Sri Lanka’s New President Dissanayake Faces Economic Challenges Amid Investor Concerns

Sri Lanka’s newly sworn-in president, Anura Kumara Dissanayake, inherits a nation grappling with severe economic hardships, including a crippling inability to afford essential imports like fuel, medicine, and cooking gas.
Following Dissanayake’s inauguration on Monday, Prime Minister Dinesh Gunawardena stepped down to facilitate the transition. Gunawardena had assumed office in July 2022 after former president Gotabaya Rajapaksa fled amid widespread protests triggered by the economic crisis.
In the wake of the leadership change, Sri Lanka’s sovereign dollar bonds dropped, trading between 49.14 and 49.77 cents on the dollar, reflecting investor apprehensions. Concerns are particularly focused on Dissanayake’s intent to reassess the terms of the $2.9 billion IMF bailout, which could hinder future financial support and complicate recently finalized debt negotiations with bondholders.
Constitutional lawyer Bhavani Fonseka suggested that, given Sri Lanka’s heavy reliance on international aid, Dissanayake is likely to adopt a pragmatic approach in the short term. “He will be taking a very pragmatic approach, at least for the next couple of months,” she stated, indicating that more decisive actions may unfold later as the situation evolves.