In the Sri Lankan presidential election held on 21 September, left-leaning candidate Anura Kumara Dissanayake, leader of the National People's Power (NPP), emerged victorious, signaling a clear rejection of the old political establishment by the Sri Lankan people. Battling a prolonged economic crisis, voters chose Dissanayake not only for his promise of economic recovery but also for his commitment to making the process less painful for ordinary citizens. Sri Lankan politics, which had shifted to the right following the rise of Mahinda Rajapaksa in 2005, remained under his influence until 2015. This election, however, marks a resurgence of faith in a left-leaning coalition, as the public seeks new leadership to navigate the country's challenges.

Sri Lanka faced a severe economic crisis in 2022 when the country defaulted on its external debt, plunging it into financial turmoil. This crisis was largely attributed to the mismanagement of finances by the political leadership and widespread corruption. Over the years, Sri Lanka relied heavily on raising funds through bonds and engaged in vanity projects, many of which were financed by China. Reckless tax cuts further eroded the government's revenue base.

Skyrocketing inflation and a cost-of-living crisis

Key sources of foreign exchange—tourism, rubber, readymade garment (RMG) exports and remittances—were severely hit during the COVID-19 pandemic. The situation worsened with the onset of the Russia-Ukraine war, as both countries had been significant sources of tourists and food supplies for Sri Lanka. The conflict also disrupted fuel supplies and triggered a surge in fuel prices, compounding the country’s economic difficulties and driving inflation to record levels.

Naturally, the 2024 election campaign was dominated by economic concerns, with a focus on the foreign exchange crisis of 2022, which led to shortages of essential goods, mass protests, and the resignation of President Gotabaya Rajapaksa. His successor, Ranil Wickremesinghe, managed to stabilize the economy by securing a $3 billion loan from the International Monetary Fund (IMF). However, the austerity measures and tax hikes that accompanied the bailout made him increasingly unpopular.

Though the IMF deal is expected to support long-term economic recovery, it has also led to skyrocketing inflation and a cost-of-living crisis. Wickremesinghe’s efforts, while stabilizing, have not alleviated the immediate financial pain felt by the public, leaving many Sri Lankans disillusioned and eager for change in leadership.

Competing visions for country's recovery

The Sri Lankan presidential election saw a significant voter turnout, with nearly 75% of eligible voters casting their ballots, reflecting strong public interest amid ongoing economic challenges. This election featured a record 38 candidates, though only four were considered key contenders.

Incumbent President Ranil Wickremesinghe, who took over after Gotabaya Rajapaksa's resignation, sought re-election after attempting to stabilize the economy. He faced challenges from Anura Kumara Dissanayake, leader of the left-leaning Janatha Vimukthi Peramuna (JVP) party, Sajith Premadasa of the Samagi Jana Balawegaya (SJB) party, and Namal Rajapaksa from the Sri Lanka Podujana Peramuna (SLPP), the 38-year-old eldest son of former President and Prime Minister Mahinda Rajapaksa. Namal Rajapaksa aimed to bring change, but support for the Rajapaksa family had dwindled due to the economic collapse of 2022.

Each of the leading candidates presented competing visions for Sri Lanka’s economic recovery. Dissanayake promised to eliminate corruption and seek amendments to the controversial IMF deal, despite it being difficult to renegotiate. Both he and Premadasa vowed to ease the austerity measures tied to the IMF bailout, which have been unpopular among the public. Dissanayake’s coalition, however, reassured the international community that they would work within the framework of the IMF agreement and seek modifications rather than cancel it altogether. His National People's Power (NPP) alliance also committed to fighting government corruption and reviewing foreign loan agreements, particularly those with China. Dissanayake became a voice for the public’s frustration with the entrenched political elite.

Wickremesinghe, on the other hand, faced criticism for the austerity policies that, while stabilizing the economy, exacerbated inflation and the cost of living. He warned that renegotiating the IMF deal could delay vital financial support, but this did little to sway voters struggling under the economic strain.

Results reflect demand for change

Sri Lanka’s election system allows voters to rank their top three candidates. If no candidate secures a majority in the first round, the top two candidates move to a run-off. The ballots of eliminated candidates are then examined for second-preference votes, which are redistributed to the remaining candidates. In this election, Anura Kumara Dissanayake and Sajith Premadasa emerged as the two candidates in the run-off, with Dissanayake ultimately winning the presidency. His victory signals a demand for change as Sri Lankans continue to grapple with the effects of the ongoing economic crisis.

From India’s perspective, the hope is that Sri Lanka's newly elected president will continue the recent positive developments in bilateral relations. The economic crisis in Sri Lanka has led the country to look to its neighbor India for support. In line with its 'Neighbourhood First' policy, India stepped in with nearly $4 billion in assistance to help Sri Lanka navigate its financial crisis. Both nations have also worked together to strengthen regional security and reduce external interference.

In a way, Sri Lanka's economic crisis has served as a blessing in disguise, bringing India and Sri Lanka closer as South Asian neighbors. However, India remains concerned about security in the Indian Ocean, where China has been actively expanding its influence. Dissanayake’s party has pledged that under his leadership, Sri Lanka will not engage in power plays between global powers and will ensure that its territory is not used against any other nation.

If Sri Lanka can achieve economic stability and maintain peace in the Indian Ocean Region, it would be a win-win situation for both countries, ensuring mutual benefits in terms of security and cooperation.

(The author is an Associate Fellow, Manohar Parrikar Institute for Defence Studies and Analyses (MP-IDSA). Views are personal. He can be contacted at anand_rai@hotmail.com )