{"id":76691,"date":"2022-03-26T00:45:50","date_gmt":"2022-03-26T04:45:50","guid":{"rendered":"http:\/\/dbsjeyaraj.com\/dbsj\/?p=76691"},"modified":"2022-03-26T19:52:30","modified_gmt":"2022-03-26T23:52:30","slug":"sri-lanka-economy-has-hit-rock-bottom-a-debt-crisis-is-disrupting-life-across-sri-lanka-where-food-and-fuel-are-either-unavailable-or-exorbitantly-priced-protests-are-rising-against-a-presid","status":"publish","type":"post","link":"https:\/\/dbsjeyaraj.com\/dbsj\/?p=76691","title":{"rendered":"Sri Lanka Economy Has \u2018Hit Rock Bottom.A debt crisis is disrupting life across Sri Lanka where food and fuel are either unavailable or exorbitantly priced. Protests are rising against a president with a reputation for brutality."},"content":{"rendered":"


\nBy Emily Schmall<\/strong>
\n (Aanya Wipulasena contributed reporting)<\/em><\/strong><\/p>\n

Just lentils, rice and tea without milk. Meals are increasingly meager for Sandamali Purnima, a Sri Lankan salonemployee, her taxi-driver husband and their four young children. With cooking gas hard to find and the electricity cut, she cooks this basic fare outdoors over wood-fed flames.<\/p>\n

A staircase in their suburban home leads to an unfinished second
\nfloor, concrete prices too high to continue.<\/p>\n

\u201cBuilding a house is hard,\u201d Ms. Purnima said. \u201cBut eating is even harder.\u201d<\/p>\n

An economic crisis is disrupting life across Sri Lanka, an island
\nnation off India\u2019s southern coast that only recently had been
\noutperforming its neighbors.<\/p>\n

In less than a decade, Sri Lanka recovered from the ravages of a civil
\nwar that ended in 2009, soaring to the status of an
\nupper-middle-income nation. It built a tourism-based economy that
\nbrought billions of dollars, many jobs and middle class comforts:
\nhigh-end eateries and cafes, imported Jeeps and Audis, and upscale
\nmalls.<\/p>\n

Now, Sri Lankans just want the lights to stay on.<\/p>\n

<\/p>\n

The country\u2019s enormous debt load, the pandemic and, most recently, the
\nwar in Europe have brought it to its knees.<\/p>\n

The central bank is printing rupees and hoarding dollars, sending
\ninflation to a record high of 17.5 percent in February. The finance
\nminister is begging neighbors for credit lines to buy diesel fuel and
\nmilk powder. In a barter arrangement, the central bank is paying for
\nIranian oil with tea leaves.<\/p>\n

For months, the government of President Gotabaya Rajapaksa has
\nrationed power. Sections of the capital, Colombo, go dark suddenly,
\ncity streets becoming as inky black as the Indian Ocean beside them.<\/p>\n

\u201cWe\u2019ve really hit rock bottom,\u201d said Paikiasothy Saravanamuttu, the
\nfounder and executive director of the Colombo-based Center for Policy
\nAlternatives.<\/p>\n

Then he paused, and conceded that many believe the situation could get
\neven worse. \u201cThe question on everyone\u2019s mind is: When is this going to
\nabsolutely crash?\u201d<\/p>\n

When Mr. Rajapaksa won elections in 2019, just months after Easter
\nSunday terrorist attacks that killed more than 250 people on the
\nisland, he had campaigned on a platform of restoring security to the
\nnation, relying in part on his reputation as a brutal defense
\nsecretary who had helped bring Sri Lanka\u2019s long civil war to a close.<\/p>\n

His campaign also didn\u2019t need to worry about name recognition, with
\nthe Rajapaksa family being well known to all Sri Lankans. His brother,
\nMahinda Rajapaksa, was Sri Lanka\u2019s wartime president \u2014 and is now the
\nprime minister. As the top commanders of an army accused of widespread
\natrocities during the civil war, including indiscriminate bombings of
\ncivilians in the breakaway Jaffna Peninsula in the country\u2019s north,
\nboth men have been accused of war crimes by the families of victims
\nand human rights groups.<\/p>\n

Since becoming president, Gotabaya Rajapaksa has only strengthened his
\nstrongman reputation, jailing opponents and dissidents.<\/p>\n

But, as the economy has worsened under his watch, the pressure on him
\nto ease the suffering is mounting.<\/p>\n

School exams have been postponed because of a scarcity of paper.<\/p>\n

India\u2019s Coast Guard rescued a boat full of asylum seekers from
\nnorthern Sri Lanka who said they were making the narrow ocean crossing
\nafter having gone weeks without enough food back home.<\/p>\n

Two men died this week waiting in long lines for fuel on scorching hot days.<\/p>\n

The supply shortages set off the largest demonstration in Sri Lanka in
\nyears earlier this month, with a series of candlelight vigils
\nprotesting the rampant blackouts.<\/p>\n

The president, a former military officer, responded by deploying
\ntroops to gas stations on Tuesday to quell public unrest.<\/p>\n

The Russian invasion of Ukraine and the coronavirus flare-up in China
\nhave disrupted supply chains and boosted the cost of goods globally.
\nIn Sri Lanka, however, the external turmoil has only exacerbated a
\nproblem that was years in the making.<\/p>\n

During the presidency of Mahinda Rajapaksa from 2005 to 2015, Sri
\nLanka took on huge amounts of expensive debt, meant to help turn the
\ncountry into another Singapore by building ambitious infrastructure
\nprojects, including ports. But, so far, many of those projects have
\nstalled, failing to attract the private investment that the government
\nhad hoped for.<\/p>\n

