Sri Lanka President Dissolves Parliament, Calls Early Poll

Anusha Ondaatjie
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(Bloomberg) -- Sri Lanka’s new president Anura Kumara Dissanayake dissolved the nation’s parliament with effect midnight Tuesday and called for early elections, framing his decision as steps toward combating corruption and renegotiating a $3 billion bailout from the International Monetary Fund.

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In a special gazette, the president ordered the parliamentary election to be held on Nov. 14 and for the new legislature to meet on Nov. 21. Under the constitution, Sri Lanka was due to hold the elections by the middle of 2025. The nation’s executive system gives the president power to dissolve parliament and call snap polls, as well as to hold multiple cabinet portfolios.

Dissanayake, 55, a leftist political outsider, won the presidential race on Sept. 21. His victory was a stunning rebuke of Sri Lanka’s political elite, which voters blamed for leading the island nation into a historic economic crisis a couple of years ago.

Dissanayake, popularly known as AKD, won 5.74 million votes acrpss two rounds of counting in the country’s first-ever runoff, defeating opposition leader Sajith Premadasa, who came in second, as well as incumbent President Ranil Wickremesinghe, who helped broker the IMF loan program.

The president is scheduled to address the nation at 7:30 p.m. local time Wednesday.

Dissanayake leads the National People’s Power, a coalition of leftist political parties and groups backed by protesters responsible for ousting President Gotabaya Rajapaksa in 2022. The NPP had just three parliamentarians in Sri Lanka’s now-dissolved 225-seat legislature.

The calling of parliamentary elections, close on the heels of Dissanayake’s victory, is seen as a bid to bolster his numbers in the legislature and push through policies tied to campaign promises.

“They need to have a solid plan to secure a parliamentary majority, to do anything. If not they will have a problem,” said Suhini Fernando, the chief executive officer of Reliance Capital (Pvt) Ltd, a Colombo-based capital market advisory. “Then we need a solid economic plan for people to invest in Sri Lanka.”

READ: Moody’s Says Major Disruption to Sri Lanka IMF Program Unlikely

Dollar bonds due March 2029 rose 1.7 cents to 53.5 cents on the dollar on Wednesday. Local shares have extended gains since the election, with the broader Colombo Stock Exchange All Share Index headed for its seventh straight day of advances. The gauge has added more than 8% since its recent bottom on Sept. 12.

On Tuesday, Dissanayake chose Harini Amarasuriya from his coalition as the nation’s new prime minister and appointed a three-member cabinet, which includes himself and others from his party. Earlier in the week, Prime Minister Dinesh Gunawardena resigned, thereby dissolving the previous cabinet and allowing Dissanayake to make his appointments. The same day, Dissanayake also chose a replacement for his seat in the parliament.

The newly-appointed interim cabinet will oversee the running of the government and can allocate funds from the 2024 budget for state operations until the election is concluded. Sri Lanka’s federal budget is traditionally announced at the end of each calendar year.

Dissanayake leads a party that was once known for violent Marxist uprisings in the 1970s and 1980s, but has since renounced those tactics. The incoming president has positioned himself as a center-left figure.

In his inaugural speech, Dissanayake said he was fully committed to democracy during his five-year term.

“We have got a very challenging country. Our policies have to be clearer. People expect a cleaner culture,” Dissanayake said on Monday. “We are ready to commit to that.”

--With assistance from Asantha Sirimanne, Marcus Wong and Ashutosh Joshi.

(Updates throughout)

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