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(Bloomberg) -- After months of persistent street protests over fuel shortages, surging prices and financial mismanagement, Sri Lankan leader Gotabaya Rajapaksa is finally on the verge of being ousted.
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The president fled on Saturday to an undisclosed location shortly before demonstrators stormed his official seaside residence in the face of tear gas and rubber bullets. In dramatic scenes, they wandered through the rooms, frolicked in the swimming pool and helped themselves to food and drink -- a reminder of the struggle to find basic goods with inflation set to hit 70%.
Hours later, Parliament Speaker Mahinda Yapa Abeywardena announced on national television that Rajapaksa would step down on Wednesday. While the president had previously vowed to serve out the remaining two years of his term, he was surprised that protesters would break into his residence even with an overnight curfew, limited public transport and a lack of petrol, according to a government official familiar with the events.
Protesters also breached both the official and private residences of Prime Minister Ranil Wickremesinghe, who offered to resign as well. His whereabouts were also kept secret after one of his homes was set on fire and security forces assaulted media personnel -- one of the few instances of violence during the hourslong mass protest.
“People have had enough of the economic situation,” said Bhavani Fonseka, a senior researcher at the Colombo-based Center for Policy Alternatives. “The frustration is palpable and it is worrying as the country needs a peaceful transition of power now with the economic problems we have. The power vacuum will need to be addressed.”
How Sri Lanka Landed in a Crisis and What It Means: QuickTake
While Rajapaksa had previously survived displays of violence, including the torching of his family’s ancestral house in southern Sri Lanka on May 9, public anger intensified as fuel shortages worsened. The storming of his residence came less than two weeks after the government abruptly restricted fuel supplies and told residents to stay home.
The uncertainty raises more questions about discussions with the International Monetary Fund on a loan program to help shore up reserves and pay for imports of food and fuel. The global monetary body said over the weekend it would continue technical discussions with Sri Lanka’s Finance Ministry and central bank.
It’s not clear where things go from here. In an all-party meeting on Saturday, leaders demanded that both Rajapaksa and Wickremesinghe resign. The parliament speaker would then act as interim president for 30 days before the legislature votes in a new leader and government. Elections would follow after that.
Both leaders signaled they would step aside, but that has yet to officially happen.
Rajapaksa hasn’t made any public remarks even though he told the parliament speaker that he would leave office. Shortly before the decision was made public, the president mulled whether to impose another emergency and curfew but he was advised against it, said the government official, who asked not to be identified discussing private deliberations.
On Sunday, Rajapaksa ordered government officials to expedite gas distribution to the public as soon as a shipment comes in later in the day, according to a statement from his office. Another gas cargo is set to arrive on Monday.
Calls to Rajapakasa’s media representatives went unanswered over the weekend.
Military in Focus
Wickremesinghe’s media office said he would stay on as caretaker prime minister until a new government was sworn in, to help oversee fuel distribution and present a debt sustainability report to the IMF. He’s been leading talks with the multilateral lender in his joint role as finance minister.
If Rajapaksa resigns first, Wickremesinghe can still become interim president and play a role in shaping the incoming government -- a scenario likely to be opposed by protesters and many lawmakers.
Some analysts have also expressed concern the military may intervene. General Shavendra Silva, a Rajapaksa ally who was appointed Chief of Defence Staff last month, called on Sri Lankans to support the armed forces and police to ensure peace in the country.
Among elected politicians, one frontrunner for the presidency is opposition leader Sajith Premadasa, who was rejected by Rajapaksa two months ago for the prime minister position.
There’s also likely to be a push for a candidate from the ruling Sri Lanka Podujuna Peramuna so that power remains with Rajapaksa and his family. Yet rival candidates in the party, which enjoys a majority in parliament, could split the vote.
Whoever takes power faces a tough road ahead: Former finance minister Ali Sabry told parliament in May it would take Sri Lanka two years to emerge from the crisis. The government also needs to agree on restructuring terms with bondholders before securing funds from the IMF -- a process history suggests may take one to three years, according to Barclays.
In the meantime, protesters have vowed to continue occupying Rajapaksa’s official residence until he leaves.
“The interim government will have to accept an economic program that will be politically costly to them,” said Jehan Perera, executive director at the National Peace Council in Sri Lanka. “The leader has to be convincing and trusted enough for the people to accept it.”
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