Sri Lanka is facing an economic crisis. This is how it is for people on earth

Like his neighbors, he was frustrated by the more than 10-hour power outages that plunged Colombo into darkness, and the lack of cooking gas made it difficult for his family.

Then on Thursday, the fourth night, the protest turned violent.

Enraged protesters threw bricks and lit a fire near the private residence of Sri Lankan President Gotabaya Rajapaksa as police used tear gas and water cannons to disperse protests.

“People were visibly angry, shouting,” said Upul, who asked only to be called by his last name, fearing the consequences. “Earlier (a week) they demanded that the president resign, (on Thursday) shouting and calling him names.”

For weeks, Sri Lanka has been battling the worst economic crisis since the island’s independence in 1948, leaving food, fuel, gas and medicine shortages and commodity prices rising sharply.

Stores have been forced to close because they can’t run refrigerators, air conditioners or fans, and soldiers are stationed at gas stations to reassure shoppers who spend hours lining up in the heat to fill their sides. Some people even died waiting.

But Thursday night was exacerbated by the economic crisis in Sri Lanka.

After the protests, police imposed a curfew, and the president ordered a nationwide state of emergency, giving authorities the power to detain people without a warrant. On Saturday night, Sri Lanka announced a nationwide 36-hour curfew, effectively banning protests scheduled for Sunday, but protests still continued on Saturday.

Meanwhile, the government is seeking financial support from the International Monetary Fund (IMF) and is turning to regional authorities who can help.

But anger is brewing in Sri Lanka – and experts warn that the situation is likely to worsen before it gets better.

The days were spent in line

For weeks, life in Sri Lanka involved long queues – just to get the basic necessities for survival.

“Our daily lives have shrunk to queuing,” said 53-year-old Malcanti Silva, leaning on a worn-out blue gas cylinder in the Colombo fire, where she had been waiting for hours for the propane she needed to prepare. feed his family. “If we need milk powder, it’s our turn, if we need medicine, it’s different.”

Although the situation is particularly acute now, it has been going on for many years.

“30% is unhappiness. 70% is mismanagement,” said Murtaza Jaferji, chairman of the Advocata Institute think tank in Colombo.

Over the past decade, he said, the Sri Lankan government has borrowed huge sums of money from foreign creditors and expanded public services. As government borrowing grew, the economy was hit by heavy rains that affected agricultural production in 2016 and 2017, followed by a constitutional crisis in 2018 and deadly Easter bombings in 2019.
Sri Lankans spend most of the day queuing for fuel and gas as the country’s economic crisis worsens.

In 2019, newly elected President Rajapaksa cut taxes in an attempt to stimulate the economy.

“They misdiagnosed the problem and thought they should give a fiscal stimulus through tax cuts,” Jafferji said.

But although President Rajapaksa was a newcomer to the role, he was not new to the government.

As defense minister under his older brother Rajapaksa, he oversaw a military operation in 2009 that ended a 26-year civil war with the Tigers of the Liberation of Tamil Eelam (TOTI). Last year, the United Nations launched an investigation into allegations of war crimes committed by both sides.

After winning the presidential election, Rajapaksa appointed his brother, former President Mahinda Rajapaksa, as prime minister and held dozens of government positions among servicemen or ex-servicemen and intelligence officers, the UN said. Their younger brother Basil Rajapaksa was later appointed Minister of Finance.
In 2020, a pandemic struck, halting Sri Lanka’s tourist-dependent economy when the country closed its borders and imposed closures and curfews. The government was left with a large deficit.
Supporters of the opposition party shout slogans during a protest near the president's office in Colombo, Tuesday, March 15, 2022.

Shanta Devarajan, a professor of international development at Georgetown University and a former chief economist at the World Bank, says tax cuts and economic ills have affected government revenues, forcing rating agencies to downgrade Sri Lanka’s credit rating to almost default. access to foreign countries. markets.

According to an IMF briefing, Sri Lanka has given up its foreign exchange reserves to repay public debt, reducing its reserves from $ 6.9 billion in 2018 to $ 2.2 billion this year.

The cuts have affected imports of fuel and other basic necessities, and in February Sri Lanka introduced a continuous power outage to deal with the fuel crisis that led to rising prices, even to the global crisis that came when Russia launched an unprovoked invasion of Ukraine.

Last month, the government placed the Sri Lankan rupee, effectively devaluing it, leading to a fall in the currency against the US dollar.

Jafferje described the government’s steps as “a series of mistakes after mistakes”.

