This 21 September marks the second anniversary of Sri Lanka’s National People’s Power (NPP) government, a political movement led by the left-wing Janatha Vimukthi Peramuna (JVP). Two years ago, the NPP candidate Anura Kumara Dissanayaka secured a dramatic victory in a three-cornered Presidential election and emerged as the first-ever left-wing leader in Sri Lankan political history to hold the country’s highest office.
The dramatic rise of the JVP/NPP in 2024, which had long been a peripheral force in Sri Lankan politics and was often overlooked by its opponents as a mere protest party, is associated with the unprecedented economic crisis Sri Lanka endured in 2022. The economic crisis, which led to a sovereign debt default in April 2022, resulted in a political crisis that eroded public confidence in established political parties — mainly the Sri Lanka Podujana Peramuna (SLPP), led by the powerful Rajapaksa dynasty. In a sense, the rise of the NPP largely reflects the aspirations and expectations that underlined the massive public protests that swept Sri Lanka amidst the 2022 economic crisis.
At the time of the crisis, the JVP-led NPP framed the political scenario as a contest between the people and a ‘corrupt elite-establishment’. This populist framing aimed at appealing to diverse social segments, capitalising on the disappointment and discontent among the masses with traditional political parties. The NPP pledged to form a government free of corruption and to bring to justice those accused of various corrupt deals associated with former governments. It further promised a ‘new political culture’ in which political representatives would be accountable to the people and cease to be a privileged vocation channelled towards self-interest.
The two years of the NPP rule, which it has framed as a ‘rule of the people’, offer a nuanced picture characterised by a tension between attempts to establish a new form of governance reflecting a modernising effect and constraints imposed by a challenging and largely unfavourable international environment.
Politics and Governance
President Anura Kumara Dissanayaka’s two-year tenure has been marked by an unprecedented, ongoing process to transform the country’s politics and governance. There has been a significant attempt to dismantle what Dissanayaka described as the corrupt political establishment. Factors like widespread corruption, nepotism, political patronage for illicit underworld activities and impunity enjoyed by the political elite have been defining features of Sri Lanka’s day-to-day political life for decades. The NPP government has launched an ambitious programme to reverse these tendencies. Some significant developments are as follows.
Anti-corruption has become a defining feature of day-to-day politics at the highest levels of government, contributing to a marked decline in the appropriation of public funds for personal gain. Furthermore, the nexus between the criminal underworld and governance, which had been an enduring feature of Sri Lankan politics, has been significantly disrupted. A sense of altruism and modesty has been introduced to the style of governance. The government scrapped many privileges afforded to those who hold political office, including pensions for Parliamentarians and former Presidents. Luxury bungalows used as ministerial residences in the past have been allocated for public use.
Further, the government has embarked on a drive to end impunity, resulting in many prominent political figures associated with the old political establishment being investigated and prosecuted. For example, for the first time in the country’s history, a former President, Ranil Wickremasinghe, was arrested and is now facing prosecution on charges of misappropriation of public funds. Leading figures of the once-powerful Rajapaksha dynasty are also awaiting prosecution. Ensuring justice for the misdeeds of those who held power has also been a prominent demand in the 2022 protests.
At the level of day-to-day governance, changes are visible too. For instance, political allegiance appears to play a considerably less significant role in decisions regarding recruitment to public-sector employment and eligibility for welfare schemes. Nepotistic practices have been significantly discouraged. Sri Lanka’s traditional parties, which have historically been organised around powerful political families, have often facilitated the reproduction of power through familial and personal connections. On the contrary, the JVP/NPP, which is influenced by principles of democratic centralism, represents a marked departure in its conduct. Responsibilities of the administration today appear to be largely decided on the grounds of merit, not dynastic links.
Another significant achievement is evident in the field of ethnic relations. The government — which also secured the highest number of seats in the Tamil-speaking North and Eastern provinces during the 2024 Parliamentary elections — has repeatedly reiterated its commitment to building ‘national unity’ and combating communalism. For sure, issues stemming from structural discrimination faced by minority communities are not completely addressed, and there is much to be done in that respect. But the government detaching from the discourse of ethno-nationalist supremacy and making a stance of equality for all ethnic communities, stands in stark contrast to what Sri Lanka was a few years ago.
In a country like Sri Lanka, in which politics and governance have been seriously intertwined with practices of nepotism, lavish privileges, political patronage, and divisive tactics to stir hatred among ethnic communities, the above measures are of no less importance. These represent an effort to bring a sense of modernisation to the country’s politics and governance, a revival in the democratic quality of the political system, which is also the central dimension of NPP’s mandate in 2024.
