Sri Lankan President Gotabaya Rajapaksa dropped his brother as finance minister on Monday after calling for a unity government, as protests against a deep economic crisis in the country focused on the leadership of the powerful family.
The debt-laden country, run by Rajapaksa and several members of his family since 2019, is struggling to pay for imports of fuel and other goods due to a scarcity of foreign exchange, leading to hours-long power cuts and a shortage of essentials.
Street protests against the government continued on Monday with crowds gathering in several towns, including in southern Tangalle where people holding posters and the national flag broke through police barricades, media reported.
Many protesters have demanded a total ouster of the Rajapaksas. The president's elder brother is the prime minister, while his younger brother was the finance minister and the nephew the sports minister in the government that got disbanded.
"Four ministers were appointed to ensure parliament and other tasks can be conducted in a lawful manner until a full Cabinet can be sworn in," the president's media office said in a statement, after cabinet ministers resigned and the central bank governor offered to quit in a bid to resolve the crisis.
The presidential media office said Justice Minister Ali Sabry would be the new finance minister, replacing Basil Rajapaksa, who was due to visit Washington this month for talks with the International Monetary Fund (IMF) for a loan programme.
Previous ministers of foreign affairs, education and highways will keep their positions.
"The president invites all political parties representing in the parliament to come together to accept ministerial portfolios in order to find solutions to this national crisis," the president's media office said, calling for a unity government.
Udaya Gammanpila, the chief of one of the 11 political parties comprising the ruling coalition, called the new cabinet "old wine in a new bottle".
"Our demand is for an all-party interim government to restore essential services and to hold a parliamentary election," Gammanpila of the Pivithuru Hela Urumaya party wrote on Twitter. "People should decide their next leaders, not anybody else."
'GOTABAYA SHOULD GO'
Charmara Nakandala, a protester, said the cabinet changes were temporary attempts to placate the public.
"This cabinet change is to try and fool the people," Nakandala, a marketing executive, said at a protest in Colombo, the main city. "This government is over. Rajapaksas no longer can save this by playing musical chairs."
Paikiasothy Saravanamuttu, executive director of the Centre for Policy Alternatives think-tank, said there would be some dissatisfaction with the president holding on to his position.
"The demands on the street were that Gotabaya Rajapaksa should go," Saravanamuttu said. "He was the target."
Sri Lanka's sovereign dollar bonds tumbled more than 5 cents in the dollar in early trading before recouping some of the losses, with many issues trading at deeply distressed levels of around 45 cents and not far off record lows hit in early March, Tradeweb data showed. ,,
Sri Lanka's central bank will hold its monetary board meeting as scheduled on Monday despite Governor Ajith Nivard Cabraal offering to quit earlier in the day.
The developments come after the president declared a state of emergency on Friday, following spiralling street protests in the island nation of 22 million.
The country off India's southern tip is also grappling with soaring inflation after the government steeply devalued its currency last month ahead of the IMF talks.
Sri Lanka's expenditure has exceeded its income under successive governments while its production of tradable goods and services has been inadequate. The twin deficits were badly exposed by the COVID-19 pandemic that crippled its economic mainstay, the tourism industry.
"The annual gross external financing requirements are relatively large," said Toshi Jain at J.P. Morgan, estimating gross debt service would amount to $7 billion this year with the current account deficit coming in at around $3 billion.
"In the absence of significant FX inflows, therefore, meeting this large external requirement is proving very challenging, driving down FX reserves and necessitating sharp import controls."
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