{"id":77204,"date":"2022-04-27T00:36:02","date_gmt":"2022-04-27T04:36:02","guid":{"rendered":"http:\/\/dbsjeyaraj.com\/dbsj\/?p=77204"},"modified":"2022-04-27T18:40:19","modified_gmt":"2022-04-27T22:40:19","slug":"a-powerful-dynasty-bankrupted-sri-lanka-in-just-30-months-policy-mistakes-led-to-shortages-of-food-electricity-and-medicine-for-the-poor-prompting-angry-protesters-to-hit-the-streets-yelling","status":"publish","type":"post","link":"https:\/\/dbsjeyaraj.com\/dbsj\/?p=77204","title":{"rendered":"A Powerful Dynasty Bankrupted Sri Lanka in Just 30 Months; policy mistakes led to shortages of food, electricity and medicine for the poor prompting angry protesters to hit the streets yelling \u201cGo home Gota!\u201d and \u201cGota is a madman!\u201d"},"content":{"rendered":"


\n.By<\/p>\n

Kai Schultz<\/p>\n

\u2014 With assistance by Asantha Sirimanne, and Anusha Ondaatjie<\/strong><\/em><\/p>\n

Ahead of the November 2019 election, Sri Lankan presidential challenger Gotabaya Rajapaksa proposed sweeping tax cuts so reckless the incumbent government thought it must be a campaign gimmick.<\/p>\n

The finance minister at the time, Mangala Samaraweera, called a briefing to assail the \u201cdangerous\u201d pledge to reduce the value-added tax to 8% from 15% and scrap other levies. To him, it was simple math: Sri Lanka collected relatively less revenue than nearly any other country, and its high debt load had forced it to seek cash from the International Monetary Fund.<\/p>\n

\u201cIf these proposals are implemented like this not only will the entire country go bankrupt,\u201d the minister warned, \u201cbut the entire country will become another Venezuela or another Greece.\u201d<\/p>\n

It took about 30 months for his prediction to come true, in what\u2019s become a cautionary tale for populist leaders navigating through a world of war, disease and high inflation.<\/p>\n

After Rajapaksa won the 2019 election, reviving one of Asia\u2019s most powerful dynasties, he passed the tax cut immediately in his first cabinet meeting. He then quickly restored presidential powers held during the 10-year rule of his strongman brother, Mahinda Rajapaksa, a period that saw the family end a nearly three-decade civil war before getting voted out in 2015 by a citizenry wary of increased oppression and indebtedness to China.<\/p>\n

Instead of learning to govern with more humility, Rajapaksa rushed to restore the family\u2019s brand of populist authoritarianism laced with appeals to nationalism among Sinhalese Buddhists, who make up 75% of the population.<\/p>\n

<\/p>\n

But that strategy quickly backfired. In recent weeks Sri Lanka ran out of cash to pay for essential goods like food and fuel, leading to long petrol lines and daily 13-hour power cuts. Irate citizens burned loaves of bread and ransacked the health ministry to find medicine. Protesters have camped outside the president\u2019s office in downtown Colombo for weeks to demand his resignation.<\/p>\n

The Rajapaksa family now is in full damage control mode, racing to ensure basic goods for the citizenry while seeking emergency funds from the IMF, World Bank, China and other lenders. It has stopped paying back foreign debt, defaulting for the first time since achieving independence from the British in 1948. The country\u2019s stock exchange, which had soared after the tax cuts, is the world\u2019s worst performer this year \u2014 below even Russia.<\/p>\n

What\u2019s more, the Rajapaksas have also been forced to retreat on the two major policies it implemented after the 2019 election. Finance Minister Ali Sabry said the value-added tax must rise for Sri Lanka to shore up its finances, and the Rajapaksas have offered to roll back presidential powers as opponents seek to impeach Gotabaya as president and remove Mahinda as prime minister.<\/p>\n

\u201cThe Rajapaksas are withdrawing, but that doesn\u2019t mean they\u2019re going to surrender,\u201d said Jehan Perera, a newspaper columnist and the executive director of the National Peace Council of Sri Lanka, an independent advocacy group. \u201cThe Rajapaksas are afraid that if they go, they\u2019ll be very vulnerable both in and outside the country. They face human rights violations, accusations of war crimes, and corruption charges.\u201d<\/p>\n

For 12 of the last 20 years, members of the Rajapaksa family have controlled the highest reaches of Sri Lanka\u2019s government. Under their watch, critics in the opposition and the media have called Sri Lanka a \u201csoft dictatorship\u201d and described the Rajapaksas as characters like those conjured up by Mario Puzo, who wrote the screenplay for \u201cThe Godfather.\u201d<\/p>\n

Gotabaya, 72, a former defense chief, led a deadly final push to end the war against Tamil separatists, which killed as many as 100,000 people before a cease-fire in 2009. His brother, Mahinda, 76, the family\u2019s political brain, has served as president and twice as prime minister. Two other siblings, Chamal, 79, and Basil, 71, carved out niches managing ports, agriculture and money. Dozens of relatives hold top posts.<\/p>\n

Milinda Rajapaksha, a government spokesperson, declined to comment for this article.<\/p>\n

Namal Rajapaksa \u2014 the president\u2019s nephew, who recently resigned as sports minister \u2014 said that while the government had inherited a bad economy from the previous administration, it also made some key policy errors and failed to pivot quickly when the pandemic hit. The tax cuts, he said, should\u2019ve been adjusted after a year because the government was losing revenue and not reaping the investment expected from local investors.<\/p>\n

