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By Uditha Jayasinghe and Alasdair Pal
COLOMBO/WEERAKETIYA, Sri Lanka (Reuters) - Sri Lankan President Gotabaya Rajapaksa said on Wednesday he would appoint a new prime minister and cabinet this week, after his elder brother and former premier Mahinda Rajapaksa resigned following deadly violence in the country.
The new prime minister and cabinet will command a majority in the 225-seat parliament, Rajapaksa said, adding he will bring constitutional reforms to grant more power to the parliament.
"I am taking steps to form a new government to control the current situation, to prevent the country from falling into anarchy as well as to maintain the affairs of the government that have been halted.
The president's statement followed comments from Sri Lanka's central bank governor earlier in the day, who said he would quit within weeks unless political stability was restored.
P. Nandalal Weerasinghe, appointed central bank chief last month to help the island nation of 22 million people find a way out of its worst economic crisis in history, said a stable government was essential to stop the turmoil.
"I have clearly told the president and other political party leaders that unless political stability is established in the next two weeks I will step down," Weerasinghe told reporters.
"Without political stability, it doesn’t matter who runs the central bank," he said, "There will be no way to stop the economic deterioration."
Ordinary Sri Lankans blame the government led by President Gotabaya Rajapaksa and his family for a meltdown in the Indian Ocean nation that reduced reserves to just about $50 million, stalling most imports and bringing massive shortages of essentials including cooking gas, fuel and medicine.
After more than a month of mostly peaceful demonstrations, public anger exploded into violence this week, when ruling party supporters stormed an anti-government protests camp, triggering clashes nationwide and pushing the prime minister to step down.
Mahinda Rajapaksa, the president's older brother, said he was resigning with the hope of a new, unity government taking over.
But with mobs targeting ruling party politicians, the former prime minister, once hugely popular, was whisked away to a military base in the country's northeast, the defence secretary said.
"He will remain there for the next couple of days and when the situation is normalised, he can be moved to a location of his choice," Kamal Gunaratne said.
On Wednesday, police and soldiers patrolled the streets of Weeraketiya, the Rajapaksa family's home town, where shops and businesses were shut by a curfew that will run until Thursday morning.
NINE DEAD, MORE THAN 200 WOUNDED
With police and armed forces ordered to shoot anyone damaging public property or threatening lives, soldiers in armoured vehicles patrolled the streets of the commercial capital Colombo.
So far, at least nine people, including two policemen, have been killed in violence across the country, which has also left more than 200 people wounded and 136 houses damaged, Gunaratne said.
"This is the time for all Sri Lankans to join hands as one, to overcome the economic, social and political challenges," President Rajapaksa said on Twitter.
"I urge all Sri Lankans to reject the subversive attempts to push you towards racial and religious disharmony. Promoting moderation, toleration and coexistence is vital."
It was not immediately clear what prompted his warning, but Sri Lanka has a long and bloody history of ethnic tension.
Pope Francis urged the government to "listen to the hopes of the people" and respect human rights and civil liberties.
Protesters have also called on the president to go. Analysts say the president can be impeached if he refuses to step down, though the opposition, which has rejected his calls for a unity government, lacks the necessary two-thirds majority in parliament.
No president has ever been successfully impeached and removed from office in Sri Lanka.
NEW GOVERNMENT AWAITED
Sri Lanka has sought urgent loans from the International Monetary Fund (IMF) following financial and other support from neighbour India as well as China, as the violence has further dented a tourism-dependent economy hammered by COVID-19.
The IMF expressed concern about the violence, but said it would continue technical talks begun on Monday with Sri Lankan officials "so as to be fully prepared for policy discussions once a new government has been formed".
The president plans to meet opposition politicians within days in hopes of forming a new government, a cabinet spokesperson said on Tuesday.
Weerasinghe, the central bank chief, said the lack of foreign exchange could led to acute fuel shortages and power cuts lasting up to 12 hours, which may worsen public anger and escalate protests.
"Even with political stability, it will take at least three months for IMF talks and at least six months for debt restructuring," he said. "So a stable government is essential."
(Reporting by Uditha Jayasinghe and Alasdair Pal; Additional Reporting by Munsif Vengattil; Writing by Krishna N. Das and Devjyot Ghoshal; Editing by Raju Gopalakrishnan, Clarence Fernandez, Nick Macfie and Bernadette Baum)