Brothers Look to Consolidate Power After Sri Lanka Election Win

(Bloomberg) -- The brothers ruling Sri Lanka scored a landslide victory in parliamentary elections even as they fell short of a two-third majority that would allow President Gotabaya Rajapaksa to push through contentious constitutional changes that restore sweeping executive powers to his office.

Rajapaksa -- who has run a minority government since he won a November presidential poll and appointed his brother and former strongman Mahinda as the prime minister -- wanted to win at least 150 of the island’s 225-seat parliament. That would allow him to bolster the role of the presidency and give him greater influence over the judiciary, military and bureaucracy.

Gotabaya’s Sri Lanka Podujana Peramuna Party polled 59.1% to 23.9% for Sajith Premadasa’s Samagi Jana Balawegaya party, which translated to 145 and 54 parliamentary seats respectively, according to state television Rupavahini.

The Rajapaksas can still obtain support from parties such as the Eelam People’s Democratic Party, which won two seats, or “poach” members of parliament in order to get the supermajority, so constitutional amendments are still possible, said risk consultancy Eurasia Group. “However, it is unlikely to be the immediate priority, as there are other more pertinent issues.”

A constitutional amendment under former Prime Minister Ranil Wickresinghe’s United National Party government had clipped some of those presidential powers.

Weak Opposition

Gotabaya’s SLPP faced a weakened opposition in this parliamentary election as Premadasa, his main rival in the presidential poll, broke away from the UNP earlier this year and set up a new party with some of its younger and more progressive members.

“A two-third majority would lead to a president with absolute political power -- the greatest concentration we have seen in Sri Lanka -- depleting power of the prime minister,” said Dayan Jayatilleka, Sri Lanka’s former permanent representative at the United Natioins. “The hope with a simple majority is for the functioning of a normal political system.”

Sri Lanka’s rupee was 0.1% higher at 185.35 per dollar at 10;15 a.m. local time while the benchmark Colombo All-Share Index closed up 0.6% at 5176.85 Thursday.

Shortly after his victory in November, Rajapaksa announced tax cuts and a moratorium on debt for small businesses in order to kick-start the economy battered by political turmoil since late 2018 and last year’s Easter Sunday terror attacks. The turnaround in fiscal consolidation measures however led to the expiration in June of a $1.5 billion International Monetary Fund program without completing disbursements, even as the nation had to contend with a new challenge: the Covid-19 pandemic.

Investors will be watching for cues on the new government’s strategies to tackle “their escalating external liquidity and debt challenges,” Citi analyst Johanna Chua said in a note. A “strong majority means government can take tough actions,” Chua said.

“IMF support is key but it might take a while for them to reverse tax cuts given weak economy and their focus on constitutional change,” she added.

©2020 Bloomberg L.P.