksa’s and extreme output gap targeting was pursued with large volume of money being printed and taxes cut. The country ran out of reserves and defaulted on its foreign debt in April.
Wickremesinghe’s appointment was slammed by Omalpe Sobitha, Buddhist monk and the country’s Catholic Cardinal, shortly before the appointment.
“This is not the change the country is looking for,” he said. Wickremesinghe has come under firm in parliament for being close the Rajapaksa family.