Economic Turmoil in Sri Lanka: Protest, Political Change, and What’s Next
Written By: London Allen | September 8, 2022
Sri Lanka is overcome with crisis as they face political and economic hardship. Protests have been occurring for months, during which citizens are demanding a change in the political culture and leadership that led the country to economic turmoil. In July 2022, the protest coerced former president Gotabaya Rajapaksa to flee the country and declare a state of emergency. Rajapaksa, accused of bankrupting the country due to poor economic management and committing war crimes, was the 8th Sri Lankan president until his resignation on July 14th. Now, with the new parliament-elected president—Ranil Wickremesinghe—change may finally be underway, however not the change some were hoping for.
Prior to Gotabaya Rajapaksa’s reign as president, Sri Lanka was already in economic decline. Sri Lanka is in heavy debt with other countries that accumulated from the reigns of various political leaders. The country currently faces the possibility of bankruptcy after announcing a default earlier this year. Since Rajapaksa took office in 2019, there have been several policy decisions that have potentially led to the economic crisis. According to Sri Lankan Human Rights Lawyer Bhavani Fonseka, these policies include tax cuts in 2019 which “significantly impacted the revenue of the government” and the overnight ban on chemical fertilizer in 2021 which “impacted the agriculture sector and food security.”
On the other hand, some individuals such as one Sri Lankan writer, Indrajit Samarajiva, attribute the country’s debt to a “Western-dominated neoliberal system that keeps developing countries in a form of debt-fueled colonization.” Samarajiva claims that Sri Lanka was “once an economic hope” ruined by “450 years of colonialism, 40 years of neoliberalism, and four years of total failure by our politicians.” The economy, long without a profitable system, was doomed to collapse according to Samarajiva.
Either way, the crisis has created hardships for many Sri Lankans including trouble getting essential items, long power cuts, and limited access to fuel. Sri Lankan citizens, unwilling to accept the government's missteps, took to the streets in monthslong protests (still ongoing at the time this was written) that reached a climax on July 9 as protesters’ breached the president’s mansion and set fire to Prime Minister Ranil Wickremesinghe’s home. This enabled some political change protestors hoped for as both the former President and Prime Minister decided to step down. Unfortunately, parliament elected Ranil Wickremesinghe, former Prime Minister, is not protesters' top pick as he has ties with the former and allegedly corrupt president. According to one New York Times article, Wickremesinghe, who took office on July 21, “is seen as a protector of the Rajapaksas’ interests… sending the police after several protest organizers.”
So far, Sri Lanka’s new president has taken action towards economic recovery. Wickremesinghe began crucial talks in August with the International Monetary Fund (IMF) delegation. The IMF could relieve the debt-ridden island nation with a potentially $5 billion USD program that the nation desires and an agreement to this extent could aid the country in its time of economic deprivation.
Furthermore, as president Wickremesinghe’s government attempts to find economic relief, the country urges China to allow Sri Lanka to restructure its debt. 10 to 20 percent of Sri Lanka’s debt is to China. Sri Lanka defaulted on their loans from China for the Hambantota port and a Chinese survey ship docked there caused India and some western countries to have fears of the ship being a “Chinese naval ship that's been used in the past to track satellites and missiles.” Though China claims the ship is on a scientific mission, foreign governments near Sri Lanka—such as India—suspect the ship’s arrival could “signal the start of the militarization of Chinese infrastructure in Sri Lanka.” India has tense relations with Beijing and according to Sri Lankan human rights activist Shreen Saroor, "People are very worried whether we will be the battlefield between China's and India's tensions — whether Sri Lanka will be the point where the war will start.” Similar to China, India has also been a lender to its neighboring island.
As the current president is in talks with the IMF to finalize a “bailout package” and the protests continue, the future of Sri Lanka remains unclear. Some Sri Lankans are starving or surviving on as little as one meal a day while others are waiting up to 3 days for fuel. Any action—whether spreading information about the crisis or donating— is important in supporting Sri Lanka through its time of economic, political, and humanitarian hardship.
