Editorial: Crippling crisis in Sri Lanka

The growing protests over Sri Lanka’s devastating economic crisis, which resulted in security forces using rifles, tear gas and water cannons to disperse crowds outside President Gotabaya Rajapaksa’s mansion, are unlikely to abate soon. For one, there appears no quick and easy solution to the economic mess the island nation finds itself in. Foreign reserves are at such a dismal low and, as the country stares at a debt payment default, there is no money to buy enough oil and gas, a predicament that has almost ground the economy to a shuddering halt.

Food prices have gone up sharply and the severe shortage has crippled manufacturing companies, hit tourism, and even forced the stock exchange in Colombo to reduce trading hours. The humanitarian consequences of this crisis, if it persists much longer, are too frightening to even consider. Shortages in food and essentials such as milk, the prices of which have risen sharply, have impacted the poor tremendously. Many government hospitals have been forced to stop performing surgeries due to the lack of life-saving drugs.

As things stand, it is not clear how Sri Lanka can find a way out. Although India, China and Bangladesh have helped with emergency credit lines, this assistance is not enough to overcome the huge public debt, which has already surpassed the GDP. Much of Sri Lanka’s borrowing is from abroad and, in recent years, much of it was expended on large and eye-catching infrastructural facilities, which have failed to deliver returns. Much of the blame for this lies at the door of Mahinda Rajapaksa, who served as President of Sri Lanka between 2005 and 2015 and his obsession for massive Chinese-funded infrastructure projects.

The Rajapaksas, both President Gotabaya and Prime Minister Mahinda, have tried to blame the crisis in the economy on COVID-19. It is true that the pandemic crippled the Sri Lankan tourism sector, which is a major source of foreign exchange. But the crisis in Sri Lanka was much more deep-rooted. Successive governments have failed to take measures to ward off the looming threat as growth slowed, foreign exchange reserves dwindled, and inflation made its way upwards. Russia’s war on Ukraine, which pushed global oil and gas prices northwards, was only the tipping point. The seeds of the crisis were sown well before that.

India has stepped in to provide aid and a credit line for the import of essentials such as food and medicine. But New Delhi should do a lot more and lead a coordinated effort to prevent things from getting further out of hand. The batches of refugees who landed at Rameswaram recently were not fleeing a war (as others did much earlier), but escaping a situation of hardship and hunger. As the Tamil Nadu government has warned, more people are likely to arrive. It would be good for New Delhi to keep in mind that this is a crisis that could impact India in a much more immediate manner as well.