Sri Lanka’s Supreme Court to rule on legality of parliament dissolution
Sri Lanka’s top court will today rule on whether former President Mahinda Rajapaksa legally dissolved the country’s 255-member legislature and if he can call snap elections.
Sri Lanka has been mired in a constitutional crisis since October 26, when President Maithripala Sirisena replaced PM Ranil Wickremesinghe with Mr Rajapaksa, who failed to command a majority in parliament and decided to dissolve the body.
On Monday, a Sri Lankan court issued a stay preventing Rajapaska from acting as PM until the court reached a verdict on the constitutional legality of President Sirisena’s actions.
Investors are concerned that the constitutional crisis will impact the country’s debt repayments. The government remains heavily indebted to China, owing some $15 billion in loans. As long as the crisis continues, the government remains without a cabinet to manage monetary policy. The Central Bank is in sole control of the state debt, but, without direction from policymakers, it is unclear how long Bank leadership will be able to manage said debt. Either way, expect the Sri Lankan economy to suffer from investor uncertainty as long as the crisis continues.
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