Colombo, Sri Lanka — Opposition leader Sajith Premadasa announced on Thursday that, if elected president, he plans to renegotiate Sri Lanka’s agreement with the International Monetary Fund (IMF) to reduce the financial burden on lower-income citizens while increasing taxes on the country’s wealthier residents. Speaking in an interview with The Associated Press (AP), Premadasa outlined his vision for economic reforms aimed at addressing the inequality caused by the current tax system.
Premadasa emphasized that his party has already initiated discussions with the IMF to explore potential amendments to the existing reforms, which were introduced after Sri Lanka’s historic 2022 default on foreign debt. The default triggered the worst economic crisis in the country’s history, and the government responded with a series of measures, including tax hikes and spending cuts, to stabilize the economy.
“We will be embarking on the third path, the middle path, the path where wealth is created, the country grows, and the wealth is equitably distributed,” Premadasa told AP. He stressed the need for “fundamental changes” to the IMF agreement, urging that it be done in a more “humanistic manner” to ensure that the financial burden falls more heavily on the rich rather than the working class.
Renegotiation of IMF Reforms
Premadasa was particularly critical of the current taxation system, which he said disproportionately affects the middle and lower classes through income taxes and value-added tax (VAT) on goods and services. While these taxes were introduced to boost state revenue, opposition parties argue that many of the wealthy evade their taxes or are shielded by connections to authorities, leaving ordinary citizens to bear the brunt.
Under the IMF-backed reform and debt restructuring program, the government halted borrowing and stopped printing new currency notes in a bid to stabilize the economy. Premadasa said that while some austerity measures are inevitable, the rich should shoulder a larger portion of the fiscal burden. “If there are burdens that have to be imposed, the super-rich and the rich have to disproportionately take a bigger share of the burden,” he said.
Criticism of Wickremesinghe’s Economic Policies
The upcoming September 21 presidential election is widely seen as a referendum on the economic reforms introduced by President Ranil Wickremesinghe, who took office following Gotabaya Rajapaksa’s ouster amid the 2022 economic meltdown. Wickremesinghe’s government has touted a number of successes, including reducing inflation from 70% in 2022 to 0.5% in August 2024, stabilizing the rupee, and improving the country’s foreign currency reserves.
However, Premadasa criticized Wickremesinghe’s economic approach, accusing him of relying too heavily on austerity and “contraction.” Premadasa’s alternative plan focuses on an “export-oriented, knowledge-based economy” as a way to spur growth. “My policy is to grow out of the problem, not contract our way through it,” he said.
Social Justice and Minority Rights
Premadasa, 57, also outlined his broader political agenda, which includes prosecuting members of the Rajapaksa administration for their handling of the COVID-19 pandemic. He specifically referenced the cremation of Muslim COVID-19 victims, a policy implemented despite religious objections, calling it a “racist policy.” Premadasa promised to offer compensation to affected families.
In addition, Premadasa vowed to allow for greater devolution of power to the Tamil-majority northern and eastern provinces, a key demand of the ethnic Tamil community since the end of the 26-year civil war in 2009. He also committed to holding an international donor conference to help rebuild these war-affected areas and bring closure to the issue of people who went missing or were forcibly disappeared during the conflict, which claimed at least 100,000 lives.
A Battle for Sri Lanka’s Future
The election has garnered significant attention as Premadasa challenges Wickremesinghe’s economic management and advocates for a more equitable future. The son of the late President Ranasinghe Premadasa, who was assassinated in 1993, Premadasa also ran in the 2019 presidential election, where he lost to Gotabaya Rajapaksa.
Wickremesinghe, who assumed office after Rajapaksa fled the country during the 2022 protests, is seeking approval for his economic agenda, which aims to make Sri Lanka a developed nation by the centenary of its independence in 2048. Though his policies have stabilized some key economic indicators, critics argue that ordinary Sri Lankans, particularly professionals, continue to face high taxes and a high cost of living.
As Premadasa campaigns to change the course of the country’s economic recovery, he faces stiff competition in a race that has 38 candidates, but he remains one of the leading contenders, with strong support from ethnic and religious minority groups.
The election promises to shape Sri Lanka’s future as the island nation continues to recover from its most severe economic crisis in history.
— Krishan Francis for AP
