Protesters seen here gathered in front of the Colombo presidential secretariat a week ago, have achieved their goal, with lawmakers soon electing a new president to replace Gotabaya Rajapaksa, who fled the country and resigned as president.
Arun Sankar | Afp | Getty Images
According to the chairman of the Ceylon Chamber of Commerce, Vish Govindasamy, business confidence in Sri Lanka is the lowest in recent years.
“Business confidence is probably at its lowest level since I’ve been in business. These are probably the hardest times we’ve faced. But we’re resilient,” he told CNBC’s “Squawk Box Asia” hours before the lawmakers choose Prime Minister Ranil Wickremesinghe as prime minister. president, to take over from Gotabaya Rajapaksa who fled the country.
Wickremesinghe defeated his closest rival, Dullus Alahapperuma, by a wide margin of 52 votes in the three-way race. Of the 225 votes, Wickremesinghe got 134 votes, and Alahapperuma 82. The third candidate, left-wing Anura Kumara Dissanayake, got only three votes, according to Reuters.
Sri Lanka has faced months of protests over food and fuel shortages amid the worst economic crisis in the island nation’s history.
Last week, angry protesters stormed the home of Rajapaksa, whom they blame for the mismanagement of the crisis, and the president fled the country and resigned days later.
“Companies are making sure we survive this difficult time … [but] reforms are absolutely necessary,” Govindasamy told Squawk Box Asia on Wednesday.
Fiscal reforms are essential for the new government, said Roshan Perera, a former director of Sri Lanka’s central bank, who spoke to CNBC before Wickremesinghe was elected.
Having the new government in place is probably more important than the ongoing rescue talks with the International Monetary Fund at the moment, said Perera, who is now a senior researcher at the Advocata Institute think tank in Colombo.
“The government there is really more critical because they can present an interim budget immediately,” he told CNBC’s “Street Signs Asia” on Wednesday.
Perera noted that the IMF package is also important, as it will help strengthen external reserves.
“This is important because it gives confidence in terms of our currency as well as in terms of restoring external stability,” he said, adding that collaborating with the IMF allows other donors to intervene to alleviate the economic difficulties that people suffer.
Perera said higher taxes under the new administration will be inevitable.
“We have to understand that we have been living beyond our means for too long … The day of the bills has come,” he said, adding that the burden of paying higher taxes should be borne by those that they can afford it. .
He noted the need to dampen households in poverty as a result of the two blows of the Covid-19 pandemic and the economic crisis. “You can’t expect them to continue to endure these difficulties. So this has to be addressed through social safety nets, maybe cash transfers,” he said.
Separately, Asanga Abeyagoonasekera, a senior member of the global think tank Millennium Project, told CNBC ahead of the vote that whoever becomes the next leader will have to hold accountable “by pursuing the corrupt.”
They must “dismantle the autocratic footprint left by Gotabaya and democratize, restore balance and independent institutions,” he said.
