Sri Lanka

Emergency in Sri Lanka Amid Economic Crisis

English News

Emergency in Sri Lanka: Sri Lankan President Gotabaya Rajapaksa declared a nationwide state of Emergency on April 1. The move came after an angry mob tried to storm the President’s house over the country’s worst Economic crisis in decades. Rajapaksa invoked laws allowing the military to arrest and imprison suspects for long periods without trial.

Sri Lankan President’s Residence Attacked by MOB

On March 31, hundreds of protesters clashed with police and military outside Rajapaksa’s residence in Colombo. Police used tear gas and water cannons to disperse crowds after they torched several police and army vehicles. Domonstrators in the capital carried placards demanding President Rajapaksa’s resignation. At least two dozen police personnel were reportedly injured in the clashes.

Sri Lankan police arrested 53 people and imposed a curfew in and around Colombo on April 1. Sweeping powers to security forces have given rise to fears of a brutal crackdown on protesters.

Why are Sri Lankans Protesting?

Soaring inflation and diesel shortages sparked outrage across Sri Lanka causing protests at empty pumps. The island nation of 22 million people has been facing rolling blackouts for up to 13 hours a day. Severe shortage of foreign currency has left Rajapaksa’s government unable to pay for Essential imports, Including fuel. The situation worsened after Colombo steeply devalued its currency in March, further increasing inflation.

Anthony Vinod (Protester)

Today, all over Sri Lanka, citizens are gathering to protest because they have not been able to buy even essential supplies. We are all gathered here to protest against this government and all the groups that support this government. Today, this government headed by Gotabaya Rajapaksa Not just us, but the whole world is talking about what has happened to Sri Lanka. Our Country has been taken to this place of nothingness.

Mohammed Roomy(Daily wage labourer)

People are dying waiting in queues for petrol, for gas, for kerosene. Three people fainted in this very queue.

How Did Sri Lanka Reach This Point?

Experts say Sri Lanka’s crisis is due to the economic mismanagement by successive govts that created and sustained a twin deficit. Twin deficits means the country’s expenditure exceeds its income, and its production of goods and services for trade is Inadequate. Sri Lanka is in the midst of a foreign exchange crisis that has crippled its economy.

Public finances were hit by deep tax cuts promised by Rajapaksa during his 2019 election campaign. Sri Lanka’s tourism industry and foreign workers’ remittances have been severely hit by the pandemic. Credit ratings agencies also locked Sri Lanka out of international capital markets. As a result, Sri Lanka’s foreign exchange reserves plummeted by almost 70% in two years.

Murtaza Jafferjee (Chairman, Advocate Institute)

I am expecting it to get a lot worse. And unfortunately they are unable to contain it, because the people who created the crisis are very much still in charge of economic management. So I think it’s behaviourally impossible for them to acknowledge that they have made a huge blunder and they have to reverse all these incorrect economic policies.

In March 2022, Colombo imposed a broad ban on imports in a bid to save foreign currency. Sri Lanka needs foreign currency to repay nearly $7 billion this year to service its $51 billion debt.

How The Rajapaksa Govt is Tackling The Political Crisis

Two govt ministers claim major intelligence failure placed the lives of the president and his wife in danger. Rajapaksa’s office said the protesters wanted to create an “Arab Spring” in Sri Lanka. Opposition leaders are calling on President Gotabaya Rajapaksa to form an all-party govt to deal with the crisis. For months, the Rajapaksa administration and the Central Bank of Sri Lanka resisted calls to seek help from the IMF.

However, after Russia’s war in Ukraine pushed up Oil prices, Colombo drew up a plan to approach the IMF in April. IMF has said it will initiate discussions with Sri Lankan authorities on a possible loan program in the ”coming days”.

India Sends Aid to Colombo

Rajapaksa has sought help from China and India, particularly assistance on fuel. A diesel shipment under a $500 million credit line signed with India is expected to arrive on April 2. Lanka IOC, the subsidiary of Indian Oil Corporation in Sri Lanka has said it would supply 6,000 MT of fuel to ease the power shortages. Sri Lanka and India have signed a $1 billion credit line for importing essentials, including food and medicine.

However, the Rajapaksa govt has reportedly sought at least another $1 billion from New Delhi. Indian traders are also going to send 40,000 tonnes of rice for prompt shipment to Sri Lanka in the first major shipment of food aid. China is also reportedly considering offering the island $1.5 billion credit facility and a separate loan of up to $1 billion.

Share link

Leave a Reply

Your email address will not be published. Required fields are marked *