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Illustration by Danie Laminta.

Crisis in Sri Lanka: The Consequences of Institutional Neglect

Shortages and inflation have made life in Sri Lanka more and more difficult by the month. But this situation was not always inevitable — decades of neglect and corruption have met current mismanagement to shape the country’s predicament.

Mar 28, 2022

Editor's Note: This article was initially published in Issue 223, but in the light of recent events in Sri Lanka, its relevance has only increased. Hence, the management and the author have decided to republish the piece for Issue 224.
My parents celebrated their 24th anniversary on our balcony, by candlelight. This was not to be romantic but because they were in the middle of a seven hour long power cut and any brief respite from a passing breeze was welcome. There used to be power cuts when I was younger, when all the children down the road would come out to play, cricket bats and balls and badminton rackets in hand, and the adults would stand by, holding steaming cups of milk tea, gossiping and planning the next party.
Today, milk powder is a luxury and many lose at least half a day to power cuts.
Sri Lanka’s inflation rate rose to 15.1 percent in February — the highest inflation rate since November 2008. Foreign reserves fell to 2.3 billion USD by the end of February while there remains 6.9 billion USD of debt to be financed this year alone. Public debt rose to 119 percent of GDP in 2021. Prices of essential items such as milk, sugar, rice, lentils and wheat have skyrocketed, along with the prices of fruits and vegetables. There has been a persistent fuel shortage in the country, exacerbated by a growing depletion of foreign reserves. Severe and prolonged power cuts have become ubiquitous, with some areas experiencing a lack of electricity supply of up to eight hours. Final term tests were canceled because there is a shortage of paper, affecting two thirds of all students in the country. Pharmaceuticals such as paracetamol, medicine for diabetes, high blood pressure, cholesterol are limited in supply due to a combination of supply disruptions and price controls. Business owners are unable to provide services due to an interrupted and inconsistent power supply, adults stand in queues at petrol stations from 3 a.m. and children study using kerosene oil lamps.
It sounds dystopian but comes as a shock to no one except the bootlickers of the current ruling party, read: family, synonymous now with the Rajapaksas. President Gotabaya Rajapaksa was elected to power in 2019 while his brother, former president and current Prime Minister Mahinda Rajapaksa took office in 2020.
I oscillate between raging anger and numbness every hour. I am angry at the government for their complete mismanagement of the economic crisis, their refusal to acknowledge mistakes or to place the lives of citizens above party (read: petty) politics and the utter lack of sensitivity shown towards its people, who are being continuously thrown from the consequences of one disastrous policy to another. I am angry at those who are speaking up against the government now but chose to remain silent when the Rajapaksas were accused of human rights violations during the Civil war and after. Those who voted for the Rajapaksas did so because they knew that their ethnicity and religion would protect them from the abuse and harm inflicted with impunity on minoritized groups such as Tamils and Muslims, they knew that being Sinhalese-Buddhist granted them safety and privileges which enhanced their mobility. They knew that with the increasing conflation of Sri Lankans and Sinhalese-Buddhists that their belonging to the nation would be absolute. I am numb when I think of the cost of such political decisions.
Part of the blame can indeed be placed on rising global inflation and the stagnating effects of Covid-19 on local economies, seen through pandemic-related supply shocks. Sri Lanka was especially hurt by the impact of Covid-19 on its tourism industry. Russia’s invasion of Ukraine has also had an impact given that we’ve engaged in direct trade with both countries and have financial linkages as well. But to place the responsibility of this economic collapse solely on global macroeconomic forces dismisses the role played by internal policy decisions, which unfortunately and predictably continue to be politically motivated and occur within a democratic system where accountability remains a dream.
In Nov. 2019, President Rajapaksa made a decision to cut corporate income taxes from 28 percent to 18 percent, VAT from 15 percent to 8 percent and remove a withholding tax, nation building tax and economic service charge. The measure led to a reduction in government revenue of 500 billion rupees a year and increased the fiscal deficit to 15 percent from 5 percent in 2020 and further shifted the trajectory of the economy away from the fiscal consolidation program implemented in cooperation with the IMF.
A fertilizer ban imposed in April 2021 is yet another example of a failed policy measure made without consideration of current capacities or understanding of the realities and constraints faced by local actors, in this case farmers. In a country where up to 70 percent of the population are directly or indirectly involved in agriculture, and that did not create adequate infrastructures to switch to a completely different model of farming, the ban meant that crop yields fell drastically. Thousands of farmers protested, demanding a hybrid policy, and there was a partial revision of the policy. But the effects of the ban, which was implemented just before the Yala planting season, had already contributed to rising food insecurity.
Concerned about the reputation of the government, which was voted in to protect national security — it is clear that there is a hierarchy of belonging within this “nation” — the government continued to reassure the public and refused to devalue the rupee. The consistent depletion of its foreign reserves finally forced the central bank to devalue the rupee by 15 percent on March 7 and a few days later allowed the rupee to float. But it happened too late, with the exchange rate coming to 290 rupees to the U.S. dollar and increasing pressures on the average Sri Lankan.
At least two people have died waiting in line for fuel. One of them was a 70-year old man, who was also a diabetic and heart patient. He used to drive a three-wheeler, a profession already made difficult by fuel shortages and rising fuel prices. The other man was 72 years old. Both of them had been in line for more than four hours, a norm in today’s Sri Lanka, and collapsed from exhaustion. A 29-year old man was stabbed to death at a petrol station, over a conflict while waiting in line. These deaths were all recorded within a 48 hour period.
On March 18, a 12-year old girl was brutally beaten for stealing biscuits, milk powder and other basic items. She stole to provide food for her family of two brothers and a mother who is a day laborer. During this same week, Namal Rajapaksa, son of the current Prime Minister and current Youth and Sports Minister was skiing in the Maldives, allegedly to promote sports tourism.
I am privileged and so is my family but the only place I ever truly thought of as home seems to be burning right now. And I am far away. When my parents sent me off to NYU Abu Dhabi, they always assumed I would come back — as most brown parents do. But whenever I call home these days, they tell me to begin imagining a life somewhere else, to not come back.
The streets have become the agitation site. The people are protesting, some as part of protests organized by the political opposition, but many as part of protests organized independent of any political affiliation. And under such pressure, the government has conceded to begin talks with the IMF to discuss potential debt relief packages. Until now, the response to the economic crisis seemed to consist of requesting bilateral aid from India and China and reviving the tourism industry. The decision to turn toward the IMF, whose recommendations include revenue-based fiscal consolidation, a market-determined and flexible exchange rate system and developing a comprehensive strategy to restore debt sustainability indicates an understanding by the government that the current stop-gap measures being implemented are woefully inadequate.
I would be hopeful but the present devastating situation isn’t merely a result of incompetence — it is also the consequence of decades of neglect and corruption which has festered within our democratic structures and has allowed the political elite exemptions when it comes to transparent governance. I would be hopeful but the president is yet to acknowledge the deaths caused by exhaustion at petrol stations. I would be hopeful if the president didn’t deploy military troops to petrol stations to curb unrest, following Sri Lanka’s pattern of increasing militarization of civic and public spaces. I would be hopeful but my younger brother lost more than a year of schooling to the pandemic, and now his exams are postponed indefinitely.
The citizens of the country have taken to the streets, demanding change by candlelight while the Finance Minister, Basil Rajapaksa, issued a directive to turn off street lights until March 31 to preserve a rapidly depleting electricity supply. It would be humorous if people weren’t starving. Or dying.
Githmi Rabel is Senior Opinion Editor. Email her at feedback@thegazelle.org.
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