Violent protests, a debt-laden economy, a President who fled the country and citizens staring at a grim future – that’s Sri Lanka today, plunging into deeper economic as well as social crisis with no improvement in sight. As the country is struggling to pay for essential imports, everyday essentials like food and fuel prices are soaring high, enraging the already angry Sri Lankans.
Long known for its dreamy landscape, rich culture and vibrant history, the country is now witnessing a tumultuous present as thousands of protesters storm streets and occupy government buildings holding the government responsible for the deepening economic crisis.
With internal political dysfunction and external economic disturbance, the situation is only getting worse even as Prime Minister Ranil Wickremesinghe took charge as the interim President after Gotabaya Rajapaksa fled the country.
Ranil Wickremesinghe taking oath as the interim President in Colombo, Sri Lanka on July 15. (AP)
WHAT’S HAPPENING?
- Prime Minister Ranil Wickremesinghe, on July 15, took oath as the interim President of the country.
- This comes after Gotabaya Rajapaksa resigned as Sri Lankan President, after fleeing to the Maldives with his wife and two bodyguards.
- His resignation is being seen as a major victory for the protesters, who had been demanding his removal for a long time.
- Sri Lankan troops are now guarding government buildings against protesters who earlier turned the president’s house into a picnic spot.
- Protesters continue to block roads with posters saying, ‘Go home, Ranil’.
- Runaway inflation reached 54.6 per cent last month and could rise to 70 per cent.
WHAT LED TO THE CRISIS?
Ill-timed tax cuts, weak government finances, skyrocketing inflation, Covid-hit tourism sector are some of the main factors behind Sri Lanka’s present economic crisis.
Analysts say that economic mismanagement by successive governments has weakened Sri Lanka’s public finances, leaving national expenditure in excess of income and the production of tradable goods and services at inadequate levels.
Deep tax cuts by the Rajapaksa government in 2019 exacerbated the situation with the Covid pandemic wiping out much of Sri Lanka’s revenue base, most notably from the lucrative tourism industry.
Concerned about government finances and its inability to repay large foreign debt, rating agencies downgraded Sri Lanka’s credit ratings from 2020 onwards, eventually locking the country out of international financial markets.
The government eroded foreign exchange reserves by 70% in two years to keep the economy afloat.
As the crisis continues to deepen, runaway inflation reached 54.6 per cent last month and could rise to 70 per cent, as per the central bank.
Police use tear gas to disperse the protestors during a protest in Sri Lanka. (Reuters)
WHAT’S NEXT?
- Sri Lanka has long been seeking help from neighbouring countries like India and China.
- The country is also pinning hope on IMF as bailout talks continue.
- Wickremesinghe said he is expecting a preliminary agreement by late July.
- A new president will be elected on July 20.
While earlier, the country was battling an economic crisis with a shortage of fuel and frequent power blackouts irking Sri Lankans, the ouster of Rajapaksa may usher in an even deeper political crisis as the future is now extremely uncertain. At the time of writing this article, Sri Lanka’s Parliament met in a brief special session to announce the vacancy in the presidency. The country’s Opposition leader Sajith Premadasa, who is seeking the presidency, vowed to “listen to the people” and hold Rajapaksa accountable. Rajapaksha, on the other hand, defended himself in his resignation letter, which was read out during a special session of Parliament on July 16.
“I served my motherland to the best of my ability and I will continue to do so in the future,” former Sri Lankan president Gotabaya Rajapaksa said.
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