Sri Lanka swears in leftist president as concerns grow for IMF deal

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Leftist Anura Kumara Dissanayake has promised to “heed the best advice” in running Sri Lanka as he was sworn in as the country’s president, following a stunning election win that has renewed concerns over the future of a fragile IMF-backed debt restructuring.

Sri Lanka’s bonds fell on Monday in the wake of the upset win at the weekend by Dissanayake, the country’s first president from outside its traditional ruling elite.

“I will heed the best advice,” said Dissanayake, 55, after taking the oath of office on Monday, in comments aimed at easing investor fears over the fate of a $3bn IMF rescue plan. “There are my capabilities and incapabilities, things that I know and don’t.”

“We do not believe that this deep crisis can be overcome by a government, a party or an individual,” he added. “I am no conjuror or magician.”

Dissanayake’s victory on Saturday marked a new era in the south Asian country’s political history, with voters rejecting the political dynasties they blamed for years of economic crisis that culminated in a damaging debt default in 2022.

Months later, protesters over-ran the presidential palace, forcing then-president Gotabaya Rajapaksa to flee the country.

Dissanayake took pains during the five-week campaign to allay investor misgivings, pledging to preserve the IMF agreement. But he has also called to ease some of its conditions to alleviate Sri Lanka’s economic hardship after two years of austerity.

The election manifesto of his neo-Marxist National People’s Power coalition called to renegotiate the IMF deal to make it “more palatable and strengthened” and keep interest payments “at a bearable level”.

Sri Lanka’s dollar-denominated bonds tumbled on Monday, with notes maturing in 2029 shedding almost 6 per cent to trade at 50.2 cents on the dollar. Prices had briefly dipped below 50 cents on the dollar in early trading.

The Colombo Stock Exchange’s all-shares index shed 1.5 per cent before paring losses to be even on the day.

Dissanayake, who hails from the rural North Central province, previously led the People’s Liberation Front, a Marxist-Leninist party founded in 1965 and a precursor to the NPP that led bloody rebellions in 1971 and from 1987-80.

He was sworn in on Monday in Sri Lanka’s old parliament building, a colonial landmark that the group had planned to attack in 1971 as part of a plot to overthrow the government.