This saddled the next administration, led by a non Rajapaksa
\npresident, Maithripala Sirisena, with high-interest loans. But his
\nadministration managed to convert the pricey short-term loans into
\ncheaper, longer-term debt, and built up foreign reserves to some $7.5
\nbillion. Sri Lanka had a budget surplus for the first time in 52
\nyears.<\/p>\n

Then Gotabaya Rajapaksa came to power, enacting a sweeping tax cut
\njust before the pandemic. Now Sri Lanka is posting negative foreign
\nassets for the first time in its history, and yields on its sovereign
\ndebt have soared from 7 percent to 16 percent.<\/p>\n

Sri Lankans can\u2019t access dollars, which means it is difficult for them
\nto travel or hedge against the fast devaluation of the local currency,
\nthe rupee. Commodities like food and fuel are either unavailable or
\nexorbitantly priced.<\/p>\n

The country is essentially living hand-to-mouth, and increasingly
\ndependent on foreign assistance, battering Sri Lanka\u2019s sense of its
\nself as a rising economic star.<\/p>\n

India recently gave Sri Lanka a $1.5 billion credit line to tide over
\na fuel crisis, and China is considering a $2.5 billion credit line,
\nthe country\u2019s ambassador to Sri Lanka told reporters this week. The
\ngovernment has even turned to poorer neighbors like Bangladesh for
\ncredit lines.<\/p>\n

\u201cWe don\u2019t have anything else to purchase fuel,\u201d said Shehan
\nSemasinghe, a lawmaker and household economy minister. \u201cOur main
\nobjective is to get fuel, essential goods and medicine.\u201d<\/p>\n

And it\u2019s not just fuel and medicine that are in desperately short
\nsupply, but also that most essential necessity: food.<\/p>\n

Because of a poorly executed plan to reduce imports by going organic,
\nSri Lankan farmers were short of fertilizer this growing season,
\nresulting in a lack of the country\u2019s staple food, rice. China donated
\na million tons, and Sri Lanka agreed to pay an inflated price for more
\nfrom Myanmar.<\/p>\n

The government has closed embassies abroad, put prime real estate on
\nthe market, scheduled power cuts and converted the dollars that its
\ncitizens had stored in banks into Sri Lankan rupees.<\/p>\n

But these stopgap measures by President Rajapaksa and his finance
\nminister \u2014 another brother, Basil Rajapaksa \u2014 are unlikely to be
\nanywhere near enough to cover the growing pile of debt owed to China
\nand other big lenders, according to economic experts.<\/p>\n

\u201cSri Lanka\u2019s economy is experiencing multiple organ failure, and
\nsepsis has set in,\u201d said Murtaza Jafferjee, the chairman of the
\nAdvocata Institute, a think tank in Colombo.<\/p>\n

Ratings agencies have downgraded Sri Lanka\u2019s debt by several notches,
\nand investors are betting on a default.<\/p>\n

The government has responded to the ratings agency downgrades and dour
\nanalyses with a mix of indignation, disbelief and denial, initially
\nresisting calls to seek help from the International Monetary Fund.<\/p>\n

Basil Rajapaksa, however, relented earlier this month, saying that the
\ncountry would work with the I.M.F.<\/p>\n

Officials are betting that a huge upturn in tourism, earnings from
\nwhich were down 62 percent in December from the year before, can right
\nthe country\u2019s balance sheet.<\/p>\n

\u201cWe know that this difficulty that we\u2019re facing is mainly because of
\nthe tourism receipts not being there. If the tourism receipts had been
\nthere, notwithstanding the Covid debacle, nobody would have been
\ntalking about I.M.F.,\u201d said Sri Lanka\u2019s central bank governor, Ajith
\nNivard Cabraal.<\/p>\n

Many less optimistic ministers have been sacked by the Rajapaksa administration.<\/p>\n

With its creditworthiness shot, the government is buying oil and gas
\nat spot prices, that is, the going rate as container ships pull into
\nport. Recently, as a tanker docked outside Colombo, the price of its
\ndiesel cargo increased from $35 million to $50 million.<\/p>\n

As the economic pain intensifies, the political opposition to the
\nRajapaksas senses an opportunity.<\/p>\n

Earlier this month, Sajith Premadasa, the opposition lawmaker who lost
\nthe 2019 election to Mr. Rajapaksa, organized a demonstration that
\nroiled Colombo. Tens of thousands of protesters marched to the
\npresident\u2019s office demanding that he resign, wearing head scarves in
\nSinhala, Tamil and English that read, \u201cGota, go,\u201d referring to the
\npresident\u2019s nickname.<\/p>\n

At another recent protest, Ms. Purnima, 42, joined dozens of other
\nwomen who marched to the presidential mansion in Colombo protesting
\nagainst the frequent power cuts, disappearance of cooking gas and milk
\npowder, and rising costs of fresh food.<\/p>\n

\u201cLife is very difficult now,\u201d she said.<\/p>\n

Courtesy: New York Times<\/em><\/p>\n

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By Emily Schmall (Aanya Wipulasena contributed reporting) Just lentils, rice and tea without milk. Meals are increasingly meager for Sandamali Purnima, a Sri Lankan salonemployee, her taxi-driver husband and their four young children. With cooking gas hard to find and the electricity cut, she cooks this basic fare outdoors over wood-fed flames. A staircase in …<\/p>\n

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