Prime Minister Mahinda Rajapaksa told CNN on Saturday that the finance minister and his team are working around the clock to adjust the economy. He said it was wrong to say the government was mismanaging the economy – instead one of the reasons was Covid-19.

Earlier, the President said he was trying to solve it.

“This crisis was not created by me,” Rajapaksa said in an address to the nation last month.

Without gas, Sri Lankans cannot cook, and a power outage means electric stoves are unusable.

Impossible situation

The situation in Sri Lanka has made it incredibly difficult to make money – and even getting to work can be a major obstacle for some.

The rickshaw driver Tushara Sampat, 35, needs fuel to work so he can feed his family. But both fuel and food are normalizing, and prices are rising – the price of bread has more than doubled from 60 rupees ($ 0.20) to 125 rupees ($ 0.42), he said.

Ajit Perara, a 44-year-old backpacker driver, also told CNN he could not survive on fuel rations.

“Of the two or two liters we get, we can’t hire and earn a living,” Perara said with tears in his eyes. “Leave alone to take care of my mother, wife and two children, I can not pay installments for my taxi to the financial company,” he said.

For many, this is an impossible situation – they can not afford not to work, but they also can not afford not to stand in long queues for basic necessities.

47-year-old Kanti Lata, who sweeps the roads to feed her two young sons, says she quietly leaves work to join short queues for food before rushing back.

“I can’t afford to take a day off, if I do, I could lose my job,” Lata said.

Before the economic crisis, Sivakala Rajiswari said her husband worked as a builder. But with rising prices for building materials, people are reluctant to undertake even the most basic construction work, she said.

The 40-year-old Rajiswari says she can still make a living doing people’s household chores, but the last few days she has had no time to do anything but wait in line. “I didn’t have the opportunity to go anywhere to work,” she said. “When will this trouble end?”

Even the middle class with savings is disappointed.

Upul, protesting, earns a decent salary for his professional work, but says he still can’t access essentials for the family. At the moment he has enough medication to treat daily headaches, aches and fevers, but he is worried that he will run out.

His family has switched to induction cooking to reduce gas use, but frequent power outages complicate even that.

“Neither I, nor my family, nor everyone else in Sri Lanka deserves it,” he said. “We have never been so poor, even with all the savings and money earned.”

Inflation is pushing food prices higher, putting pressure on people to make more money to cover basic expenses.

What happens next

Sri Lanka is now seeking outside help to ease economic shocks – the IMF, India and China.

Speaking last month, President Rajapaksa said he weighed the pros and cons of working with the IMF and decided to go for help from a Washington agency, which his government was reluctant to do.

“We must take steps to fill this deficit and increase our gold and foreign exchange reserves. To this end, we have initiated discussions with international financial institutions, as well as with our friendly countries on the repayment of loans,” Rajapaksa said on March 16.

At a news conference on Thursday, IMF spokesman Jerry Rice told reporters: “The Sri Lankan authorities have expressed interest in an IMF-supported financial program.

“We plan to initiate these discussions almost in the coming days, and this will include during the expected visit of the Minister of Finance of Sri Lanka to Washington for our spring meetings in April.”

Sri Lanka has also turned to China and India for help, with New Delhi already issuing a $ 1 billion credit line, Indian Foreign Minister Dr S. Jayshankar tweeted on March 17.

But that would be just “knocking the bank out on the road,” said Jafferjee of the Advocata Institute. “It prolongs the crisis.”

Paikiasotti Saravanamuttu, executive director of the Center for Political Alternatives in Colombo, worries that people’s frustration with the government could escalate.

“Obviously it has to get a lot worse before it gets better,” Saravanamuttu said. “There is a lot of hatred and anger against the president and the cabinet. Government lawmakers are afraid to confront voters. “

Soldiers were sent to gas stations to keep the peace as tensions rose.
There is still much uncertainty about what will happen next – according to the country’s central bank, consumer price inflation in the country has almost tripled from 6.2% in September to 17.5% in February.

“Prices for basic necessities change every day,” Silva said as she lined up in Colombo. “The price of rice yesterday is not the price we will buy tomorrow.”

Thursday’s protests – and developments – also increase the likelihood of even worse things.

Upul, a protester, says he demonstrated on behalf of all Sri Lankans. But the new rules of the state of emergency make him worried.

“I took part in these protests, and despite the fact that I was injured, I was not upset,” he said. “But now, with the new rule, I’m scared.”

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