Economic Meltdown
On 31st March, the President of Sri Lanka, Gotabaya Rajapaksa, was threatened by unidentified social media activists as they rallied to his house to ask for his resignation. In the act of protecting the home of the president, the police started firing water cannons and tear gas.
Given the state of the country and the desperate ordinary Sri Lankan, a state of emergency was declared the next day. The following days made the conditions worse, as almost every cabinet minister bailed on the Rajapaksa brothers and resigned.
How did Sri Lanka Get here?
According to the Asian Development Bank working paper, “Sri Lanka is a classic twin deficits economy.” They further explain the twin deficit economy, saying “Twin deficits signal that a country’s national expenditure exceeds its national income, and that its production of tradable goods and services is inadequate.”
Sri Lanka has a lot of foreign debt, amounting to 51 billion dollars. Not only that, but the country’s foreign currency reserves are running out as well. This is the amount of money a country has in foreign currency which is used to pay for all the imports. But, since that amount is also low, it can barely afford necessities and fuel that can be imported from other countries.
Some have accused President Rajapaksa and his brother, the then Prime Minister, Mahindra Rajapaksa of using the country’s money to their benefit. Others believe that China’s efforts to help Sri Lanka develop economically were just ways to make the country increasingly dependent and in debt to the Chinese.
Meanwhile, the government blamed the pandemic for the economic turmoil, as it heavily depends upon tourism. While every mentioned reason behind this economic crisis might or might not be true, we cannot deny the fact that this looks like a condition of poorly managed finance. As a result of which, the people of Sri Lanka have lost their faith in the government and want change.
How has this affected ordinary Sri Lankan?
The outrage that has been seen throughout the country is adding to the chaos, but given the conditions, we can only sympathize with the ordinary Sri Lankan.
The spiking inflation has affected the ordinary to a point that they cannot even afford basic food. The inflation of the general food is currently running at 50%. 22 million people in this country can not just afford food but they can not even find it easily. They are living in 13 hours of power cuts and cannot go to their jobs because they can not afford fuel. Authorities announced that the country would experience more frequent power cuts because of a fuel shortage.
The population of Sri Lanka is still divided into pro-Rajapaksa government and anti-Rajapaksa government, which is adding to the disorder and chaos, turning protests into violence.
Sri Lanka is looking out for every possible solution, but nothing is concrete yet. What is certain is that the country has seen the worst economic crisis since its independence in 1948.
