Sirisena Reshuffles Sri Lanka Cabinet After Local Poll Defeat

(Bloomberg) -- President Maithripala Sirisena reshuffled the cabinet in Sri Lanka for the second time since forming a unity government in 2015 after its two main coalition partners were defeated in local government elections.

Sirisena announced changes to six cabinet ministers, three state ministers and one deputy minister on Sunday, according to a statement from the president’s office. Prime Minister Ranil Wickremesinghe added the portfolio of law and order to his responsibilities.

"The government needs to improve its policies, programs and actions to serve our people better." Sirisena’s office quoted him as saying in a tweet.

A new opposition party backed by former Sri Lankan president Mahinda Rajapaksa won local government elections on Feb. 10, defeating the parties of Sirisena and Prime Minister Ranil Wickremesinghe, who together run the federal government. Amid moves by Sirisena to appoint a new prime minister, Wickremesinghe said on Feb. 16 that he will restructure his party after its poll loss and would stay in his role as per the island’s constitution while discussing with Sirisena changes to the cabinet.

Sirisena ousted Rajapaksa at presidential polls in 2015 and the unity government he formed with Wickremesinghe won parliamentary elections in August that year.

With no significant changes announced, there will be no impact on the markets, said Adrian Perera, chief operating officer at EquiCapital Investments in Colombo.

"The government will have to take strong action to revive the economy and keep the cost of living down, otherwise the opposition will get activated again and the main parties will be in trouble again in future elections," Perera said.

Sirisena made his first changes to the cabinet in May, including swapping the key finance and foreign ministry portfolios in a bid to bolster the island nation’s development drive.

The central bank on Feb. 15 kept its benchmark interest rates unchanged to help bolster an economy that’s been hit by bad weather across the South Asian island.

The International Monetary Fund has said it supports Sri Lanka maintaining a tightening bias and the monetary authority should contain credit growth and inflation. The central bank has been on hold since raising rates in March last year to bolster the currency. The rupee is down 1.1 percent so far this year.

To contact the reporter on this story: Anusha Ondaatjie in Colombo at anushao@bloomberg.net.

To contact the editor responsible for this story: Ruth Pollard at rpollard2@bloomberg.net.

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