Ravi Karunanayake, a former Sri Lankan commerce minister, is the frontrunner for the finance portfolio under President Maithripala Sirisena, said two politicians of the new ruling coalition.
Sirisena is in discussions with Karunanayake as he forms a scaled-down cabinet from among parties that helped him end Mahinda Rajapaksa’s decade-long rule in the Jan. 8 election. Kabir Hashim, a parliamentarian in Karunanayake’s United National Party, is also under consideration for the post, said the two politicians, who asked not to be identified because the negotiations are private.
Sirisena’s backers, including free-market capitalists, hard-line Buddhist parties and the island’s main Tamil and Muslim groupings, may prompt changes in fiscal and economic policies that could erode Sri Lanka’s credit standing, Standard & Poor’s said last week. Sri Lanka’s next finance minister will need to sustain one of the world’s highest economic growth rates while curbing the influence of China, the island’s biggest investor under Rajapaksa’s rule.
“Focus is likely to be to spur consumption demand and have a broad-based foreign policy to attract lending and investment also from western nations,” Bimanee Meepagala, Colombo-based analyst at the island’s biggest private fund NDB Wealth Management said in a telephone interview today. “Subdued commodities and oil prices should ease pressure on the fiscal side.”
100 Days
Sirisena, who was sworn in on Jan. 9, may announce some cabinet choices today after addressing the nation from the hill station town of Kandy. He has pledged that within 100 days of taking office he will reduce the powers of the presidency in favor of parliament, boost salaries of state employees, protect religious minorities and call parliamentary elections in April.
Karunanayake, 51, a chartered accountant and former businessman, served as minister of commerce and consumer affairs in 2001 under a UNP government. He declined to comment on Sirisena’s possible cabinet choices, while Hashim wasn’t immediately available for comment.
UNP leader Ranil Wickremesinghe, also sworn in on Jan. 9 as the country’s new prime minister, encouraged privatizations and improved ties with the U.S. during two earlier terms as head of government.
Parliamentarians from Rajapaksa’s Sri Lanka Freedom Party may join the cabinet, which would help the passage of reforms, said Rajitha Senaratne, who quit the previous cabinet to support Sirisena.
Excessive Power
Rajapaksa, 69, called an election two years ahead of schedule in a bid for an unprecedented third term as his popularity weakened amid allegations his family was amassing too much power.
The former president held Sri Lanka’s defense and finance portfolios as well as the ports, highways and aviation departments. His brother Basil Rajapaksa was minister of economic development. Another sibling, Gotabaya Rajapaksa, was defense secretary, and his son Namal a member of parliament.
Sirisena, 63, defected from Rajapaksa’s camp in November and the opposition gained momentum with a campaign that criticized the president’s scrapping of term limits and tightened grip over the judiciary, military and bureaucracy.
Rajapaksa strengthened ties with China in the face of U.S. criticism of human rights abuses after he oversaw the end of Sri Lanka’s three-decade civil war in 2009.
Chinese Money
China has poured money into the island nation off India’s southern coast during the past decade, becoming its largest investor, top government lender and second-biggest trading partner. Chinese-funded projects include a proposed $1.4 billion complex the size of Monaco on reclaimed land in Colombo port. Sirisena vowed to scrap that plan.
Sirisena must also name a new governor for Sri Lanka’s central bank, after Ajith Nivard Cabraal resigned in tandem with Rajapaksa’s defeat. Critics say the island’s monetary authority has lacked transparency and independence, especially under the Rajapaksa regime.
During Rajapaksa’s tenure, interest costs have risen to among the highest of countries rated by Moody’s.
An increased dependence on foreign debt endangers Sri Lanka’s economic security, Sirisena said in his manifesto. His government will have to repay or rollover about $2 billion of debt in 2015, the most in data going back to 2005.
Sri Lanka’s benchmark stock index rose to the highest level in almost four years and the currency stayed pat after Rajapaksa conceded defeat on Jan. 9.
To contact the reporters on this story: Anusha Ondaatjie in Colombo at anushao@bloomberg.net; Asantha Sirimanne in Colombo at asirimanne@bloomberg.net
To contact the editors responsible for this story: Stanley James at sjames8@bloomberg.net Jim McDonald, Garry Smith
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