May 19, 2022

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Sri Lanka is facing an economic crisis. This is what it looks like to the people on Earth

Sri Lanka is facing an economic crisis.  This is what it looks like to the people on Earth

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

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

Angry protesters threw stones and set fires outside the residence of Sri Lankan President Gotabaya Rajapaksa, as police used tear gas and water cannons to break up the protests.

“People were visibly angry, screaming,” said Opole, who asked only to be referred to by his last name for fear of the consequences. And earlier (week) they called on the president to step down (on Thursday) they were shouting and calling him names.”

For weeks, Sri Lanka has been grappling with its worst economic crisis since the island nation gained independence in 1948, leading to shortages of food, fuel, gas and medicine, driving up prices for basic commodities.

Shops were forced to close because they couldn’t run refrigerators, air conditioners or fans, and soldiers too Stationed at gas stations To cool off customers, who line up for hours in sweltering heat to fill their closets. Some people even died while waiting.

But Thursday evening saw an escalation of the ongoing economic crisis in Sri Lanka.

Following the protests, the police imposed a curfew and the President of the Republic ordered the following: A nationwide public emergency, which gives authorities the power to detain people without a warrant. Sri Lanka on Saturday evening announced a nationwide curfew for 36 hours, effectively preventing protests planned for Sunday – but protests continued on Saturday anyway. Police said in a statement on Sunday that they had arrested 664 people for violating the curfew.

Meanwhile, the government is seeking financial support from the International Monetary Fund (IMF) and turning to regional powers that may be able to help.

But there is deep anger within Sri Lanka – and experts warn that the situation is likely to get worse before it gets better.

Days waiting in line

For weeks, life in Sri Lanka took hours of waiting – just to get the basic commodities needed to survive.

“Our daily lives have turned into standing in line,” Malkanthi Silva, 53, said, leaning on a worn blue gas cylinder in the heat of baking in Colombo, already waiting for hours for the propane she needed to cook. feed her family. “When we need milk powder, there’s a waiting list for that, if we need medicine, there’s another queue for that.”

Although the situation is now particularly acute, it has been years since it was made.

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“30% is misfortune. 70% is mismanagement,” said Murtaza Jafferji, head of the Colombo-based think tank Advocata Institute.

He said that during the last decade, the Sri Lankan government had borrowed huge sums from foreign lenders and expanded the scope of public services. As government loans grew, the economy took hits from major monsoons that hit agricultural production in 2016 and 2017, followed by Constitutional crisis in 2018and the Deadly Easter bombings in 2019.
Sri Lankans spend most of their day waiting for fuel and gas as the country's economic crisis deepens.

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

“They misdiagnosed the problem and felt they had to provide a fiscal stimulus through tax cuts,” Jafferji said.

But while President Rajapaksa was new to the position, he was not new to the government.

As defense minister under his older brother, Rajapaksa oversaw a 2009 military operation that ended 26 years of civil war with the LTTE. And the United Nations opened an investigation last year into allegations of war crimes by both sides.

After winning the presidential election, Rajapaksa appointed his brother, former President Mahinda Rajapaksa, as Prime Minister and He held dozens of government roles With current or former military and intelligence personnel, according to the United Nations. Their younger brother, Basil Rajapaksa, was later appointed Finance Minister.
In 2020, the epidemic hit, This brought Sri Lanka’s tourism-dependent economy to a standstill, as the country closed its borders and imposed lockdowns and curfews. The government has a huge deficit.
Opposition party supporters chant slogans during a demonstration outside the president's office in Colombo, Tuesday, March 15, 2022.

Tax cuts and economic malaise have hurt government revenue, prompting rating agencies to cut Sri Lanka’s credit rating to levels close to default — meaning the country has lost access to the outside world, says Shanta Devarajan, a professor of international development at Georgetown University and a former chief economist at the World Bank. . markets.

Sri Lanka has tapped into its foreign exchange reserves to pay off government debt, reducing its reserves from $6.9 billion in 2018 to $2.2 billion this year, according to an International Monetary Fund filing.

The liquidity crunch affected imports of fuel and other necessities, and in February Sri Lanka imposed continuous blackouts to deal with a fuel crunch that drove up prices, even before the global crisis that followed. Russia launched an unprovoked invasion of Ukraine.

