Ajay Roy
Indian Ocean's island nation Sri Lanka is facing a severe economic and humanitarian crisis. It has practically defaulted on debt payments. The country has a massive deficit of foreign exchange reserves. So they cannot import food, medicine and fuel. An International Monetary Fund (IMF) team visited Colombo during 20-30 June.[1] Ranil Wickremesinghe's government is conducting a discussion with the IMF. They aim to make a new agreement.
The country has faced a severe price rise in essential commodities in the last few months. Inflation sprang close to 40% in Sri Lanka in May.[2] Food inflation rose to 57.4%. There is a massive scarcity of food items. The fuel crisis also reached a severe level. There are long queues at petrol pumps. Daily many hours of power cuts are taking place. The government directed its employees to work from home for two weeks.
The corona pandemic damaged the country's economy. Revenue from the tourism sector has decreased a lot. Substantial tax cuts also created problems. A ban on chemical fertiliser imports for some months damaged agriculture.
Now to divert public attention, the commercial media is conducting propaganda that China is mainly responsible for Sri Lanka's crisis. They need a scapegoat. But according to a section of economists, the root of the country's economic problem is much more profound. The government is corrupt and dictatorial. It follows anti-people neo-liberal economic policy; and serves the interests of domestic and foreign big business houses. These factors have created the basis of the current financial disaster. If they retake money from IMF, more austerity measures will follow. It will further damage the living conditions of the masses. Many lacs of people will lose their jobs. Wage and pension will be slashed randomly. Already a massive initiative has been taken for privatisation. Recently, a high official complained that Indian Prime Minister Narendra Modi pressured the Sri Lanka government to hand over the Mannar air power project to industrialist Adani.
From last April onwards, countrywide mass protests have been occurring. General strikes have also received a great response. But the ruling party provoked and organised violent attacks on anti-government protestors. As a result, clashes spread nationwide. The ruling class took the opportunity. They launched a brutal suppression campaign and violated human rights.
Protestors have demanded the resignation of President Gotabaya Rajapaksa. All the previous cabinet members, including the other Rajapaksa brothers, resigned some days ago. But Gotabaya has refused to leave. He came to power in 2019 with a wave of Singhalese Buddhist majority support. But now, he has become very unpopular.
Some experts believe immediate repudiation of illegal debts is necessary to recover Sri Lanka's economy. Strengthening the public distribution system to counter the deepening food crisis is essential. Bolstering the democratic process is also crucial. Any other country can take a lesson from Sri Lanka's experience.
30.06.2022
Notes
[1] By Press Trust of India, "Sri Lankan PM Wickremesinghe hold talks with IMF team on economic programme", June 20, 2022, Business Standard
[2] By Bloomberg, "Sri Lanka inflation jumps close to 40% in May as shortages persist", June 01, 2022, Business Standard
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