Economic Constraints
Nevertheless, political transformation cannot be separated from economic considerations, and this is where the NPP government has been facing a challenging situation. The 2024 election manifesto of the NPP spoke of a ‘production-based economy’ that emphasised the state’s role in shaping the country’s development trajectory. It also outlined a number of social measures — notably, enhancing public services such as free education, healthcare, and public transportation. However, once in power, the NPP government has been compelled to navigate a complex economic environment that has proven less accommodating of the vision outlined in the manifesto.
After the debt default in April 2022, Sri Lanka entered negotiations with its external creditors for a debt restructuring deal, facilitated by an Extended Fund Facility (EFF) programme with the International Monetary Fund (IMF). The IMF programme negotiated by the previous Ranil Wickremasinghe government was characterised by a number of conditionalities, including an aggressive revenue-based fiscal consolidation target, the removal of subsidies for public utilities such as electricity and fuel, and strict monetary financing rules.
The NPP government in 2024 inherited the IMF programme and an agreement with external bondholders, which has been widely criticised for imposing a disproportionate burden on Sri Lanka. Before the elections, the NPP’s stance was that it did not seek to repudiate the IMF agreement but would attempt to renegotiate it to ease the burden on the masses. It appears that this stance stemmed from the concern that not following the programme would have adverse repercussions for the fragile economy, which is only beginning to recover.
Thus, the NPP government has been functioning over the last two years within the constraints it inherited due to the IMF programme. This has led to the accusation that the new government has been following the same economic policies as its predecessor. There is a partial truth in this claim, as the NPP government, in pursuance of the EFF agreement, had to adhere to its broader parameters.
However, certain discontinuities indicate that adherence arises from necessity rather than ideological commitment. The most notable change is the reversal of the massive privatisation process launched by the previous regime. The government has vowed to maintain state ownership of strategically important sectors of the economy. For example, the plan to unbundle the functions of the Ceylon Electricity Board (CEB) into twelve companies in a manner that leads to privatisation was reversed, by assuring state ownership of the companies that succeeded the CEB.
Decisions like the reactivation of the Paddy Marketing Board to purchase rice directly from farmers to control oligarchal influence in the paddy market, the ambitious project the government has launched to transform public transportation through greater investments in the state-owned Sri Lanka Transport Board, are further examples underlying the government’s interest in defending state intervention in the economy. The government also ended the moratorium on public-sector recruitment imposed by the previous regime.
Furthermore, there has been considerable attention to expand social spending. For instance, targeted cash transfers for families living below the poverty line were increased, and allowances for vulnerable groups such as the elderly and persons with disabilities were raised. Significant allocations were made to expand the scheme to provide meals free of charge for schoolchildren. A new programme has been introduced to enhance primary medical care in rural areas, inter alia to reduce patients’ reliance on private medical entities for primary health care. Moreover, there has been a substantial increase in subsidies for small-scale producers, such as farmers and fishermen.
Economic Independence?
Despite these efforts, the limited fiscal and policy space imposed by the IMF programme continues to impede the government’s preferences. Certain social welfare-related pledges of the NPP — such as the removal of taxes on essential food items and educational equipment — had to be compromised to meet the fiscal targets required by the programme. Strict fiscal targets and restrictions on monetary financing will continue to impose significant constraints on the government’s ability to pursue a developmentalist path.
Moreover, Sri Lanka is expected to begin servicing its external commercial debt starting in 2028, which is likely to increase the country’s financial burdens. Sri Lanka faces other external economic obstacles, such as tariffs imposed by the Trump administration on Sri Lankan exports and pressure on the country’s balance of payments from the conflict in West Asia.
Economic conditions — an improvement in the lives of ordinary people — are crucial to sustain the modernisation drive the NPP government has embarked on in politics and governance. A decline or stagnation in people’s standards of living is likely to provide grounds for mobilisation by parties representing the old establishment. This can undermine the legitimacy that the government has derived so far through its political reforms.
In a recent speech at a public rally celebrating the government’s second anniversary — while outlining the achievements over the past two years — President Dissanayaka stated that the ultimate objective of the government is to achieve economic sovereignty. He admitted that the country is still far from genuine economic independence. In the context of an international economic architecture insensitive to the developmental aspirations of small and weaker nations, and a hostile political environment shaped by aggressive unilateral policies pursued by superpowers, the Sri Lankan government is likely to face an uphill battle. How the NPP government envisions navigating these challenges remains to be seen.
