COLOMBO/WEERAKETIYA, Sri Lanka (REUTERS) - Many Sri Lankans thronged buses in the main city Colombo on Thursday (May 12) to return to their hometowns with leaders of political parties due to meet after the prime minister quit and went into hiding and President Gotabaya Rajapaksa warned of anarchy.

Hundreds of people thronged the main bus station in the commercial capital after authorities lifted an indefinite curfew at 7am (9.30am, Singapore time). The curfew was set to be reimposed at 2pm.

Streets in Colombo were quiet, with some people venturing out to buy essential supplies. Frustration remained at ongoing fuel shortages that have crippled the country’s economy.

“We have hit the bottom economically,” said Nimal Jayantha, an autorickshaw driver queuing for petrol after the curfew was lifted.

“I don’t have the time do my job. By the time I stay in the fuel queue and get petrol, curfew will be imposed. I will have to go home without any money.”

The island nation off India’s southern tip, which overlooks shipping routes between Europe and Asia, is battling its worst economic crisis since independence.

President Rajapaksa had said on Wednesday he would appoint a new prime minister and Cabinet this week, after his elder brother and former premier Mahinda Rajapaksa resigned following deadly violence in the country.

A Sri Lankan court on Thursday banned the former prime minister Mahinda Rajapaksa, his politician son Namal and 15 allies from leaving the country over acts of violence against anti-government demonstrators.

The new prime minister and Cabinet will command a majority in the 225-seat Parliament, Mr Gotabaya Rajapaksa said, adding that he will bring constitutional reforms to grant more power to the Parliament.

"I am taking steps to form a new government to control the current situation, to prevent the country from falling into anarchy as well as to maintain the affairs of the government that have been halted," he said.

The President's statement followed comments from Sri Lanka's central bank governor earlier in the day, who said he would quit within weeks unless political stability was restored.

Mr P. Nandalal Weerasinghe, appointed central bank chief last month to help the island nation of 22 million people find a way out of its worst economic crisis in history, said a stable government is essential to stop the turmoil.

"I have clearly told the President and other political party leaders that unless political stability is established in the next two weeks, I will step down," Mr Weerasinghe told reporters.

"Without political stability, it does not matter who runs the central bank," he said, "There will be no way to stop the economic deterioration."

Ordinary Sri Lankans blame the government led by President Rajapaksa and his family for a meltdown in the Indian Ocean nation that reduced reserves to just about US$50 million (S$69.5 million), stalling most imports and bringing massive shortages of essentials including cooking gas, fuel and medicine.

After more than a month of mostly peaceful demonstrations, public anger exploded into violence this week, when ruling party supporters stormed an anti-government protest camp, triggering clashes nationwide and pushing the prime minister to step down.

Mr Mahinda Rajapaksa, the President's older brother, said he was resigning with the hope of a new, unity government taking over.

Protesters sprayed graffiti over his home in a southern town and ransacked a museum dedicated to his father.

They have vowed to keep up the protests until the president also quits.

With mobs targeting ruling party politicians, the former prime minister, once hugely popular, was whisked away to a military base in the country's north-east, Defence Secretary Kamal Gunaratne said.

"He will remain there for the next couple of days and when the situation is normalised, he can be moved to a location of his choice," Mr Gunaratne said.

Nine dead, more than 300 wounded

With police and armed forces ordered to shoot anyone damaging public property or threatening lives, soldiers in armoured vehicles patrolled the streets of commercial capital Colombo.

So far, at least nine people, including two policemen, have been killed in violence across the country that has also left more than 300 people wounded and 136 houses damaged, Mr Gunaratne said.

"This is the time for all Sri Lankans to join hands as one, to overcome the economic, social and political challenges," President Rajapaksa said on Twitter.

"I urge all Sri Lankans to reject the subversive attempts to push you towards racial and religious disharmony. Promoting moderation, toleration and coexistence is vital."

It is not immediately clear what prompted his warning, but Sri Lanka has a long and bloody history of ethnic tension.

Pope Francis has urged the government to "listen to the hopes of the people" and respect human rights and civil liberties.

Protesters have also called on the President to go. Analysts say the President can be impeached if he refuses to step down, though the opposition, which has rejected his calls for a unity government, lacks the necessary two-thirds majority in Parliament.

No president has ever been successfully impeached and removed from office in Sri Lanka.

New government awaited

Sri Lanka has sought urgent loans from the International Monetary Fund (IMF) following financial and other support from neighbour India as well as China, as the violence has further dented a tourism-dependent economy hammered by Covid-19.

The IMF expressed concern about the violence, but said it would continue technical talks begun on Monday with Sri Lankan officials "so as to be fully prepared for policy discussions once a new government has been formed".

President Rajapaksa plans to meet opposition politicians within days in the hope of forming a new government, a Cabinet spokesman said on Tuesday.

Mr Weerasinghe, the central bank chief, said the lack of foreign exchange could lead to acute fuel shortages and power cuts lasting up to 12 hours, which may worsen public anger and escalate protests.

"Even with political stability, it will take at least three months for IMF talks and at least six months for debt restructuring," he said. "So a stable government is essential."

He also said on Wednesday that a failure to find a solution to the crisis will lead to his own resignation.