Sri Lanka is experiencing an unparalleled economic catastrophe.
While the island nation’s difficulties have been simmering for years, impacts from the Ukraine conflict have pushed it over the brink.
In terms of the US dollar, the Sri Lankan rupee has hit rock bottom. Inflation is in the double figures on an annual basis. Import restrictions are in place. And the country is on the verge of going bankrupt.
As a result, power outages are regular. Fuel, food, and medication – all of which are imported – are in short supply, and price hikes are pushing what is still affordable to many Sri Lankans out of grasp. Even printing paper is scarce, causing schools to postpone exams.
Sri Lanka is now seeking aid from other countries, notably its two largest economic partners. China is considering increasing its pledge to $2.5 billion from the $2.8 billion it has already made, while India has put up $2.4 billion. And President Gotabaya Rajapaksa’s government is presently negotiating a larger loan arrangement with the International Monetary Fund and the World Bank – something he had initially denied to avoid the typically stringent terms they demand.
Several of the measures that contributed to the current turmoil are witnessed. And now, Asia’s oldest democracy’s economic, social, and political stability are all at jeopardy unless the government can find a long-term solution.
Then the COVID-19 pandemic and the War collided.
Export restrictions resulted in shortages of vital items such as natural fuel and milk, while currency defence depleted Sri Lanka’s foreign reserves. Furthermore, when the black market value of the rupee sank, transfers began to decline, prompting individuals to avoid changing dollars to rupees at the prime rate or through legitimate channels. Annual inflation has been estimated to be as high as 55%, contrary to the official rate of 14%.
A potentially dangerous set of circumstances
Over 350 “non-essential” commodities, including milk, oranges, and home appliances, are now prohibited from entering the country. And the small quantity of remaining supplies is becoming more costly by the day. Cooking gas, for example, is nearly three times more expensive than it was only five months ago.
Sri Lanka’s economic and financial condition might be stabilized by obtaining loans from the IMF and the World Bank, as well as short-term financing from China and India. However, with mounting protests and the lenders’ demand for fiscal consolidation expected to be unpopular, the cabinet may struggle to stay in power for long.
Protesters resist a curfew imposed by the government due to the economic crisis.
In Sri Lanka, demonstrators resist a curfew imposed by the government due to the economic crisis. Activists in Sri Lanka disobeyed a curfew in many cities to protest the government’s mishandling of the country’s worst economic crisis in decades. Opposition protestors clashed with national police for a few hours in Colombo’s capital before withdrawing amicably. In Kandy, though, police used tear gas and water cannon to attack students. President Gotabaya Rajapaksa enforced the curfew following disturbances outside his mansion on Friday.
For weeks, food and gasoline have been in short supply. People are now concerned that they may lose essential rights as a result of the government’s blocking of social media sites like YouTube, Instagram, and Facebook, as well as WhatsApp and TikTok. Many feel it’s to stop people from holding rallies and muzzle criticism.
The Crisis-hit
At a late-night meeting on Sunday, Sri Lanka’s government resigned vast numbers from their positions, according to the education minister. Mahinda Rajapaksa, on the other hand, will stay Prime Minister.
Protesters packed the streets of Sri Lanka’s capital, Colombo, and its suburbs, as well as a university in the central city of Kandy, when the midnight resignations took place. Protesters defied a state of emergency and risked detention to take part in protests, driven by a severe economic crisis that has resulted in food and electricity shortages.
At this stage, these solutions will do some justice
- The president has the option of serving out his term or resigning.
- If the president decides to leave, it is crucial that he does so after forming a new cabinet, in order to prevent a power struggle that would further postpone the important job that has to be done (i.e., fixing the economy).
- As a result, the new Prime Minister will be able to easily transition to the presidency.
- The president dismisses the current cabinet. The president appoints a member of parliament to lead the formation of a new national government. Who is this mysterious figure? The people’s fury is directed not only at existing government politicians but at ALL politicians.
- So there’s no easy option, but according to our constitution, we need to choose someone from parliament to lead the country.
- The new government should be a national government because we are going to have to make a lot of difficult decisions to get out of this economic situation, and neither party wants those decisions to be used against them in the next election cycle.
- The president does not take any of the government’s departments or institutions under his wing. Yes, that is in stark contrast to the enormous power he wields under 20A. He effectively becomes a figurehead president to ensure a smooth handover.
- The parliament promptly reinstates 19A and repeals 20A, reducing the presidential authority and giving control to the legislature, therefore standardizing the earlier action.
- Parliament quickly impeaches Central Bank Governor Nivard Cabraal (who is apparently refusing to quit) and requests that the Attorney General examine his, the Monetary Board, and other senior CBSL officials’ roles in the currency crisis to see if they broke any laws. Oh, and the Monetary Board has been sacked as well.
- The new national government chooses a global, credible economics team (which, sadly, will include many politicians whose activities over the previous years and decades have also contributed to the economic catastrophe we’re in). To begin, the Finance Minister, Secretary of the Treasury, Governor of the Central Bank, and Monetary Board have such responsibilities. Yes, we have good individuals; use the national list slots to elect them to parliament if essential.
This process can lead to a flawless transition to a new cabinet and beyond. The subject of how to combat our leaders’ insane corruption and hold them accountable is crucial, but it is distinct. We must do so, not just with the authority in an organization, but also with many of the members of parliament (or out).
We, the people, must take this initial step to hold our elected officials responsible for us.