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Sri Lanka: SLPP secures majority; growth and fiscal agenda likely priorities

  • Rajapaksa backed SLPP wins General Elections

  • The Premadasa-led Samagi Jana Balawegaya (SJB) came in second with 54 seats

  • Tall order awaits the Rajapaksa brothers

Asia Securities
7 August 2020
Published byAsia Securities

The much-awaited Parliamentary elections took place on Wednesday, 5th August after delays due to COVID-19 (elections were initially scheduled for April and then postponed for June). As expected, the Sri Lanka Podujana Peramuna (SLPP) backed by the Rajapaksas emerged clear winners, topping 18 of the 22 districts, thereby winning 59.9% votes. The Premadasa-led Samagi Jana Balawegaya (SJB) came in second with 54 seats (23.9% of votes) including the national list seats. Meanwhile, the United National Party led by Ranil Wickramasinghe received 2.1% of votes, obtaining 1 parliamentary seat thought the National List.

Mahinda Rajapaksa will likely take on the reigns of Prime Minister, and the party will look to secure a 2/3 majority in the coming days. Given that several allied parties have secured seats – especially in the Northern province – we believe that SLPP would be able to secure a supermajority in parliament. In our view, the strong results for the SLPP indicate the voters’ need for a change from the United National Front (UNF) era, especially amidst a significant economic slowdown stemming from the constitutional crisis of 2019, Easter Attacks in 2018 and the impact of COVID-19.

The new parliament is expected to meet on the 20th of August.

Tall order awaits the Rajapaksa brothers

The SLPP government now has a challenging agenda of reforms which include 1) stimulating economic growth amidst a 1.6% YoY contraction in 1Q 2020, 2) ensuring national and health security, 2) a political solution to minority concerns and 4) managing the fiscal position amidst low revenue collections.

Along with a 2/3 majority, there is also a high probability of the Government amending the constitution to restore presidential powers, which was curbed in 2015 with the 19th Amendment.