Paikiasothy Saravanamuttu is director of the Center for Policy Alternatives (CPA) in Sri Lanka’s capital Colombo.
Bankrupt and without a functioning government – the state of the Southeast Asian island nation of Sri Lanka could hardly be worse. This Saturday the country is celebrating the 75th anniversary of its independence.
But a real party mood is unlikely to arise. Sri Lanka is in an unprecedented state crisis. It has run out of foreign exchange reserves to speak of while the dollar is rising and food prices are rising. The government is in office legally, but without legitimacy. Only one member of the presidential party remains in parliament, supporting incumbent Ranil Wickremesinghe.
In view of the acute crisis, he sees himself forced to take unpopular measures: After Wickremesinghe declared state bankruptcy last summer, a rescue package agreed with the International Monetary Fund (IMF) has not yet been implemented.
China, to which the country owes about 20 percent of its foreign loans, seems uninterested in debt relief and has instead offered a two-year moratorium.
Ranil Wickremesinghe has been President of Sri Lanka since July 2022.
Meanwhile, Sri Lanka’s government has started implementing measures in line with IMF conditions, which has met with public opposition. The tax increases that have been decided threaten to hit the middle class in particular.
Also planned are the shedding of 1.5 million public sector jobs, partnerships between private and state-owned companies that are losing millions of dollars a day, and the downsizing of the military.
A culture of entitlement
The cause of the crisis is not new: since independence, the governments of Sri Lanka have encouraged a culture of entitlement among the population. With every election so far, tens of thousands of jobs in the public sector have been promised and salaries have been increased many times over.
The 1.5 million people employed by the state are cared for from birth to grave with free education, health care and a job for life.
Human rights were seen as a luxury at best and subversive at worst.
Paikiasothy Saravanamuttu, Policy Analyst
But there is another reason for the crisis: the Rajapakse dynasty, which has long monopolized the state. Former President Gotabaya Rajapaksa, who resigned in July 2022, is primarily responsible for the misery in the country. He is the second member of the Rajapaksa family to hold the presidency, after his older brother Mahinda.
The Rajapaksa dynasty draws its importance from the victory over the renegade rebels the “Tamil Liberation Tigers” in 2009.
Sri Lanka’s ex-president Gotabaya Rajapaksa (r) with his brother Mahinda Rajapaksa, also former president.
Elder brother Mahinda has made a name for himself as championing the interests of the majority Sinhala community against the Tamil and Muslim communities – using extreme toughness and establishing a culture of impunity in politics. Always backed by China, which defends the Sri Lankan government internationally against allegations of war crimes.
There was no transparency or accountability in this type of governance, and human rights were seen as a luxury at best and subversive at worst. What was completely missing: a sense of shame among those responsible.
Mahinda Rajapaksa, the elder of the two presidential brothers, attempted to win a third in 2015 after two terms but failed. The opposition united behind the call for those in government to be held accountable. They also wanted to abolish the executive presidency.
Warnings about the debt crisis ignored
But the alliance fell apart in the government. Then, in 2019, Gotabaya Rajapaksa, the younger of the two brothers, won the presidency with 6.9 million votes, followed by a two-thirds majority in the 2020 general election.
In office, he refuses to heed the warnings of the impending debt crisis. Instead of going to the IMF, he dug ever deeper into foreign exchange reserves to pay international creditors. As a result, Sri Lanka today lacks foreign exchange for vital imports. At the same time, tax revenues eroded under Gotabaya Rajapaksa, taking millions from the Treasury.
In Sri Lanka, anti-government demonstrations continue. Here protesters are demanding the release of political prisoners.
A decision that Rajapaksa made overnight led to mass protests: chemical fertilizers should be replaced by organic fertilizers in agriculture. Public anger erupted in the streets.
The protesters’ demand: Gotabaya Rajapaksa and his brothers should leave the government. This happened. Citizens also demanded that the Rajapaksa brothers return the money they allegedly stole. That hasn’t happened to this day.
The President has his predecessors’ backs free
Current President Ranil Wickremesinghe has been accused of backing the Rajapaksa family as his government depends on their supporters.
Wickremesinghe has served as prime minister six times. He is credited with the experience and expertise to restructure the economy. However, concerns arise from his clumsy tactics against social protests, including the use of draconian laws.
Whether Sri Lanka can overcome the acute crisis depends on the government – whether it manages to hold the overdue local elections and implement the agreements with the IMF.
There is also the question of whether the over-indebted country’s creditors are willing to make concessions. Above all, 75 years after independence, Sri Lanka needs a new social contract. If we want to be successful, everyone involved has to make hard sacrifices and the country has to be united.
