JVP-Led NPP Government to clear hurdles ensuring smooth governance

• CNL Reporter
• March 2, 2025
• Weekly Political Review
• Weekly Political review
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WEEKLY POLITICAL REVIEW

Wide Angle focus on Economic Constraints and Budgetary Challenges

By Rohana Jith

The newly established National People’s Power (NPP) government, led by President Anura Kumara Dissanayake (AKD), faces numerous hurdles in ensuring smooth governance. A primary concern is the economy, particularly the constraints surrounding the government’s inaugural 2025 budget.

The administration attributes these financial limitations to legal restrictions that have been in place since the previous year. Revenue generation and tax relief have become complex issues due to agreements signed under former President Ranil Wickremesinghe’s tenure, notably with the International Monetary Fund (IMF).

Key legislations such as the Economic Transformation Act, Public Financial Management Act, Public Debt Management Act, and the Banking (Amendment) Act—enacted in 2024—have further constrained the government’s financial maneuverability. Additionally, multiple agreements with international financial institutions have imposed further restrictions.

Despite these challenges, the government received a boost with the IMF approving the third review of the Extended Fund Facility (EFF) program.

This allows Sri Lanka to access $334 million, a disbursement delayed due to last year’s elections. While the IMF acknowledges economic reforms, concerns remain about insufficient social spending.

The government now faces the crucial task of sustaining economic reforms to ensure stability and debt sustainability ahead of the IMF’s upcoming fourth review.

Fuel Crisis and Public Unrest

Another pressing issue is the sudden disruption in the fuel supply due to the decision of the Petroleum Dealers’ Association to halt fuel orders. This move came in response to the Ceylon Petroleum Corporation’s (CPC) decision to cut their commission from 3%.

The announcement led to panic buying, long queues at fuel stations, and widespread public anxiety despite CPC’s assurances that there was no fuel shortage.

Rising Organised Crime and National Security Concerns

Organised crime and a surge in gang-related violence have also emerged as significant challenges for the NPP government. Political opposition has seized on national security concerns as a tool to sway public sentiment.

Historically, Sri Lanka’s political landscape has witnessed national security being used as a campaign strategy, particularly during conflicts with the Liberation Tigers of Tamil Eelam (LTTE) and in the aftermath of the 2019 Easter Sunday attacks.

While such tactics have yielded electoral victories in the past, parties using this platform have often suffered political losses later.

The prevalence of underworld activities with alleged political connections is not new. Successive governments since 1977 have reportedly had ties with criminal syndicates to suppress opposition.

However, the current government’s refusal to engage with such entities has resulted in growing unrest among organised crime groups. Minister Bimal Rathnayake recently stated in Parliament that criminal elements are frustrated due to their inability to establish links with the administration.

In response to this crisis, President AKD addressed Parliament during the defence budget debate, pledging to dismantle the entrenched “crime state” that has operated alongside the official government.

He suggested that the simultaneous escalation of criminal activities might indicate an orchestrated effort to destabilize the administration, particularly in areas such as Batticaloa and the Northern Province.

Public Opinion and Government Approval Ratings

Despite these challenges, the NPP government’s approval ratings have seen a remarkable rise. According to Verité Research’s ‘Mood of the Nation’ survey, approval for the government jumped from 24% in July 2024 to 62% in February 2025.

Moreover, for the first time since the economic crisis, a majority (55%) believes that economic conditions are improving, though 47% still consider the economy to be in poor shape.

Between July 2024 and February 2025, disapproval of the government dropped from 60% to 16%, while the percentage of people who believe the economy is deteriorating fell from 65% to 14%.

Strengthening International Relations: Japan and India

Diplomatic efforts remain a priority for the government. President AKD is preparing for his fourth official international visit, this time to Japan, following an invitation from Japanese Ambassador Akio Isomata. Discussions have centered on Sri Lanka’s inclusion in Japan’s security cooperation assistance program, as well as Japanese investments in the country’s digital economy and airport infrastructure.

Meanwhile, Indian Prime Minister Narendra Modi is expected to visit Sri Lanka in April. This visit is seen as significant, given the historically strained relationship between the JVP and India.

The irony lies in the fact that the JVP, which once strongly opposed Indian-backed projects, is now hosting Modi for the launch of a 120 MW Sampur solar power plant—an initiative the party had previously protested against.

This development reflects the NPP government’s pragmatic approach to foreign relations and economic investments.

Internal Party Conflicts and Growing Discontent

While the NPP government enjoys public support, internal tensions within the party are becoming evident. Reports indicate that around 15 NPP parliamentarians are considering resigning due to financial difficulties.

The JVP’s stringent discipline, which requires members to work full-time without salaries or perks, has led to dissatisfaction, particularly among professionals who previously had stable incomes.

JVP leadership appears to be adopting a passive stance regarding these resignations, possibly seeing an opportunity to strengthen its parliamentary presence. Since most next-in-line replacements are JVP members, any resignations from NPP MPs would inadvertently bolster the JVP’s influence in Parliament.

Meanwhile, a splinter faction, the Frontline Socialist Party (FSP), has emerged as a vocal critic of the JVP-led government.

The FSP has highlighted economic concerns, particularly increased taxation on goods and services. FSP Education Secretary Pubudu Jayagoda claims that the revised taxation structure will force families to pay nearly Rs. 40,000 per month in taxes, significantly impacting household expenses.

Political Landscape and Upcoming Elections

As the budget process nears completion, Sri Lanka’s political landscape is shifting towards election preparations. The Election Commission has confirmed that all legal barriers to holding Local Government (LG) elections have been cleared, with an announcement expected soon. The elections are anticipated to take place between late April and early May 2025.

Opposition Dynamics and Coalition Challenges

Talks between the Samagi Jana Balawegaya (SJB) and the United National Party (UNP) regarding a possible alliance have collapsed. While some UNP members are exploring an alternative coalition with defectors from the SJB, internal divisions within the SJB are also surfacing. A faction within the SJB is calling for party reforms, while others are contemplating forming a new political entity to challenge both the UNP and JVP/NPP.

Conclusion

The JVP-led NPP government under President Anura Kumara Dissanayake is navigating a complex political and economic landscape. With economic constraints, a resurging crime wave, internal party tensions, and evolving diplomatic ties, the administration’s ability to manage these issues effectively will shape its political trajectory.

The coming months will be crucial in determining whether the government can sustain its growing public approval and implement meaningful reforms to address Sri Lanka’s pressing challenges.