sri lanka leaders signal pm may quit as prices surge 30 per cent - Sri Lanka leaders signal PM may quit as prices surge 30 per cent

COLOMBO (BLOOMBERG) – Sri Lankan President Gotabaya Rajapaksa is willing to drop his brother as prime minister, according to a top leader, as a fresh surge in inflation threatens to renew calls for the family to resign.

Mr Rajapaksa has agreed to form an all-party government with a new PM, local media reported on Friday (April 29) citing Mr Maithripala Sirisena, a former president who was part of the ruling coalition before his Sri Lanka Freedom Party quit in protest of the Rajapaksas’ policies.

Mr Rajapaksa will also discuss the matter with other parties, lawmaker Weerasumana Weerasingha said, without elaborating.

Politicians are preparing positions before Parliament resumes on May 4, and it’s unclear how events will play out.

Opposition leaders have said they have enough support to oust the PM in a no-confidence vote, while street protesters want both Rajapaksas to step down.

Data on Friday showed costs in the capital Colombo rose 30 per cent, making more interest rate increases almost certain to meet conditions of an International Monetary Fund (IMF) bailout.

President Rajapaksa extended an invitation to form an all-party government; he would agree to proposals if all political parties supported it, the President’s Office said in a statement later on Friday.

Consumer prices surged 29.8 per cent in April from a year earlier, the Department of Census and Statistics said in a statement.

That’s faster than 18.7 per cent in March and a 25 per cent median estimate in a Bloomberg survey.

The nation’s foreign exchange reserves dipped to US$1.94 billion (S$2.68 billion).

The government has already suspended payments on foreign debt and is seeking assistance from India, China and multilateral lenders to pay for food and fuel.

Sri Lanka’s decision to float the rupee after it ran out of dollars to defend a peg, coupled with rising global commodity prices, mean inflation could stay higher.

Finance Minister Ali Sabry also told the BBC that Sri Lanka will raise levies as the government made a mistake when it almost halved the value-added tax rate to 8 per cent in 2019.