At least seven people died in Monday’s riots. The houses of Sri Lanka’s leading politicians were burned.
Sri Lanka, an island nation in the Indian Ocean, has suffered badly from rising global food and energy prices. Prices have risen by about 30 percent during the first half of the year.
Food and fuel prices have risen beyond the reach of many poor Sri Lankans. There have been large-scale demonstrations in the island state for more than a month.
Opposition protests are against the brother-in-law ruling Sri Lanka, Prime Minister Mahinda Rajapaksaan and his brother, the president Gotabaya Rajapaksaan.
Prime Minister Mahinda Rajapaksa resigned on Monday (9.5). However, this was not enough for the opposition, and large-scale demonstrations raged in many localities. At least seven people were killed and more than 200 were injured in the daytime skirmishes.
Protesters are also demanding the resignation of President Gotabaya Rajapaksa. The house of many of the leading politicians in the leading party was burned.
The protests only subsided when the army was called to the streets and a curfew was imposed on the whole country until Wednesday morning.
There is also bad luck and wrong politics behind it
Sri Lanka’s problems have been exacerbated during the war in Ukraine, when inflation has accelerated globally.
Even before this corona pandemic, Sri Lanka was paralyzed by a rising tourism industry. In addition, there were bombings in Sri Lanka at Easter 2019 that frightened many tourists. Behind the bombings was a group reportedly linked to the Isis terrorist organization.
Tourism has been a very important source of foreign income for Sri Lanka. When the country’s 30-year civil war ended in 2009, Sri Lanka opted for an economic policy line focused on the domestic market. The country’s extensive textile industry lost its relevance.
As Sri Lanka’s exports declined and imports increased, the country’s economy became indebted. In recent years, the foreign trade deficit has been around EUR 3.5 billion a year. The government has taken out large loans from China to finance major infrastructure projects. The opposition believes many projects have been unnecessary.
When in power, the borderline has pursued a populist policy. Gotabaya Rajapaksa, who became president in 2019, approved substantial tax cuts.
As a result of these actions, the Sri Lankan state’s financial resources have dwindled and the state treasury is now almost empty. The Treasury minister Ali Sabry said last week that the state had less than $ 50 million in foreign currency left.
The state is now having great difficulty buying essential supplies abroad, such as medicines. There is also a shortage of food.
The government is trying to curb the crisis
The financial difficulties have not come as a complete surprise to the government, but attempts to solve them have been bad. Last spring, the government tried to save foreign currency by banning the import of foreign fertilizers. The result was a lousy harvest, forcing the government only to increase its purchases of food abroad.
A frequently used means of reviving exports is the devaluation of the country’s currency. The Sri Lankan government refused to devalue for a long time, but in March the pressure became overwhelming. The value of the Sri Lankan rupee fell by more than 30 percent.
In April, the credit rating agency Standard & Poor’s rated Sri Lanka partially insolvent.
Border guards have acknowledged that the solutions they have made have exacerbated the crisis.
One wrong solution was to delay the request for help. It was not until March that President Rajapaksa asked for help from the International Monetary Fund (IMF). It is hoped it will draw up a rescue plan.
Sri Lanka has an external debt of about $ 50 billion, and debt service costs this year are about $ 7 billion. Negotiations with lenders to ease debt service costs are ongoing, but it is likely to take months to find solutions.
Sri Lanka’s problems have been exacerbated by the international situation, but the country’s leadership has exacerbated the crisis. Similar clashes due to rising prices can be seen in other underdeveloped countries.