No Hope in the Horizon: Why is Sri Lanka Burning With Protests?

Sri Lanka is in the worst economic crisis in its 74-year history and is experiencing widespread political turmoil, following which government ministers have submitted a collective resignation.

As Sri Lanka's president and his brother, the Prime Minister, clung to their positions, the South-East Asian country announced a default on its foreign debt.

Sri Lanka, with a population of 22 million, is characterized by a deep crisis of food and fuel shortages, power outages, accelerated inflation, and huge debt, in the worst recession since its independence in 1948, AFP reported.

 

Miserable Reality

More than a month after the beginning of the protests, newspaper stalls are empty because Sri Lanka doesn't have enough paper for printing.

Food sellers can't get the ingredients they need for their products. For some vendors, even going to the toilet during their shift is too expensive.

"Every time I go to the toilet, it's 20 rupees. If I go five times, even that's too much—it's too expensive to pee these days," says one of the vendors, who sell lottery tickets, in press statements to Reuters.

"I wasn't unhappy with my income but, since inflation is so high, my spending capacity exceeds my earning capacity."

Nowadays, there are daily power outages, a critical shortage of life-saving medicine and basic food staples such as rice and milk are hard to come by. 

Not only workers but also doctors protested the deterioration of health services and drug shortages.

Sri Lankan President Gotabaya Rajapaksa won’t resign until now despite widespread protests since mid-March 2022 over his handling of the economic crisis.

 

Economic Crisis

Colombo's inflation rate reached 18.7% in March, the sixth consecutive monthly record, official data showed. Food prices rose by a record 30.1%.

Diesel was not available at stations across the island, according to officials and media reports. The government's electricity monopoly authority announced a 13-hour cut-out daily, the longest ever because diesel was not available for generators.

Many government hospitals have stopped performing surgeries because of the lack of necessary medicines

Sri Lanka is experiencing the worst economic crisis in its history, burdened with $25 billion in external debt, of which more than $7 billion is due this year alone, as its foreign exchange reserves decline, according to the Associated Press.

The difficult economic situation in Sri Lanka, which has reached the limit of borrowing to buy food, has led to unrest, with demonstrators occupying President Gotabaya Rajapaksa's office, demanding that he step down.

Experts say Sri Lanka is expected to be declared bankrupt this year, exacerbating Sri Lanka's crisis with a major tax cut and increased spending.

In just three years, Sri Lanka's foreign cash reserves have fallen from $7.5 billion to $3.1 billion.

The COVID-19 virus has worsened in Sri Lanka, with more than a fifth of the population below the poverty line, according to the World Bank, which described the crisis as a "huge setback equivalent to five years of progress."

Sri Lanka is heavily indebted and urgently needs the dollar to import fuel, gas, food, and medicine from abroad, and has asked India and China for help to buy food and fuel and financial assistance from the International Monetary Fund.

 

Consequences

A perfect storm of problems led to this situation: multiple foreign loans from countries such as China, years of government borrowing, tax cuts, and COVID-19 lockdown.

The crisis began in the wake of the COVID-19 epidemic, depriving Sri Lanka of its income from the tourism sector, the country's main source of foreign exchange.

This April, Sri Lanka announced the temporary suspension of payment of the external debt to avoid an emergency default, as it needed its reserves of foreign exchange to import commodities such as fuel.

Sri Lanka's Finance Minister Ali Sabri told Reuters that his country would need about $3 billion in foreign aid in the next six months to help get supplies of basic materials including fuel and medicines.

The demonstrations sparked differences within the authority itself, "I will not support the disruption of social media," said Namal Rajapaksa, the sports minister, and nephew of the president.

The president, Gotabaya Rajapaksa belongs to a ruling family that in the past enjoyed the support of much of the country's Sinhalese majority because it put an end to an ethnic civil war with the LTTE in 2009. However, support for the Rajapaksa family collapsed due to the economic crisis.

Sri Lanka's Parliament Speaker warned that famine threatens his country, fearing that the commodity shortage facing the South Asian Island, which is mired in an unprecedented economic crisis, could worsen.

"We were told it was the worst crisis, but I think it's only the beginning," the speaker said at the start of a two-day debate with MPs on the worsening economic crisis.

The Government acknowledged that the country was experiencing the worst economic crisis since independence in 1948 and requested IMF assistance.

"The shortage of food, gas, and electricity will worsen," he said, adding that "there will be a very severe food shortage and famine."

All members of the government, except President Gotabaya Rajapaksa and his brother Prime Minister Mahinda Rajapaksa, submitted their resignations, and Sri Lanka's new Finance Minister Ali Sabri on Tuesday resigned from the government, the day after his appointment by the president.

Sri Lanka's government said on April 26 that it is discussing another loan from Beijing to pay off some of its debts to Chinese banks after China informed Colombo, which is on the verge of bankruptcy, that it did not favor restructuring existing loans.

Nalaka Godahewa, a government spokesman, said Beijing was reluctant to restructure Sri Lanka's debt because it did not want to set such a precedent.