Sri Lanka's Rajapaksa brothers back in business

Amal JAYASINGHE
The Rajapaksa brothers are credited with destroying in brutal fashion ethnic Tamil insurgents to end Sri Lanka's civil war

Sri Lanka's divisive Rajapaksa clan consolidated their grip on power on Thursday as the newly elected President swore in his brother as prime minister amid concerns they could roll back vital economic reforms.

Gotabaya and Mahinda Rajapaksa are credited with annihilating ethnic Tamil separatists to end Sri Lanka's civil war a decade ago when Mahinda was president and Gotabaya effectively ran the security forces.

Mahinda, the elder and more charismatic of the brothers, was unable to run for president, having already served the maximum of two terms between 2005 and 2015 -- clearing the way for his sibling.

Thursday's nationally televised brief ceremony came after Ranil Wickremesinghe stepped down in the wake of Saturday's election.

Gotabaya, 70, was elected president on Saturday thanks to his popularity among the Sinhalese-Buddhist majority, thrashing his main moderate rival despite support from minority Tamils and Muslims.

Rajapaksa campaigned with promises to make the island of 21.6 million people safe in the wake of suicide bombings by homegrown Islamist extremists in April that killed 269 people.

- Reforms threatened -

The International Monetary Fund (IMF) said earlier this month that Sri Lanka's economy was slowly recovering from the impact of the Easter Sunday suicide bombings that crippled the booming tourism sector.

Growth was likely to accelerate to 3.5 percent next year from this year's forecast of 2.7 percent, the Washington-based lender said in early November, compared to 3.2 percent in 2018.

International credit rating agency Fitch warned Thursday though that the new president's pledges to increase social spending, public-sector wages and pensions could jeopardise cutting Sri Lanka's public finances.

Earlier this month, the IMF released the latest tranche of a $1.5 billion bailout that was suspended in October 2018 during a constitutional crisis last year.

Fitch said that coupled with expected bond issues this should ease near-term concerns about Sri Lanka's debts.

"But external debt repayments are substantial at $19 billion in 2020-2023 against reserves of $7.8 billion," Fitch said.

It said that any rollback of economic reforms of the previous government could have implications for Colombo's relations with the IMF.

Sri Lanka's Central Bank rejected the report.

"The contents of the statement issued by Fitch Ratings, which are purely based on loose assumptions, cannot be endorsed," the Central Bank of Sri Lanka said in a statement.

During Mahinda's 2005-15 presidency, Sri Lanka borrowed almost $7 billion for infrastructure projects -- many of which turned into white elephants mired in corruption -- pushing up Sri Lanka's debts.

The new government's policy direction could be signalled when Prime Minister Mahinda Rajapaksa names his new cabinet on Friday.

Mahinda was also prime minister between 2004 and 2005 and again for 52 days during last year's political crisis before the Supreme Court ruled his appointment unconstitutional.

He will likely head a minority government and elections cannot be held before March. His previous governments faced international censure for failing to investigate allegations that around 40,000 Tamil civilians were killed by the military in 2009.