With Gotabaya Rajapaksa Gone, What's Next for Sri Lanka's Economy and Politics?

Sri Lanka declared a state of emergency on Wednesday, 13 July, after reports emerged of President Gotabaya Rajapaksa fleeing the island nation which is going through an extraordinary period of political and economic turmoil.

The surreal events of 9 July that saw the storming of the president's residence, led to not only the resignation of Prime Minister Ranil Wickremesinghe but also an announcement by the speaker that Gotabaya would resign from his post on 13 July.

An all-party interim government is expected to take over soon. It will govern the country until the next parliamentary elections are held.

Now, these resignations were a key demand of the protesters, but there are two fundamental problems that the country still needs to resolve regardless of what happens with the interim government – the economy and the political crisis.

Number one, let's not forget that Sri Lanka's economy is still in shambles. It is, after all, a financial crisis that sparked the protests, bringing the government down.

And number two, Sri Lanka continues to endure a political crisis that is not going to be so easy to resolve. Who are the protesters going to accept as their new leader? And what about their demands?

For instance, one of the demands, as clearly stated in their six-point action plan, is a "process that enables the people to participate in making and amending the law." Such a demand is unprecedented, and may very well be unconstitutional.

Let's look at both these factors in detail.

The Economic Crisis

It is really no secret that Sri Lankans have been skipping meals and lining up for hours to try to buy fuel. The situation with fuel especially is so dire that towards the end of June, the government had to suspend the sales for non-essential purposes.

The UN World Food Program says nearly nine out of 10 families are skipping meals or pacing out their food supplies, while 3 million are receiving emergency humanitarian aid.

The government owes more than $50 billion and is unable to even make interest payments on the loans it has taken, let alone actually pay back the loan.

According to official data, food prices have risen by almost 60% and the tourism sector is not doing any better than before the financial crisis began. Foreign Direct Investment into the country continues to remain scarce.

So, what is being done to help the economy?

India is playing a big role. Sri Lanka is being supported by $4 billion in credit lines from India. Other countries like China, the United States, Japan, and Australia have provided a few hundred million dollars in support.

But its main hopes will hinge on the International Monetary Fund, which, one day after Gotabaya's house was stormed, said that it was closely monitoring the ongoing developments in Sri Lanka and that it hoped that the political crisis would be resolved soon to allow for the resumption of dialogue on an IMF-supported programme.

The bailout plan, however, still seems to be pretty far away, given the IMF would like to ensure that the package is accompanied by strict conditions, so that the aid isn't mismanaged.

After all, Wickremesinghe recently said, "We are now participating in the negotiations as a bankrupt country."

The Political Crisis

Under the Sri Lankan constitution, if both the president and prime minister resign (which is exactly what has happened), the speaker of Parliament will serve as acting president for a maximum of 30 days.

Parliament will elect a new president within 30 days from one of its members, who will hold the office for the remaining years of the current term.

The party of the Rajapaksas, the SLPP (Sri Lanka Podujana Peramuna), has a majority in Parliament. But there is plenty of infighting within the party, plenty of factions. Nobody knows where the votes will go.

Some of the names making the rounds for the next leader are:

• Sajith Premadasa of the SJB (Samagi Jana Balawegaya)

• Anura Kumara Dissanayake of the JVP (Janatha Vimukthi Peramuna), a socialist party

• MA Sumanthiran of the ITAK (Illankai Tamil Arasu Kachchi), a party that represents the Tamil minority

• Saliya Pieris, who is the president of the BASL (Bar Association of Sri Lanka)

Then again, no matter who comes to power, they cannot ignore the demands of the protesters, who want to have a stake in the interim government.

But such an accommodation is not provided for in the Sri Lankan constitution. If non-elected institutions and people are given an official say in Parliament, then that contradicts the provisions of the constitution.

Of course, it can be amended to accommodate the demands of the protesters, but what precedent does that set for the future?