By Shihar Aneez
COLOMBO (Reuters) - Sri Lankan Prime Minister Ranil Wickremesinghe said on Wednesday he would resign this week after his party's candidate lost a presidential election, and local media reports suggest the new president would name his own brother as the new interim premier.
Former defence minister Gotabaya Rajapaksa was elected president on Nov. 16 as the candidate of the party of his brother Mahinda Rajapaksa, who served as president from 2005-2015. Gotabaya Rajapaksa defeated the candidate from Wickremesinghe's party.
"I have decided to resign from the Prime Minister's post to give space for the new President to form his own government," said Wickremesinghe in a statement, adding that he plans to hand in his resignation to the president on Thursday.
Sri Lankan media have reported that the new president would soon name an interim cabinet to govern the country until a parliamentary election expected around April.
The election was overshadowed by Sri Lanka's deepest economic slump in more than 15 years, which followed attacks on hotels and churches on Easter Sunday that killed more than 250 people. Islamic State claimed responsibility for the attacks, which damaged Sri Lanka's tourism sector, a vital source of foreign exchange.
The new president, who oversaw the defeat of Tamil separatists as his brother's defence minister a decade ago, won the election after promising to secure the country against militant threats.
Under the Sri Lankan constitution, Wickremesinghe's government will be dissolved following his resignation.
Neither Wickremesinghe's UNP, nor Mahinda Rajapaksa's SLPP have an absolute majority in parliament to form a government. Mahinda Rajapaksa attempted to return to office last year as prime minister but was blocked by a court.
The new president is expected to appoint a 15-member interim cabinet until the parliamentary election, when his brother is expected to seek the post of prime minister. Some local media reported on Wednesday that the president would name his brother Mahinda as interim prime minister until the election.
In his first set of appointments, Gotabaya Rajapaksa on Tuesday named P. B. Jayasundera, who was treasury chief under his brother, as his secretary, and tapped his close ally Kamal Gunaratne, a military general, as defence secretary.
Rajapaksa's election has raised hopes among investors that the island nation's economy would recover. The main stock index (CSE) has risen 1.9% and the Sri Lankan rupee
"What is expected from Rajapaksa was the political stability and the change in the cabinet will help that sentiment and the market will see it positively," said Dimantha Mathew, head of research at brokerage firm First Capital Holdings.
Some rights groups and some Sri Lankan minorities, however, accuse the Rajapaksas of human rights violations during the end of the 26-year civil war and have expressed concerns of renewed ethnic tensions on the diverse island, following the elections.
The Rajapaksa brothers have denied any wrongdoing.