The development of discontent is the worst economic downturn since South Asia gained independence in 1948, with crippling inflation leading to a jump in commodity prices.
Here’s what you need to know.
Experts say the crisis has been going on for years, driven by a bit of bad luck and very poor government management.
Over the past decade, the Sri Lankan government has borrowed huge sums of money from foreign creditors to finance public services, said Murtaza Jaferji, chairman of the Colombo-based think tank Advocata Institute.
This wave of borrowing coincided with a series of hammer blows to Sri Lanka’s economy, from natural disasters – such as severe monsoons – to man-made disasters, including a government ban on chemical fertilizers that destroyed farmers’ crops.
These problems became more complicated in 2018, when the dismissal of the Prime Minister by the President caused a constitutional crisis; the following year, when hundreds of people in churches and luxury hotels were killed in the Easter bombings of 2019; and from 2020 onwards with the arrival of the Covid-19 pandemic.
Faced with a huge deficit, President Gotabaya Rajapaksa cut taxes in a doomed attempt to boost the economy.
But the move had the opposite effect, instead hitting government revenue. This has led rating agencies to downgrade Sri Lanka to almost default levels, meaning the country has lost access to overseas markets.
Sri Lanka then had to give up its foreign exchange reserves to pay off government debt, shrinking its reserves from $ 6.9 billion in 2018 to $ 2.2 billion this year. This affected the import of fuels and other basic necessities, which led to higher prices.
In addition, the government released the Sri Lankan rupee in March – meaning its price is determined based on supply and demand in foreign exchange markets.
The move appears to have been aimed at devaluing the currency in order to qualify for a loan from the International Monetary Fund (IMF) and to encourage remittances.
However, the collapse of the rupee against the US dollar has only made things worse for ordinary Sri Lankans.
What does this mean for the people of the earth?
For Sri Lankans, the crisis has turned their daily lives into an endless cycle of queuing for basic goods, many of which are standardized.
In recent weeks, stores have been forced to close because they cannot run refrigerators, air conditioners or fans. Soldiers are stationed at gas stations to reassure customers, who line up for hours in the scorching heat to fill their tanks. Some people even died in anticipation.
A mother in the capital, Colombo, told CNN she was waiting for propane gas to prepare food for her family. Others say the price of bread has more than doubled, while rickshaw and taxi drivers say fuel rations are too meager to make a living.
Some are caught in an impossible situation – they have to work to feed their families, but they also have to line up for supplies. A cleaning lady with two young sons told CNN she was quietly getting out of work to join the food queues before rushing back.
Even middle-class members are frustrated with savings, fearing they may run out of essentials such as drugs or gas. And life is hampered by frequent power outages that plunge Colombo into darkness, sometimes for more than 10 hours at a time.
What is happening with the protests?
Protesters in Colombo took to the streets in late March, demanding government action and responsibility. Public helplessness and anger erupted on March 31st when protesters threw bricks and set fire to the president’s private residence.
The police use tear gas and water cannons to break the protests, and then imposed a 36-hour police hour. President Rajapaksa declared a state of emergency across the country on April 1st, giving authorities the power to detain people without a warrant and blocking social media platforms.
But protests continued the next day in violation of curfew, prompting police to arrest hundreds of protesters.
The protests continued in the following days, although they remained largely peaceful. Crowds of student protesters again surrounded Rajapaksa’s residence on Tuesday night, calling for his resignation.
On April 5, the emergency ordinance was repealed.
What about the cabinet?
The entire cabinet was effectively dissolved on April 3rd due to mass resignations of senior ministers.
About 26 cabinet ministers withdrew this weekend, including the president’s nephew, who criticized the apparent blackout on social media as something he “would never approve of.” Other important figures, including the central bank governor, have also resigned.
Faced with the administration in chaos, the president on Monday attempted a change he hoped would calm the opposition. Four ministers, including a finance minister, have been appointed to run the government temporarily, while several others have been given new posts in a bid to keep the country running “until a full cabinet is appointed”, the president said.
But just a day later, the interim finance minister resigned, explaining that he had taken the position only because of “many demands” and that he then realized that “fresh and proactive and unconventional steps must be taken”.
And the reshuffle failed to stop further desertion. The ruling coalition of the Popular Front of Sri Lanka (also known as Sri Lanka Podujana Peramuna) lost 41 seats by Tuesday after members of several partner parties withdrew to continue as independent groups. The coalition was left with only 104 seats, losing its majority in parliament.
What did the government say?
President Rajapaksa issued a statement on April 4, but did not address the resignations directly, but only called on all parties to “work together on behalf of all citizens and future generations.”
“The current crisis is the result of several economic factors and global events,” the statement said. “As one of the leading democracies in Asia, solutions need to be found in a democratic framework.”
Later that day, announcing the cabinet reshuffle, the president’s office issued a statement saying Rajapaksa “sought the support of all people to overcome the economic challenge facing the country.”
On April 6, Chief Government Whip Johnston Fernando told a parliamentary session that Rajapaksa would not resign “under any circumstances”. Fernando is a member of the ruling coalition and is seen as a close ally of the president.
Earlier, Rajapaksa said he was trying to solve the problem, saying in an address to the nation last month that “this crisis was not created by me.”
On April 1, Prime Minister Mahinda Rajapaksa, the president’s older brother and the former president himself, told CNN that it was wrong to say the government had run the economy poorly. Instead, Covid-19 was one of the reasons, he said.
What next?
Sri Lanka is now seeking financial support from the IMF and is turning to regional forces that may be able to help.
In a speech last month, President Rajapaksa said he had weighed the pros and cons of working with the IMF and decided to seek bailout from the Washington-based institution, something his government is reluctant to do.
Sri Lanka has also asked for help from China and India, with New Delhi already issuing a $ 1 billion credit line in March – but some analysts have warned that the aid could prolong the crisis instead of resolving it.
There is still a lot of uncertainty about what follows; national consumer price inflation has tripled, from 6.2% in September to 17.5% in February, according to the country’s central bank. And Sri Lanka has to pay off about $ 4 billion in debt for the rest of this year, including a $ 1 billion international sovereign bond maturing in July.
And the situation has caused alarm among international observers. Speaking at a news briefing on April 5, Liz Trossel, a spokeswoman for the UN High Commissioner for Human Rights, expressed concern over Sri Lanka’s official response.
Curfew, social media shutdowns and police crackdowns on protests could prevent or discourage people from expressing their grievances, she said, adding that the measures “should not be used to stifle dissent or obstruct peaceful protests.” “. She said the UN was “closely monitoring” and warned against “deviating from militarization and weakening institutional checks and balances in Sri Lanka”.
CNN’s Julia Hollingsworth, Rukshana Rizui and Iqbal Atas contributed to the report.
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