Sri Lanka’s UNF to form own administration, no coalition

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ECONOMYNEXT – Sri Lanka’s United National Front will form its own administration without getting into a coalition, senior party officials said with its leader Ranil Wickremesinghe expected to be appointed Prime Minister as early as Sunday.

“We want to go for a United National Front government,” former State Minister of Finance Eran Wickremeratne said.

“It will be a financially disciplined administration.”

President Sirisena is expected to re-appoint Wickremesinghe as Prime Minister Sunday.

Sirisena sacked Wickremesinghe, saying he could not work with him and appointed Mahinda Rajapaksa as Prime Minister plunging the country into a political and economic crisis.

Wickremesinghe has poor people skills according to his critics and has weak relations even with members of his own party.

President Sirisena had said there was a ‘cultural’ gulf between him and Wickremesinghe.

He had repeatedly offered to make any UNF legislator the Prime Minister other than Wickremesinghe.

Sirisena had said there were also policy differences between him and Wickremesinghe’s party.

Wickremeratne said mechanisms will be developed to work with the President and engage in policy discussions. A common program will be worked out for the next year.

Wickremeratne said there will be no coalition administration, which has led to policy deadlocks.

Anyone wishing to join the administration has to come into the UNF, and not operate as a coalition partner that is a separate party, he said.

Under the constitution any administration that is not a coalition should only have 30 ministeries.

Wickremesinghe will take over a country with a credit system de-stabilized by sterilized forex sales, or printing money after intervening in the forex market.

There is no budget with the end of the year just two weeks away and large debt repayments coming up early next year.

Three rating agencies downgraded Sri Lanka by one notch to ‘B’ from ‘B+’ during the crisis and risk premiums have shot up.

Sri Lanka’s central bank defended the currency and printed money to keep interest rates down, triggering reserve losses and putting pressure on the currency.

Capital flight intensified during the crisis. In November Sri Lanka lost over 800 million dollars in forex reserves.

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