Sri Lanka's president drops brother as finance minister in crisis shake-up

The debt-laden country, run by Rajapaksa and his brothers in top positions, is struggling to pay for imports of fuel and other goods due to a scarcity of foreign exchange, leading to hours-long power cuts and a shortage of essentials.

Street protests against the government continued on Monday with crowds gathering in several towns, including in southern Tangalle where people holding posters and the national flag broke through police barricades, local media reported.

"Four ministers were appointed to ensure parliament and other tasks can be conducted in a lawful manner until a full Cabinet can be sworn in," Rajapaksa's media office said in a statement after cabinet ministers resigned in a bid to resolve the crisis.

It said Justice Minister Ali Sabry would be the new finance minister, replacing Gotabaya's brother Basil Rajapaksa, who was due to visit Washington this month for talks with the International Monetary Fund (IMF) for a loan programme.

Previous ministers of foreign affairs, education and highways will keep their positions.

"The president invites all political parties representing in the parliament to come together to accept ministerial portfolios in order to find solutions to this national crisis," the president's media office said, calling for a unity government.

Central Bank of Sri Lanka Governor Ajith Nivard Cabraal said on Twitter he had also offered to quit.

'OLD WINE'

Udaya Gammanpila, the chief of one of the 11 political parties comprising the ruling coalition, rejected Rajapaksa's move, calling the new cabinet "old wine in a new bottle".

"Our demand is for an all-party interim government to restore essential services and to hold a parliamentary election," Gammanpila of the Pivithuru Hela Urumaya party wrote on Twitter. "People should decide their next leaders, not anybody else."

Charmara Nakandala, a protester, said the cabinet changes were temporary attempts to placate the public.

"This cabinet change is to try and fool the people," Nakandala, a marketing executive, said at a protest in Colombo, the main city. "This government is over. Rajapaksas no longer can save this by playing musical chairs."

The Colombo Stock Exchange's All Share Index .CSE briefly turned positive following the flurry of announcements, before turning red again. The market is down about a third this year, and the bourse suspended trading twice on Monday morning due to sharp falls in the benchmark share price index.

The developments come after Gotabaya Rajapaksa, whose elder brother is the prime minister, declared a state of emergency on Friday, following spiralling street protests in the island nation.

The country of 22 million, off India's southern tip, is also grappling with soaring inflation after the government steeply devalued its currency last month ahead of the IMF talks.

The country's expenditure has exceeded its income under successive governments while its production of tradable goods and services has been inadequate. The twin deficits were badly exposed by the COVID-19 pandemic that crippled its economic mainstay, the tourism industry.

"If this interim government is put in place and it is with people who have some credibility, then we can instil some confidence both in the people and in the markets," said Paikiasothy Saravanamuttu, executive director of the Centre for Policy Alternatives think-tank.

But there would be some dissatisfaction with the president holding on to his position, he said.