(Bloomberg) -- Sri Lanka’s 17 million voters head to the polls Saturday to elect a president two years after an economic meltdown and a historic debt default caused widespread political unrest and the ousting of the former strongman leader.
Voters must now choose a president who can steer the economy through a fragile recovery and finalize a debt restructuring deal that will allow the International Monetary Fund to disburse more bailout funding the South Asian island desperately needs.
Although a record 38 candidates are on the ballot, the election has been a tight race between three leading candidates: incumbent President Ranil Wickremesinghe, opposition leader Sajith Premadasa, and Anura Kumara Dissanayake, a leftist politician backed by protesters who led the political uprisings in 2022.
At stake is the fate of the $3 billion IMF lending program, with both Premadasa and Dissanayake vowing to renegotiate the loan conditions to ease the burden on the poor. Wickremesinghe helped to broker the IMF bailout and stabilize the economy, although the austerity measures and higher taxes that followed have made him deeply unpopular with voters.
“Sri Lanka has enjoyed a steady, if unspectacular recovery from the 2022 crisis,” Gareth Leather, senior Asia economist at Capital Economics Ltd., wrote in a note. “However, this progress could be put at risk depending on the results of this weekend’s presidential election.”
Observers and some opinion surveys suggest the election may go to a run-off for the first time since the system was introduced in 1982. Under Sri Lanka’s election rules, each voter casts three ballots in order of preference. A candidate needs more than 50% of first-preference votes to win. If no candidate reaches that mark, then voters’ second and third preferences are added to the count, and the person with the most votes is declared the winner.
Polls close at 4 p.m. local time and counting begins immediately. A winner may be known by Sunday, although an uncertain result may cause delays.
Wickremesinghe, 75, has been campaigning on his track record of bringing inflation down from 70% two years ago to low single digits now, and negotiating a debt restructuring with creditors like China and private bondholders. He says policy stability is needed to help bolster the recovery.
“I’ve been upfront with them, I’ve not been promising them things I can’t do,” the president said in an interview in Colombo on Friday. “I said it’s going to be difficult before it gets better.”
Premadasa, 57, is the main opposition leader who heads a political party that split from Wickremesinghe’s in 2020. A former minister of housing and health in previous governments, Premadasa draws much of his support from poorer Sri Lankans and the Tamil minority. He’s vowed to boost exports to spur growth and tackle corruption.
Dissanayake, 55, leads the National People’s Power, a coalition of leftist political parties and groups backed by protesters who ousted then-leader Gotabaya Rajapaksa from power two years ago. Some opinion polls have put him ahead of his competitors in the election, and his rallies have been drawing significant crowds in recent weeks on pledges to fight corruption. Dissanayake has vowed to reopen negotiations with the IMF, and some in his party oppose the debt restructuring framework agreed with the IMF.
Investors are bracing for turmoil in financial markets as the IMF loan program hangs in the balance. Sri Lanka will need to meet certain economic targets before the IMF approves the next tranche of funding, estimated at about $350 million.
“There is a worry about negative repercussions if there is an effort to tinker or renegotiate either the current IMF program or the proposed agreement with debt holders,” said Navin Ratnayake, the head of research at Colombo-based John Keells.
--With assistance from Asantha Sirimanne, Anup Roy, Sudhi Ranjan Sen and Dan Strumpf.
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