Sri Lanka is experiencing an economic crisis. That’s what it’s like for people on earth

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

Then on Thursday, the fourth night, the protest escalated into violence.

Angry demonstrators threw bricks and set fire to the private residence of Sri Lankan President Gotabai Rajapaksa as police fired tear gas and water cannons to disperse the protests.

“People were clearly angry and screaming,” said Upul, who asked to be referred to by his last name only for fear of repercussions. “Earlier (in the week) they demanded that the President resign, (Thursday) they shouted and called him names.”

For weeks, Sri Lanka has been battling the worst economic crisis since the island nation gained independence in 1948, leaving food, fuel, gas and medicine in short supply and the cost of basic commodities skyrocketing.

Stores have been forced to close because refrigerators, air conditioners or fans don’t work, and soldiers stand at gas stations to reassure shoppers who queue for hours in the scorching heat to fill up their tanks. Some people even died waiting.

But Thursday night marked an escalation in Sri Lanka’s ongoing economic crisis.

After the protests, the police imposed a curfew and the president declared a state of emergency throughout the country, giving the authorities the right to detain people without a warrant. Sri Lanka announced a nationwide 36-hour curfew on Saturday night, effectively banning protests scheduled for Sunday, but the protests took place on Saturday anyway. On Sunday, police said they had arrested 664 people for curfew violations.

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

But fury is brewing inside Sri Lanka, with experts warning the situation is likely to get worse before it gets better.

Days of waiting in line

For weeks, life in Sri Lanka has included hours of queuing just to buy the essentials you need to survive.

“Our daily life was about standing in line,” said Malcanti Silva, 53, leaning on a worn blue gas tank in hot Colombo, where she had been waiting for hours for propane she needed to prepare for cooking. feed her family. “When we need powdered milk, there is a queue for it, if we need medicines, there is another queue for that.”

Although the situation is particularly acute now, it took years.

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

Over the past decade, the Sri Lankan government has borrowed huge amounts of money from foreign lenders and expanded public services, he said. As government borrowing grew, the economy was hit by strong monsoons that damaged 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 lowered taxes in an attempt to stimulate the economy.

“They misdiagnosed the problem and felt they should provide fiscal stimulus through tax cuts,” Jafferjee said.

But although President Rajapaksa was new to this role, he was not new to government.

As defense minister, under his older brother Rajapaksa, he oversaw the 2009 military operation that ended a 26-year civil war with the Liberation Tigers of Tamil Eelam (LTTE). 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 with current or former military and intelligence officers, according to the UN. Their younger brother Basil Rajapaksa was later appointed finance minister.
In 2020, a pandemic broke out, bringing Sri Lanka’s tourist-dependent economy to a halt as the country closed its borders and imposed quarantines and curfews. The government was left with a large deficit.
Opposition party supporters shout slogans during a protest outside the president's office in Colombo, Tuesday, March 15, 2022.

Shanta Devarajan, professor of international development at Georgetown University and former chief economist at the World Bank, says tax cuts and economic malaise hit government revenue, prompting rating agencies to downgrade Sri Lanka’s credit rating to near default, meaning the country has lost access to foreign loans. markets.

Sri Lanka has slashed its foreign exchange reserves to pay off its public debt, cutting its reserves from $6.9 billion in 2018 to $2.2 billion this year, according to an IMF briefing.

The monetary crisis has taken its toll on imports of fuel and other essentials, and Sri Lanka imposed permanent power outages in February to deal with a fuel crisis that sent prices skyrocketing, even before the global crisis that followed when Russia launched an unprovoked invasion of Ukraine.

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

Jafferjee described the government’s actions 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 get the economy in order. He said it would be wrong to say the government mismanaged the economy — instead, Covid-19 was one of the reasons.

Earlier, the president said he was trying to solve this problem.

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

Without gas, Sri Lankans cannot cook their meals, and power outages render electric stoves unusable.

Impossible situation

The current situation in Sri Lanka has made earning money incredibly difficult and even getting a job can be a major hurdle for some.

Autorickshaw driver Tushara Sampat, 35, needs fuel to feed his family. But both fuel and food are being rationed and prices are skyrocketing — the cost of bread has more than doubled from Rs 60 ($0.20) to Rs 125 ($0.42), he said.

Ajit Perera, a 44-year-old auto-rickshaw driver, also told CNN he couldn’t survive on fuel rations.

“With a liter or two that we get, we can’t hire and make a living,” Perera said tearfully. “Not to mention looking after my mother, wife and two children, I can’t pay in installments for a finance company taxi,” he said.

For many, this is a no-win situation – they can’t afford not to work, but they also can’t afford not to stand in long lines for essentials.

Kanti Latha, 47, who makes a living sweeping roads to support her two young sons, says she sneaks out of work to join shorter food lines before rushing back.

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

According to Shivakal Rajeswari, before the economic crisis, her husband worked as a construction worker. But with soaring prices for building materials, people are reluctant to take on even the most basic building work, she said.

Rajeswari, 40, says she can still make a living doing housework for people, but hasn’t had time in the past few days to do anything other than stand in line. “I didn’t have the opportunity to go and work anywhere,” she said. “When will this misfortune end?”

Even members of the middle class with savings are disappointed.

Upul, a protester, earns a decent salary from a professional job but says he still can’t access the basic necessities his family needs. At the moment, he has enough medicine to treat his daily headaches, aches and fevers, but he is worried that they will run out.

His family has switched to an induction cooktop to cut down on gas consumption, but frequent power outages make even that difficult.

“Neither I, nor my family, nor any other person in Sri Lanka deserve this,” he said. “We have never been so poor, even with all the money we have saved and earned.”

Inflation raises food prices, forcing people to earn more money to cover basic expenses.

What will happen next

Now Sri Lanka is looking for outside help to ease the economic turmoil – the IMF, India and China.

During a speech last month, President Rajapaksa said he had weighed the pros and cons of working with the IMF and decided to seek bailouts from the Washington institution, which his government was reluctant to do.

“We must take action to fill this gap and increase our foreign exchange reserves. To this end, we have begun negotiations with international financial institutions, as well as with our friendly countries, regarding the repayment of our loan payments,” Rajapaksa said on March 16.

At a press 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 start these discussions in the coming days, including during the expected visit of the Sri Lankan finance minister to Washington for our spring meetings in April.”

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

But that would just be “thrown money aside,” Jafferjee of the Advocacy Institute said. “It prolongs the crisis.”

Paikiasoti Sarawanamuttu, executive director of the Center for Political Alternatives in Colombo, fears that people’s dissatisfaction with the government may increase.

“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 legislators are afraid to meet with voters.”

Soldiers have been sent to gas stations to keep the peace as tensions rise.
There is still a lot of uncertainty about what will happen next: consumer price inflation in the country almost tripled from 6.2% in September to 17.5% in February. according to the country’s central bank.

“Prices for essential goods change every day,” Silva said as she stood in line in Colombo. “The price of rice yesterday is not the price we will buy tomorrow.”

Thursday’s protests – and subsequent events – also increase the likelihood that worse things are coming.

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

“I took part in these protests and although I was injured, I was not discouraged,” he said. “But now, with the new rules, I’m scared.”

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