For weeks on end now, Sri Lanka has been rocked by angry street protests over the economic crisis that has deeply impacted its 22 million inhabitants.
Continued street protests resulted in the resignation of Prime Minister Mahinda Rajapaska, but the protesters have pressed on, calling for the removal of his brother, Gotabaya Rajapaksa, as president.
Protesters blame the government for the current crisis that has left most Sri Lankans short of basic food stuff, the economy facing a massive debt and an acute shortage of foreign currency.
To assuage public anger, the president has appointed Ranil Wickremesinghe, a former prime minister, as the country’s new PM. Whether this appointment will end the street protests remains to be seen, but the reality is that the crisis facing the nation is deep-rooted and will likely take far more than a reshuffle at the top to resolve.
Ordinary Sri Lankans are presently dealing with shortages and soaring inflation as a result of the country steeply devaluing its currency some two months ago before critical talks with the International Monetary Fund (IMF) over a potential loan programme.
After decades of civil war, Sri Lanka has struggled to build a firm economic foundation. The mishandling of finances by successive governments has been cited as a reason.
Ballooning foreign debt
A large part of the economic mess lies in Lanka’s ballooning foreign debt, which Rajapaksa used to fund an aggressive turn to infrastructure development.
Deep tax cuts promised by Rajapaksa during a 2019 election campaign -- that were enacted months before the pandemic – made a bad situation worse.
The nation’s over-reliance on a burgeoning tourism market also proved to be a weak spot. Experts note that the deep economic malaise brought about by the coronavirus pandemic aggravated an already hopeless situation.
In reality there is no quick fix that the president or the new prime minister can apply without addressing the systemic problems in the Sri Lankan economy.
With China and India both providing short-term help, it is simply not enough to make a difference to the protesters.
It remains to be seen whether the new changes proposed by the government will placate the public, who are expecting a solution to come through from the IMF. Sri Lankan central bank chief, Nandalal Weerasinghe, recently stated that such a hoped-for deal could still be months away.
These are worrying times indeed for Sri Lanka.