Sri Lanka's Presidential Election: Evaluating Economic Recovery Two Years After Crisis Under Ranil Wickremesinghe

Two years ago, Fathima Shiyama, a food cart worker, faced long waits for essentials like cooking gas and fuel. This was a common struggle for many Sri Lankans amid economic and political turmoil. Under President Ranil Wickremesinghe, the economy has shown signs of recovery. As the nation approaches a crucial presidential election, economic indicators have improved, and shortages of food and fuel have ceased.

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Inflation, once at 70%, is now nearly under control. On Thursday, the government announced the completion of its debt restructuring. The finance ministry confirmed agreements on restructuring international sovereign bonds, following previous arrangements with local and bilateral lenders. Despite these improvements, many Sri Lankans continue to face financial hardships.

Economic Challenges and Election Promises

Shiyama struggles to cover monthly expenses and her daughter's medical costs. She resorts to borrowing from loan sharks at high interest rates. "We are trying our best to survive despite many difficulties," she said while selling traditional foods from her cart near Colombo. The upcoming election sees Wickremesinghe competing against opposition leader Sajith Premadasa and Anura Dissanayake of a Marxist-led coalition.

The candidates promise prosperity through new industries, improved agriculture, expanded tax bases, and job creation. Under Wickremesinghe's leadership, Sri Lanka began negotiating with international creditors to restructure its debt. The finance ministry stated that restructuring agreements will provide over USD 17 billion in debt relief.

Impact of Economic Policies

The International Monetary Fund approved a four-year bailout last year. However, many citizens are unhappy with increased electricity rates and heavy taxes imposed to meet IMF conditions. Tourism earnings have risen, and the rupee has strengthened, but austerity measures have led to rising prices for households.

Murtaza Jafferjee, an economic analyst, noted that while the economy is improving, it hasn't fully recovered. He suggests aiming for 4% growth instead of the government's 3% target. Jafferjee emphasized policies should benefit all citizens, not just the elite. "It is high time that we run this country for the benefit of the 22 million people," he said.

Historical Context and Current Conditions

Sri Lanka's economic crisis began before 2022 due to poor management by successive governments and pandemic impacts. Former President Gotabaya Rajapaksa's tax cuts in 2019 and a ban on chemical fertiliser imports worsened the situation. The Ukraine war further escalated food and fuel prices.

Today, inflation is below 5%, eliminating queues for essentials. However, key economic sectors remain troubled. Jagath Dissanayake's construction firm in Gampaha struggles as material costs tripled. Most projects are halted, leading to layoffs of two-thirds of his staff.

Job Losses and Migration

The construction industry lost about 400,000 jobs in four years. Once contributing nearly 12% to growth figures, its share has fallen to 7%. Many Sri Lankans seek work abroad for better opportunities.

Viraj Maduranga left his teaching job in Sri Lanka for Dubai in 2021 due to financial struggles. "Either I had to sell off the house and the car or find an alternative income," he said. Now teaching in Dubai, he won't vote in the election but hopes for change back home.

Public Sentiment on Political Promises

W A Wijewardena, an economic analyst, expressed skepticism about candidates' promises: "We have seen it in the past... they have simply ignored what they have said during campaigns." Jafferjee called the election "extremely crucial" for recovery and urged pro-consumer policies.

Sri Lankans like Maduranga await change eagerly. He wishes to return home debt-free but must first repay loans. "This is not the best time to go back," he said. "I want to live in Sri Lanka as a free man without being indebted to anyone."