Last month, the government floated the Sri Lankan rupee, effectively devaluing it by causing the currency to fall against the US dollar.

Jafferji described the government’s moves as “a series of blunders after another.”

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

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Previously, the president said he was trying to solve it.

“I did not create this crisis,” Rajapaksa said during a speech to the nation last month.

Without gas, Sri Lankans would not be able to cook, and power cuts meant that electric stoves were unusable.

impossible situation

The unfolding situation in Sri Lanka has made it very difficult to earn money – and even getting to work can be a major hurdle for some.

Automobile rickshaw driver Thachara Sampath, 35, needs fuel to work so he can feed his family. But he said both fuel and food are being rationed, and prices are going up – the cost of bread has more than doubled from 60 rupees ($0.20) to 125 rupees ($0.42).

Ajith Pereira, a 44-year-old rickshaw driver, told CNN he couldn’t live on fuel rations.

“With a liter or two we get, we can’t run staff and make a living,” Pereira said with tears in his eyes. “Leave me alone to take care of my mother, wife and child, I can’t pay the premium for the taxi to the finance company,” he said.

For many, it’s an impossible situation – they can’t afford not to work, but they also can’t afford not to join long queues to get essential goods.

Kanthi Latha, 47, who is clearing ways to earn a living to feed her two young sons, says she is quietly turning away from work to join shorter queues to get food before rushing back.

“I can’t bear to take the day off, if I do that I may lose my job,” Latha said.

Before the economic crisis, Sivakala Rajeswari says her husband used to work as a construction worker. But with building materials prices soaring, people are reluctant to do even the simplest construction work, she said.

Rajeswari, 40, says she can still make a living doing chores in people’s homes, but for the past few days she hasn’t had time to do anything but wait in line. “I haven’t had the opportunity to go and work anywhere,” she said. “When will this misery end?”

Even middle-class people with savings are frustrated.

Upul, the protester, is earning a decent wage in a professional job, but says he still cannot reach the necessities he needs for his family. He has enough medication to treat his daily headaches, pain, and fever for now, but he’s worried about running out.

His family has switched to induction cooking to reduce gas use, but frequent power outages make doing so difficult.

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

Inflation drives food prices up, putting pressure on people to earn more money to cover basic costs.

what happened after that

Sri Lanka is now looking for outside help to ease the economic turmoil – the International Monetary Fund, India and China.

During a speech last month, President Rajapaksa said he was weighing the pros and cons of working with the IMF and decided to pursue a bailout from the Washington-based institution – something his government has been reluctant to do.

“We must take measures to bridge this deficit and increase our foreign exchange reserves. To this end, we have started discussions with international financial institutions as well as with friendly countries regarding the repayment of our loan installments,” Rajapaksa said on March 16.

Speaking at a briefing on Thursday, IMF spokesman Gerry Rice told reporters: “The Sri Lankan authorities have expressed interest in an IMF-supported financial programme.

“We plan to begin these discussions largely in the coming days, and this will include during the expected visit of Sri Lanka’s finance minister to Washington for the Spring Meetings in April.”

Sri Lanka has also requested assistance from China and India, with New Delhi already issuing a $1 billion credit line, Indian External Affairs Minister Dr S. Jaishankar on March 17th.

This would just be “kick the can on the road,” said Jafferji, of the Advocata Institute. This prolongs the crisis.”

Paikiasothi Saravanamoto, executive director of the Colombo-based Center for Policy Alternatives, is concerned that people’s frustration with the government may escalate.

Saravanamoto said: “It is clear that things will get worse before they get better. There is a lot of hatred and anger against the president and the government. Government lawmakers are afraid to confront the voters.”

Soldiers were posted at gas stations to maintain peace as tensions escalated.
There is still a great deal of uncertainty about what will happen next – national consumer price inflation has nearly tripled from 6.2% in September to 17.5% in February, According to the country’s central bank.

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

Thursday’s protests – and the developments that followed – also raise the possibility of worse things to come.

Obol, the protester, says he was demonstrating on behalf of all Sri Lankans. But the new emergency rules make him worried.

“I participated in these protests and despite my injury, I was not discouraged,” he said. “But now, with the new regulation, I’m afraid.”