By Anusha Ondaatjie Courtesy BNNBloomberg

(Bloomberg) — A candidate with roots in Marxist socialist policy in Sri Lanka is gaining momentum in next month’s presidential election with a strong message to combat corruption and scrutinize investment deals with China to avoid another debt trap.

Anura Kumara Dissanayake, popularly known as AKD, leads the National People’s Power, a coalition of leftist political parties and groups backed by protesters who ousted the powerful Rajapaksa government in 2022. He’s emerged as a key challenger to incumbent President Ranil Wickremesinghe, who remains unpopular for carrying out austerity measures in exchange for an International Monetary Fund bailout. 

Dissanayake is campaigning on a platform of clean governance and combating corruption in a country that’s still saddled with high debt two years after an unprecedented economic crisis and historic default. Sri Lanka’s debt had ballooned over the years partly because of Chinese loans to fund ambitious projects ranging from ports, roads and a lotus tower.” 

Beijing has faced allegations of burdening developing countries like Sri Lanka with debt through its funding of infrastructure projects, accusations it’s denied.   

China had been an easy source of money” for past governments and the NPP wants to ensure future investment isn’t wasteful, said Harini Amarasuriya, a lawmaker and a member of the coalition.

We don’t want easy money coming in to fund unproductive projects and not care about corruption,” Amarasuriya, an academic who has become one of the more public faces of the group, said in an interview in the capital Colombo. That’s what we expect of any country, and that’s how we would want it to be with China.” 

The coalition’s main party is the leftist Janatha Vimukthi Peramuna, which is led by Dissanayake. Once known for its violent uprisings in the 1970s and 1980s, the JVP has since re-branded itself and entered mainstream politics. Some surveys have polled Dissanayake as a leading contender in the Sept. 21 vote while he’s been drawing substantial crowds at his campaign rallies.

Dissanayake is drawing support from the 2022 protesters, who wanted to curb the executive powers of the presidency, eradicate graft and bring the ruling Rajapaksa clan to task for their role in bankrupting the country. The Rajapaksas cultivated ties with China to help rebuild the country in the 2010s after brutally ending a decades-long civil war with Tamil separatists. 

Amarasuriya said the leftist coalition wants to maintain ties with China since the country had been one of the few to back Sri Lanka when it faced global scrutiny for human rights violations as the civil war drew to a close. 

We are cognizant of the fact that China has politically backed us in sensitive moments,” she said. And we want to maintain those relations.”

IMF Bailout

The popularity of the leftists’ candidate adds to political uncertainty that could jeopardize Sri Lanka’s debt restructuring deal with creditors and possibly delay bailout funding from the IMF.

Markets do not have past experience to make a judgment call on NPP policies,” said Thilina Panduwawela, a senior economist at Frontier Research in Colombo. And the election itself is too close to call and that is why there is some uncertainty in markets.”

Also contesting the election is the main opposition leader Sajith Premadasa, who leads a breakaway group from Wickremesinghe’s party, and Namal Rajapaksa, the scion of the populist clan. 

Amarasuriya said her party was against some of the tax measures Wickremesinghe’s government was implementing to meet the IMF targets. Even so, she acknowledged that the conditions of the loan program, including the primary balance and the debt-to-GDP ratio, were fairly standard.”

Dissanayake’s election manifesto, which was launched on Aug. 26, proposes a number of tax amendments and more oversight on government spending. 

He’s pledged to increase the income tax-free threshold and equitably” amend rates and tax brackets. He also wants to remove some essential health, education and food items from the 18% value-added tax to make them more affordable, Amarasuriya said. The tax threshold has had a huge impact on the middle class and professionals, she said, leading to a severe brain drain with over 3,000 doctors as well as IT and banking personnel having left the country.

Amarasuriya added that the current administration has not paid enough attention” to some other IMF conditions, including bolstering social security networks and eradicating graft.

With corruption, the approach will be to clean it from the top” where all elected representatives have to behave based on a code of conduct that is strictly enforced, she said. There will be restrictions on government appointments and the tender processes — two areas where corruption gets initiated,” Amarasuriya said. 

Foreign investors have nothing to fear” as the party will make it easier for business by eliminating corruption and putting in systems, she added.