Sri Lanka’s local elections are a major threat to the ruling class

Sri Lankans entered 2023 with an unwelcome gift from the government – a new income tax policy. This was meant to bolster empty public coffers as the government tries to navigate the country's economic crisis, but for ordinary people already facing difficulty on every front it was one more blow from the same ruling class that created the mess in the first place. Already, triggered by the new tax policy, protests against the government by large numbers of middle-class professionals have become a regular occurrence. These protests have the potential to spread among other social strata too: the poor and working classes also feel mounting despair because of unrelenting economic hardship. In a situation where most of the burden of Sri Lanka's economic recovery has been passed on to these social classes, a new wave of popular outrage against the ruling elites cannot be ruled out, and there is speculation that renewed citizens' protests this year may well be more widespread and militant than those that shook the country in 2022.

Two themes dominate the political debate in Sri Lanka at present: managing the economic crisis through restructuring sovereign debt and the local government elections announced for March 2023. Debt restructuring talks have begun, but there is yet no concrete plan of action agreed upon between the government and its creditors, for two reasons. First is the delay of the Chinese and Indian governments in agreeing to join international private creditors at the negotiation table, and the resultant hold-up in IMF approval for Sri Lanka's debt restructuring plan, which would unlock an IMF bailout. Despite the deadlock, the Sri Lankan government has already begun to implement key elements of an economic "recovery" programme that officials admit has been proposed by the IMF. The government and bureaucracy have embraced with shameless enthusiasm a new phase of neoliberal economic reforms, hoping to manage a crisis caused by the same brand of neoliberal policies implemented some years ago.