The new year has started like a nightmare for Sri Lanka. However, changing the date does not change the tawarikh (history). Means coming from 31st December to 1st January cannot be a reason for change.
The troubles of the past are directly related to the present. The economic crisis that Sri Lanka seemed to be in for the last few years has now taken a frightening form and is on the verge of bankruptcy.
Sri Lanka is almost half of Tamil Nadu in terms of area. The population is about two and a half million. The contribution of the tourism sector to Sri Lanka’s GDP is more than 10 percent.
The Kovid epidemic first ruined the tourism and the right amount is being met by the debts of China. This belief about China is close to the truth that it traps weak countries with debt diplomacy and then makes policies in that country according to its own.
Sri Lanka had to give the Hambantota port to China on a 100-year lease in exchange for not repaying the loan. But this was not the end of the Chinese debt.
Sri Lanka’s economic crisis seems to be turning into a serious humanitarian crisis. Inflation is rising at record levels. Food and drink are also getting out of reach of people every day. The treasures are almost empty. It would not be a surprise if Sri Lanka were declared bankrupt in 2022.
The government of Sri Lanka is headed by the Rajapaksa family. One brother Gotabhaya Rajapaksa is the President and the other brother Mahinda Rajapaksa is the Prime Minister. All the important powers are limited with the Rajapaksa family.
The government treasury has become empty due to the Kovid epidemic, the devastation of the tourism industry, increasing government spending and continuing tax cuts. Along with this, the pressure of repayment of loans is also increasing but foreign exchange reserves are at historically low levels.
According to World Bank estimates, five lakh people have gone below the poverty line since the start of the pandemic. Inflation had reached a record 11.1% in November. Food and drink became costlier by 22.1 percent in December.
Sri Lanka is now facing a shortage of food and drink. There is not enough money to supply food items through imports. It has become difficult for people in Sri Lanka to eat even three times a day.
The Rajapaksa government of Sri Lanka had already declared a state of economic emergency last year. The army was given the responsibility of ensuring the supply of essential goods. Even the government price was fixed for sugar and rice, but even this did not end the problems of the people.
A taxi driver named Anuruddha Parangma in Colombo, the capital of Sri Lanka, told the British newspaper The Guardian that they also do other things to pay off the car loan, but still it is proving to be insufficient. He said, “It is very difficult for me to repay the car loan. After the expenses of electricity, water and food, there is nothing left to pay the car loan. My family is eating food only two times instead of three times.
Anurudda gave an example to tell the truth of the plight. He said, “In my village shop, packs of 100-100 grams are prepared by unpacking a packet of one kilo of milk powder because people can’t buy one kilo packet. Now we are not able to buy more than 100 grams of beans.
Tourism brought foreign exchange to Sri Lanka and people also got employment, but the Kovid epidemic destroyed that too. According to the World Travel and Tourism Council, more than two lakh people in Sri Lanka have lost their jobs in the tourism sector.
According to the reports of local newspapers of Sri Lanka, there are long lines at the passport office of Sri Lanka. One out of every four educated youth in Sri Lanka wants to leave the country. The present situation is reminiscent of the Sri Lankan elders of the 1970s, when import controls and low production within the country made them stand in long lines for basic goods.
Wa Wijewardena, a former deputy governor of Sri Lanka’s central bank, has warned that the economic crisis will deepen due to the confrontation of the common people. He has said that people’s life is going to be more difficult.
He has said, “When the economic crisis gets out of control, the situation will get worse. The food crisis is also expected to increase as production is falling and there is no money for imports. In this situation it will be difficult to avoid humanitarian crisis.
The biggest problem of Sri Lanka’s economy is the increasing foreign debt. Especially China’s debt. China has a debt of more than five billion dollars on Sri Lanka. Last year, Sri Lanka took a loan of one billion dollars to avoid the economic crisis.
Now it is time to pay off these debts. In the next 12 months, the Sri Lankan government and its private sector have to pay an estimated $ 7.3 billion in domestic and foreign debt. It also includes an international sovereign bond of $ 500 million. It has to be paid in January itself. On the other hand, by November, Sri Lanka’s foreign exchange reserves were left with only $ 1.6 billion.
Rajapakse government minister Ramesh Pathirna has said that efforts are being made to pay the oil import bill through tea. He has said that Sri Lanka is sending tea to Iran every month worth $ 5 million in exchange for oil money. He said that this will help in meeting the shortage of foreign exchange.
no money to pay off debt
Sri Lanka’s opposition MP and economist Harsh D’Silva recently said in parliament, “Sri Lanka will have total foreign exchange minus $ 437 million in January this year, while in February it will need $ 4.8 billion to pay off the debt. In such a situation, Sri Lanka will be completely bankrupt.
Sri Lanka’s central bank governor Ajith Nirvada Cabral has assured that Sri Lanka will gradually pay off foreign debt but according to former deputy governor of Sri Lanka’s central bank Wa Wijewardena, Sri Lanka is in full danger of defaulting and if this happens. There will be very bad consequences.
Last year, the Rajapaksa government abruptly banned the use of all types of fertilizers and pesticides. The farmers were forced by the government to do organic farming. This decision of the government had brought the farmers to their knees.
It was difficult for the farmers to cultivate without fertilizers and pesticides. The result was that the farmers stopped farming due to fear of losses. This decision of the government is also responsible for the decrease in the supply of food items in Sri Lanka. In October last year, the government took a dramatic U-turn but now farmers are forced to buy imported fertilizers at higher prices.
The price of food grains suddenly increased because fertilizers are getting expensive. The farmers there say that the government does not have the money to subsidize fertilizers. Farmers are refraining from investing money in agriculture as they are not sure about the profit.
The Rajapaksa government is taking help from India to handle the situation immediately. The Rajapaksa government is swapping currency with India, Bangladesh and China. But these steps can help in the short term.
Due to non-payment of debt, after months of talks with China, Sri Lanka had to hand over 15,000 acres of land along with Hambantota Port. The area which Sri Lanka has entrusted to China is just 100 miles away from India. It is being described as a strategic threat to India. In such a situation, the new economic crisis of Sri Lanka is also a matter of concern for India.