Sri Lanka faces worst economic and political crisis
The island nation is facing its worst economic crisis since gaining independence from Britain in 1948 and is facing food shortages, soaring prices and power cuts.
Protesters have come together organically, with little party backing, everywhere from the mostly Tamil north to the largely Sinhalese deep south. This is rare unity in a nation with deep historical fault-lines. It reflects the devastation the economic crisis has precipitated. The primary rallying cry “go home Gota” (aimed at president Gotabaya Rajapaksa) has been accompanied by “go home Rajapaksas” — a fierce rebuke of the family that has dominated Sri Lankan politics this century.
So far, the Rajapaksas have been unmoved. Although the president’s nephew Namal Rajapaksa stepped down from his portfolios when the entire cabinet resigned last weekend, he has through the course of the week stated that the president, his uncle, and the prime-minister, his father, do not need to step down.
The Rajapaksas have now also appointed a new central bank governor, and an economic council comprising, most notably, of Dr Indrajit Coomaraswamy, who had headed the central bank under the previous government. But although these appeared sensible moves ahead of major debt restructuring talks with the IMF, Sri Lanka’s population has not been placated. If anything, calls for the Rajapaksas to step down have only grown in scale and volume.
Saturday saw Colombo’s biggest and most vibrant protest yet. In a nation in which it is the major parties that frequently organise and facilitate demonstrations, this one came together organically, a loose collection of student movements, social justice groups, and activists joined by tens of thousands with no stated political affiliation.
Sri Lanka’s problems come down to the fact that its foreign currency reserves have virtually run dry. It means it cannot afford to pay for imports of staple foods and fuel, leading to acute shortages and very high prices.
The government blames the pandemic, which all but killed off Sri Lanka’s tourist trade – one of the island’s biggest foreign currency earners.It also says tourists were frightened off by a series of deadly bomb attacks on churches three years ago.However, many experts say economic mismanagement is to blame.
There are many reasons for this, but one main factor is that at the end of its 30-year civil war in 2009, Sri Lanka chose to focus more on its domestic markets instead of exporting to foreign ones. So income from exports remained low, while the bill for imports kept growing. The government also racked up huge amounts of debt to fund what critics have called unnecessary infrastructure projects. At the end of 2019, Sri Lanka had $7.6bn (£5.8bn) in foreign currency reserves, but by March 2020 it had only $2.3bn (£1.75bn).