\u201cThere were certain decisions that we did not agree on as a political party when it comes to implementation,\u201d Namal Rajapaksa said by phone, adding that the administration should\u2019ve been more transparent and taken time to educate the public on the challenges. \u201cI don\u2019t blame the public for blaming the Rajapaksa-led government because they are in power. The government is in power, so the government is responsible.\u201d<\/p>\n

\u201cThe current situation is purely based on the breakdown of the supply chain and governance,\u201d he added. \u201cThe president has to take decisions, firmly, and govern the country. And also get the institutions back on track.\u201d<\/p>\n

Even before the Rajapaksas took power, the country was in financial trouble. During the family\u2019s first stint in office, the government took out big loans from China to invest in projects like a deep-sea port in its home district of Hambantota on the island\u2019s southern coastline, part of an effort to turn the nation into a South Asian version of Singapore. But many projects stalled and foreign debt more than doubled between 2010 and 2020.<\/p>\n

On top of that, the country was still reeling from terrorist attacks on Easter Sunday in 2019, when suicide bombers linked to the Islamic State killed more than 250 people in strikes on churches and luxury hotels. The pervasive fear prompted voters to rally behind the candidate with experience crushing insurgencies: Gotabaya Rajapaksa.<\/p>\n

\u201cThere was this assumption that the way out of the post-Easter Sunday slump was tax cuts and low-interest rates,\u201d said Anushka Wijesinha, an economist and former adviser to the government\u2019s ministry of international trade and development. \u201cIt was a mistake.\u201d<\/p>\n

Fears of a broader meltdown first emerged with the pandemic, which suddenly sapped revenue from tourism and remittances. Credit rating companies downgraded Sri Lanka. To stay afloat, the government printed money, boosting supply by 42% between December 2019 and August 2021 \u2014 helping to stoke what would become Asia\u2019s fastest inflation.<\/p>\n

Last April, Sri Lanka suffered another shock: the government abruptly banned chemical fertilizer imports. In public, officials framed the move as delivering on a campaign promise to embrace organic farming and fight the \u201cfertilizer mafia.\u201d In reality, many saw the decision as an attempt to save dollars, according to Wijesinha and other economists. Namal Rajapaksa said the timing of the fertilizer decision was a point of disagreement within the ruling party. <\/p>\n

The ban backfired. Sri Lanka\u2019s entire agricultural chain \u2014 around a third of the labor force and 8% of gross domestic product \u2014 faced disruptions. The paddy harvest failed, forcing the government to import rice and start an expensive food aid program to support devastated farmers. Export earnings from tea, a key revenue source, also dried up. In November, as protests flared, the government partially reversed the ban.<\/p>\n

\u201cSo many experts came forward and said this is a disastrous policy that will affect food security,\u201d said Dhananath Fernando, the chief operating officer of Advocata, an economic policy research group. \u201cBut unfortunately, the government was hell-bent on its decision.\u201d<\/p>\n

The policy mistakes led to shortages of food, electricity and medicine for the poor, and soon prompted angry protesters to hit the streets yelling \u201cGo home Gota!\u201d and \u201cGota is a madman!\u201d The Rajapaksas lost their two-thirds majority in parliament as coalition members defected, and they\u2019re now trying to withstand the opposition\u2019s efforts to remove them from power.<\/p>\n

While the current financial troubles make an election difficult to hold at the moment, opinion surveys suggest the Rajapaksas would lose in a landslide. The first \u201cMood of the Nation\u201d poll carried out in January by Verite Research showed that the government\u2019s approval rating stood at just 10%.<\/p>\n

The Rajapaksa government is \u201ctesting our level of patience and perseverance,\u201d said Malik Nazahim, 24, who\u2019s attended several demonstrations. \u201cThat\u2019s what\u2019s pushing us forward. We want change and we want it now.\u201d<\/p>\n

Courtesy:Bloomberg.com<\/em><\/p>\n

Tweet<\/a><\/div>","protected":false},"excerpt":{"rendered":"

.By Kai Schultz \u2014 With assistance by Asantha Sirimanne, and Anusha Ondaatjie Ahead of the November 2019 election, Sri Lankan presidential challenger Gotabaya Rajapaksa proposed sweeping tax cuts so reckless the incumbent government thought it must be a campaign gimmick. The finance minister at the time, Mangala Samaraweera, called a briefing to assail the \u201cdangerous\u201d …<\/p>\n

Continue reading ‘A Powerful Dynasty Bankrupted Sri Lanka in Just 30 Months; policy mistakes led to shortages of food, electricity and medicine for the poor prompting angry protesters to hit the streets yelling \u201cGo home Gota!\u201d and \u201cGota is a madman!\u201d’ »<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[12],"tags":[],"_links":{"self":[{"href":"https:\/\/dbsjeyaraj.com\/dbsj\/index.php?rest_route=\/wp\/v2\/posts\/77204"}],"collection":[{"href":"https:\/\/dbsjeyaraj.com\/dbsj\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/dbsjeyaraj.com\/dbsj\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/dbsjeyaraj.com\/dbsj\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/dbsjeyaraj.com\/dbsj\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=77204"}],"version-history":[{"count":1,"href":"https:\/\/dbsjeyaraj.com\/dbsj\/index.php?rest_route=\/wp\/v2\/posts\/77204\/revisions"}],"predecessor-version":[{"id":77205,"href":"https:\/\/dbsjeyaraj.com\/dbsj\/index.php?rest_route=\/wp\/v2\/posts\/77204\/revisions\/77205"}],"wp:attachment":[{"href":"https:\/\/dbsjeyaraj.com\/dbsj\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=77204"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dbsjeyaraj.com\/dbsj\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=77204"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dbsjeyaraj.com\/dbsj\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=77204"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}