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Article by Batuhan (21.11.2024)
The island nation of Sri Lanka (nicknamed “The Pearl of the Indian Ocean”) has always been seen as unique due to both its geography and its economic decisions. Sri Lanka is geographically located to the south of India, with a population of 23 million Tamil and Sinhalese people.
Sri Lanka’s diversity has been known as an unpleasant factor in Sri Lankan politics (like the Civil War lasting from 1983 to 2009), as well as the fact that the Rajapaksa family held all primary positions of power for a decade. Sri Lanka has been known historically as a country that primarily incurred a large amount of debt due to its imports, which would eventually play a part in the coming turmoils of Sri Lanka. After the ending of the Sri Lankan Civil War between the infamous insurgency LTTE (a.k.a. The Tamil Tigers) and the Sinhalese government, followed by the 2019 Easter Sunday bombings, the Rajapaksa government would elect its newest president in 2020, Gotabaya Rajapaksa.
He would quickly come to be praised due to his response to the pandemic of 2020; however, such praise would quickly evaporate with his economic policies. In 2021, Gotabaya would make the decision to ban all chemical fertilizers altogether in an attempt to make Sri Lanka a country of 100% organic farming. This attempt would prove to be both costly and unwise as the harvest became severely hampered, causing acute food shortages throughout the country. This would also lead to panic in the economy as people rushed to buy important essentials like food, gas, and fuel. This would snowball into an economic crisis as the currency exchange rate of the Sri Lankan rupee would fall, leading to inflation as well due to the high food prices.
Sri Lanka has also been known for always incurring a large amount of foreign debt, which didn't help the crisis as the country ran out of foreign reserves to pay off the debt. The government (now in a state of emergency) took control of the prices of essential food items and began accusing both suppliers for hoarding and the Sri Lankan media for creating “unnecessary fears”. Changes in gas cylinder compositions led to explosions in homes and hotels, leading to an increase in protests against the government’s economic handling. Due to the heavily decreasing foreign reserves, the government began banning certain imports, like motor vehicles, leading to even more outrage.
The tourism industry (one of Sri Lanka’s largest industries) was already in decline due to the 2020 pandemic, but was affected even worse due to the fears of tourists over the “Delta Variant,” causing a greater decrease in the industry. Australian journalists also revealed at this time several shady dealings between friends of the Rajapaksa family and an Australian company called Aspen Medical, which the president vehemently denies involvement in and calls a conspiracy to undermine the reputation of the Rajapaksa family. The combined worsening of the economy and general distrust in the government and parliament led to protests throughout Sri Lanka as citizens called for a major overhaul with younger educated people to be elected to lead the country.
Protestors would also call for the net worth of politicians to be revealed as evidence of obvious corruption within the government. On the 3rd of April, 2022, 26 cabinet ministers would resign, which were deemed null and void due to not following proper constitutional regulations. The president Gotabaya and prime minister Mahinda (both Rajapaksa’s) would invite all the political parties to form an all-party interim government, which was rejected by the SJB (a political alliance) and JVP (a leftist political party), who would go on to urge the entire government to resign, which included the president. A temporary cabinet would be formed with 4 ministers (all part of the 26 who attempted to resign) but ultimately failed, as Minister Ali Sabry would then resign a day later before revoking his resignation soon after.
By early 2022, Sri Lankans would face power cuts and shortages of basic necessities like fuel with an ever-increasing inflation due to political instability. On the 9th of July, the homes of both the president and prime minister would be broken into and burned, leading to the eventual resignation of both Gotabaya Rajapaksa and his new prime minister, Ranil Wickremesinghe. Gotabaya would flee to the Maldives (a country made up of over 1000 islands to the west of Sri Lanka while also being known as a good holiday destination), where he would issue a statement declaring himself unable to perform the duties of being president as he was no longer in the country before promoting Ranil Wickremesinghe as acting president before resigning a day later as he fled from the Maldives to Singapore.
A secret ballot would later be held in parliament, and Ranil would win the vote and be sworn in as the 9th president of Sri Lanka. The crisis would end shortly afterwards as the Rajapaksa family was booted out of the high offices of government after successfully dominating Sri Lankan politics for decades. Unfortunately, the new president now must face the growing issue of foreign debt, as Sri Lanka still owes 7 billion USD to China and nearly another billion to India. The IMF (International Monetary Fund) has agreed to loan Sri Lanka 3 billion USD, while both China and India have agreed to restructure their loans. Sri Lanka’s government now attempts to restructure its industries and wishes to privatize its national airline while introducing a higher income tax for higher earners, whose effects are yet to be known.
Sri Lanka’s further attempts to pay off its debts was by sending Sri Lankan officials to London to discuss the 12 billion USD worth of government bonds, which takes up a month before a proposal is reached. This was rejected on the grounds that some of the “baseline” assumptions are different from those used by the IMF.
A further graph shown by the website Reuter showcases the economic collapse of Sri Lanka. Currently it appears that even if the
the political crisis within Sri Lanka abates, the economy of Sri Lanka is still struggling, showing how the effects of the crisis are still felt to this day.
In conclusion, the island nation of Sri Lanka is an example of the consequences of mismanagement and the drawbacks of a single family of individuals holding complete power over a country's government and economy. The 2022 crisis also showcases how the people can hold the power to depose even the most corrupt of governments if they make their own voices heard.
Sources:
Source 1- World Bank
https://www.worldbank.org/en/country/srilanka/overview
Source 2- Wikipedia
Source 3- Sciencedirect
https://www.sciencedirect.com/science/article/abs/pii/S1572308923001134
Source 4- The BBC
https://www.bbc.com/news/world-61028138
Source 5- Reuter
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