Sri Lanka opposition coalition splits ahead of polls

COLOMBO (Reuters) - Opposition parties in Sri Lanka which backed former army commander General Sarath Fonseka in presidential polls last month have decided to separately contest forthcoming parliamentary elections, officials said on Thursday.

The split is expected to boost the chances of the coalition of newly re-elected president Mahinda Rajapaksa, who needs a two thirds majority to enable him to change Sri Lanka’s constitution and implement reforms to boost foreign investments.

The two main opposition parties are the pro-business United National Party (UNP) and the Marxist Janatha Vimukthi Peremuna (JVP).

Despite their obvious differences, they joined hands in backing Fonseka in January’s presidential poll. Fonseka lost by a 1.8 million vote margin and later accused Rajapaksa of vote rigging.

“It is policies,” said Ravi Karunanayake, the UNP leader for Colombo district, citing reasons for their split.

Political analysts said it will not be easy for Rajapaksa to win a two third majority, but could make it by encouraging defections from opposition parties -- a tactic which strengthened his first term.

The need for a strong parliament comes as the $40 billion economy waits for a surge in foreign investment following the end in May of a 25-year war.

The IMF said on Thursday it was delaying the third tranche of a $2.6 billion loan to Sri Lanka until it sees the budget numbers after the parliamentary election, because the government had missed its 2009 deficit reduction targets.

Editing by David Fox