Sri Lanka 2017: The Uncertain Road of the «Yahapalayanaya» Government?

In 2017, the Lankan internal situation was a constant cause of difficulty for President Sirisena and the governing coalition. First, the government was challenged by the unexpected political initiative of former President Rajapaksa’s «Joint Opposition ». Second, the Tamil communities in the north and the east of the country expressed their growing frustration and discontent against the government. Finally, the most distressing development was the rise of Buddhist religious extremism and the consequent violent attacks against non-Buddhist individuals and groups. At the economic level, the year under review witnessed a constant improvement of the economy. Economic reforms were implemented to comply with the demands of the financial international institutions. Among these reforms, the long-awaited Inland Revenue Act (IRA) introduced a new tax system characterised by a direct/indirect taxation ratio favouring direct taxation. Moreover the government presented an ambitious long-term economic reform program: «Vision 2025: A Rich Country». Among the main goals of «Vision 2015» were the raising of per capita income; the creation of jobs; the increase of foreign direct investments; the promotion of exports; the creation of a more competitive market; the widening of social justice; the promotion of digitalisation; the implementation of a balance between environmental conservation and economic development. As far as foreign policy is concerned, 2017 saw Sri Lanka acting as a «tightrope walker», striving to keep the balance between India and China, and desperately trying to avoid being crushed between the two Asian giants. In addition the new US presidency caused contrasting effects on Sri Lanka-US relations. On the one hand the existing structures, created to strengthen and deepen the economic and military bilateral ties, remained in place and continued to properly work. On the other, the US-Sri Lanka political relations went through a series of problems, mainly caused by the new US administration’s concerns about Chinese presence in Sri Lanka.