Sri Lanka’s president and cabinet set to step down, c.bank governor remains

COLOMBO, July 11 (Reuters) – Sri Lankan President Gotabaya Rajapaksa and the entire cabinet will step down to make way for a unity government, the Prime Minister’s Office announced on Monday, after tens of thousands of protesters stormed the official residences of the two men.

After Saturday’s widespread protests following a debilitating economic crisis, the speaker of parliament said Rajapaksa would step down on Wednesday. However, there has been no direct word from Rajapaksa about his plans.

Prime Minister Ranil Wickremesinghe said he would also step down to allow a multi-party caretaker government to take over. Wickremesinghe’s office said Rajapaksa had confirmed his resignation plans to the prime minister, adding that the entire cabinet would step down once an agreement was reached to form a multi-party government.

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Political instability could hurt the country’s negotiations with the International Monetary Fund for a bailout, the central bank governor told Reuters in an interview. Read more

Governor P. Nandalal Weerasinghe has indicated he will remain in office despite saying in May that he could step down if there is no political stability in the island nation of 22 million people.

When asked if he would continue to lead the central bank, Weerasinghe said: “I have the responsibility once I have been appointed for a six-year term.”

Protest leaders said the crowds would continue to occupy the president’s and prime minister’s residences in Colombo until they finally leave office. Over the weekend at the president’s house, protesters jumped in the pool, lay on a four-poster bed, took turns jostling on a treadmill and tried out the couches. Read more

Colombo was quiet on Monday as hundreds of people strolled through the secretariat and the president’s residence and toured the colonial-era buildings. The police made no attempt to arrest anyone.

“We are not going anywhere until this president leaves and we have a government that is acceptable to the people,” said Jude Hansana, 31, who is at a protest site outside the residence. since early April.

Another protester, Dushantha Gunasinghe, said he traveled to Colombo from a town 130 km (80 miles) away, walking part of the way due to fuel shortages. He said he finally arrived Monday morning.

“I’m so exhausted I can barely speak,” said the 28-year-old as he sat in a plastic chair outside the president’s desk. “I’ve come this far alone because I believe we have to go all the way. This government needs to come home and we need better leaders.”

“TOTAL CHAOS”

Rajapaksa and Wickremesinghe were not at their residences when protesters stormed into buildings and have not been seen in public since Friday. Rajapaksa’s fate was not known, but Wickremesinghe’s media team said in a statement that he held a meeting with cabinet ministers at the prime minister’s office on Monday morning.

Wickremesinghe’s private home in an affluent Colombo suburb was set on fire on Saturday and three suspects were arrested, police said.

Constitutional experts say that once the president and prime minister officially step down, the next step would be for the president to be appointed interim president and for parliament to vote for a new president within 30 days to complete Rajapaksa’s term. was due to end in 2024.

Ordinary Sri Lankans have mainly blamed Rajapaksa for the collapse of the tourism-dependent economy, which has been hit hard by the COVID-19 pandemic and the ban on chemical fertilizers which have hurt agricultural production. The ban was later overturned.

Public finances have been crippled by mounting debt and lavish tax breaks granted by the Rajapaksa regime. Foreign exchange reserves were quickly depleted as oil prices rose.

The country is running out of dollars to import fuel, which has been severely rationed, and long queues have formed outside shops selling cooking gas. Headline inflation in the country of 22 million people hit 54.6% last month, and the central bank has warned it could hit 70% in the coming months.

The political crisis sent Sri Lanka’s government bonds, which are already in default, to new lows. The country’s 2025 bonds fell 2.25 cents on the dollar as most were now below 30 cents, or 70% below face value.

Lutz Roehmeyer of Capitulum Asset Management, which holds Sri Lankan dollar bonds, said a deal with the IMF could come this year or next, but for bondholders a restructuring wouldn’t have happened. probably only in 2024 or 2025, not next year.

“It’s total chaos,” Roehmeyer said. “It is expected that the transition of power will be more chaotic and that it will take longer to reach an agreement.”

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Reporting by Uditha Jayasinghe and Devjyot Ghoshal Additional reporting by Marc Jones and Karin Strohecker in London Writing by Krishna N. Das Editing by Christopher Cushing and Raju Gopalakrishnan

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