Future tense

Sterling economics fails to save Sri Lankan leader

Sri Lanka's president can boast a sterling economic record. But that wasn't enough to help him keep his job.

Mahinda Rajapaksa's bid to extend his decade-long reign over the island state came to an abrupt end when he conceded defeat in the January 8 poll. That outcome was unforeseeable when the confident president called elections two years ahead of schedule.

The result is partly a verdict on Rajapaksa's dictatorial style, and a shot in the arm for the hastily cobbled-together opposition. Yet, by placing their faith in challenger Maithripala Sirisena's unwieldy alliance, voters have taken a big risk with an economy that has thrived under strongman rule.

GDP growth over the past five years has exceeded seven per cent. Inflation, a chronic problem in the supply-constrained economy, is down to two per cent. The burden of public debt - a legacy of civil war - eased to an estimated 77 per cent of GDP last year, down from 102 per cent before Rajapaksa became president in 2005. The president also brought in welcome Chinese investment in infrastructure, even though that irked neighbouring India.

Those gains won't vanish overnight. Nevertheless, investors will worry. Sirisena, who was Rajapaksa's health minister until two months ago, is supported by a breakaway faction of the ruling party, as well as the main opposition. They are unlikely to agree on anything much. Besides, the new president has vowed to curb his own powers and revive the post of prime minister, which was abolished by his predecessor. If politics turns more chaotic as it turns more participatory, policies could get muddled.

Then, there's the issue of Sri Lanka's volatile ethnic fault lines. Having wrested power with the support of minority groups, Sirisena will struggle to accommodate Tamil and Muslim demands for political autonomy in the North and East without angering the Sinhalese-speaking Buddhist majority. Tensions, which have simmered since Rajapaksa crushed the Tamil Tigers in a bloody military campaign in 2009, could flare up.

Sirisena's warning that Rajapaksa was running a corrupt, family-run dictatorship seems to have touched a chord. But by ousting a strong leader who described himself as the "known devil," Sri Lanka's 15 million voters have taken a gamble. Investors can only hope that the people are right.