Sri Lanka Lawmakers Abolish Pensions Amid Economic Crisis
In a significant move, Sri Lankan legislators voted on Tuesday to eliminate pensions, aligning with a major campaign promise from the Marxist-influenced ruling party, amidst widespread discontent due to the nation’s economic turmoil.
The measure passed in the 225-member Parliament by an overwhelming 154 votes, with only two dissenting votes and the rest of the lawmakers absent during this critical decision.
Under the previous system, individuals were eligible for pensions after serving five years in office. The new legislation halts payments to current pension recipients and those who qualify. President Anura Kumara Dissanayake, who is set to assume office in 2024, vowed during her campaign to put an end to this practice.
In a related step, responding to public pressure, the Dissanayake administration removed benefits for former presidents in September, which included state-funded housing, allowances, and transportation assistance. Additionally, the offices and staff for former presidents and their spouses were dismissed. Currently, there are five former presidents and their wives alive.
Dissanayake successfully garnered support for the vote, capitalizing on the public’s outrage toward politicians deemed responsible for the severe economic crisis that plagued the country in 2022. This situation resulted in acute shortages of essential goods like food, medicine, fuel, and electricity and ultimately forced the resignation of then-President Gotabaya Rajapaksa.
Law Minister Harshana Nanayakkara presented the bill in Parliament, stating that the government had met its electoral commitment and argued that lawmakers lacked the moral justification to receive pensions while the nation confronts its profound economic challenges.
Sri Lanka declared bankruptcy in April 2022, burdened by over $83 billion in debt, with more than half owed to international creditors. Seeking assistance, the government turned to the International Monetary Fund, which agreed to a four-year bailout of $2.9 billion in 2023, contingent upon restructuring the country’s debt.
The nation announced it has concluded its debt restructuring efforts after securing agreements with bilateral and multilateral creditors, as well as private bondholders, while seeking $17 billion in debt relief.
Contributing to Sri Lanka’s crisis were factors like economic mismanagement, the toll of the COVID-19 pandemic, and the devastating 2019 terrorist attacks that heavily impacted the tourism sector. The pandemic also disrupted cash flows from Sri Lankans working abroad.
