Courtesy Malay Mail

Sri Lanka’s Central Bank governor P. Nandalal Weerasinghe speaks during the Central Bank of Sri Lanka Annual Report 2023 press conference in Colombo May 7, 2024. — AFP pic

COLOMBO, May 7 — Sri Lanka’s tentative recovery from its worst economic crisis could be stalled by presidential elections due later this year, the island nation’s central bank chief warned today.

Months-long shortages of food, fuel and medicines culminated in Sri Lanka defaulting on its foreign debt in 2022 and angry protests that led to the ouster of then-president Gotabaya Rajapaksa.

His successor Ranil Wickremesinghe has introduced austerity measures including sharp tax hikes, and cracked down hard on anti-government demonstrations.

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Nandalal Weerasinghe said the crisis-hit economy had stabilised thanks to tough reforms prompted by an International Monetary Fund rescue package, but the country was not completely out of the woods.

Domestically, what I see as the challenge is to continue the same policies going forward irrespective of the administration,” Weerasinghe said. That is an important one.”

Wickremesinghe’s party has indicated that he will seek a fresh term at the elections due in September or October.

His two main rivals have said they wants to renegotiate terms of the IMF bailout, reduce taxes and increase food and energy subsidies.

Last month, the Asian Development Bank also warned that Sri Lanka’s recovery could be stalled by abrupt policy changes after elections if the outcome weakened the government’s commitment to austerity measures.

Foreign lenders have also warned that any delay in restructuring Sri Lanka’s foreign debt could impact the economy.

Sri Lanka had expected a deal with foreign lenders — including China, its single biggest bilateral creditor — by the end of March, but so far, no accord has been announced. — AFP