The island nation is seeing severe shortages of essentials, sharp price rises and crippling power cuts in its most painful downturn since independence in 1948. On Thursday, it led to violent protests outside President Gotabaya Rajapaksa’s house, demanding his resignation
A protester shouts slogans after setting a bus on fire during a demonstration outside the Sri Lankan president’s home to call for his resignation as the country’s unprecedented economic crisis worsened in Colombo. AFP
Sri Lanka descended into violence and chaos on Thursday night when thousands of protesters gathered outside the home of President Gotabaya Rajapaksa Thursday, demanding he resign over the nation’s worst economic crisis.
The police has arrested 45 people for their alleged involvement in the protests, adding that five policemen were injured and several vehicles were set on fire. Following the violence, a curfew was also imposed within the Colombo North, South, Colombo Central, Nugegoda, Mount Lavinia and Kelaniya Police Divisions.
As Sri Lanka struggles, here’s a complete guide of what’s going in the country — from the cause of the economic crisis to how people are suffering.
What’s ailing Lanka’s economy?
In 2006, after the end of the civil war, the Sri Lankan government tried to accelerate growth in the island nation by borrowing heavily and attracting foreign capital by propping up the Sri Lankan rupee.
This helped in the short-term and the economy boomed, lifting 1.6 million people out of poverty.
However, the adage of ‘all good things must come to an end’ holds true for Sri Lanka. The fast growth of the nation led to an external debt of 119 per cent of the GDP.
In 2019 as the coronavirus pandemic came knocking, Sri Lanka was already facing a downturn and staring at bankruptcy. Tourists, who spent $5.6 billion in 2018 and played a big role in balancing Sri Lanka’s $10 billion trade deficit, disappeared virtually overnight.
The Conversation reports that this dealt a massive blow to the economy, especially considering a large tax cut the previous year depleted government coffers. Simply paying interest on that large debt took up 72 per cent of government revenue in 2020, requiring the central bank to print more cash to avoid default, thus fuelling inflation.
In 2021, as many economists and analysts urged Sri Lanka to seek international aid, the central bank instead focused on borrowing from its neighbours, maintaining the value of the rupee and restricting imports.
Sri Lanka’s beleaguered economy received another massive hit in 2022 with the Russia-Ukraine war, which drove up international prices of oil, wheat and many other commodities.
Beyond the effect on the cost of imported goods, the war also further threatens Sri Lanka’s tourism industry as flights to Moscow are now suspended. Before the war, Russians frequently made up the biggest share of Sri Lankan tourists, with Ukrainians not far behind.
Sufferings of the Lankans
The economic disaster has caused untold suffering for the common Sri Lankan man. The country has been witnessing record 13-hour-long power outages, the longest for the country in 26 years.
People were left struggling in the dark, with students being forced to study using homemade kerosene oil lamps; fishermen restricted from fishing and shops and industries limiting production and business.
Hospitals have suspended routine surgeries after running out of life-saving medicines. The National Hospital of Sri Lanka in the capital, as per an Al Jazeera report, had also stopped routine diagnostic tests.
Sri Lanka’s power minister Pavithra Wanniarachchi also said, as per a Reuters report, that the power cuts could continue into May.
On Thursday, the island country also reported that diesel was no longer on sale, crippling the transport system. Petrol is on sale but in short supply, forcing motorists to abandon their cars in long queues.
Essential commodities such as milk and food items are also in short supply, with the prices of these items going through the roof.
An activist based in Mannar V S Sivakara told the Indian Epxress that the price of items such as rice has skyrocketed to Rs 300 per kilogram, while sugar is being sold for Rs 300. Milk powder is being sold for Rs 790 for 400 gram.
Reuters reported that the rise in food prices have prompted restaurant owners to raise the cost of a cup of milk tea to Rs 100.
Even printing paper is hard to come by, forcing schools to cancel exams.
What next for Sri Lanka
On 17 March, India extended a $1-billion credit facility to Sri Lanka in an attempt to help the island country.
It has also agreed to an urgent request of around 40,000 tonnes of fuel. According to a Hindustan Times report, the state-run Indian Oil Corporation is likely to send the consignment to Sri Lanka.
On 31 March, Tamil Nadu chief minister MK Stalin also sought the Union goverment’s approval for the state government to provide humanitarian aid to Sri Lankan Tamils in the wake of an economic crisis in that country.
During a meeting with Prime Minister Narendra Modi, Stalin said that his administration was willing to provide essential commodities and lifesaving medicines as a life-saving measure for Sri Lankan Tamils living in the northern and eastern parts of Sri Lanka, as well as those working in the plantation sector, who are reeling under a severe food crisis — especially vulnerable groups of women and children.
The Sri Lankan government also said it was seeking a bailout from the International Monetary Fund (IMF). IMF spokesman Gerry Rice on Thursday confirmed that such talks “should begin in the coming days” with Sri Lanka’s finance minister.
With inputs from agencies
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