Sri Lanka is going through the worst economic crisis in its history. In view of the violent protests, emergency was declared on Friday night. There are many reasons for how Sri Lanka reached the state of pauper, but tax cuts, the collapse of the tourism industry are the main reasons behind the current crisis. As a result, Sri Lanka’s debt management program collapsed. Sri Lanka had a debt of $ 12.55 billion as of February, of which it has to pay about 4 billion this year.
International sovereign bonds, Asian Development Bank, China and Japan have a large share in Sri Lanka’s foreign debt. China has turned its back on Sri Lanka in times of trouble. He is not ready to give any concession in the terms of the loan. On the contrary, in the last few years, the India, with whom Sri Lanka has increased the distance, has sent help while maintaining friendship. China’s behavior with Sri Lanka is a lesson for those countries of the world who are trapped in its debt trap.
Emergency in Sri Lanka, 36-hour curfew
Emergency was declared on Friday night in view of the violent protests by people in Sri Lanka, which is facing the biggest economic crisis. Still, the anger of the people struggling with the shortage of diesel-petrol, electricity and food and drink did not subside. 11 parties supporting the Rajapaksa government demanded the dissolution of the cabinet and the formation of an interim government. An anti-government rally was also announced. In view of this, a 36-hour curfew was imposed in the country from 6 pm on Saturday to 6 am on Monday by the order of the President.
President Gotabaya Rajapaksa has imposed strict laws amid the demand to remove the government. In this, the army has been allowed to detain people for a long time without trial. Information about the arrest of relatives has been received from many places. The crisis is such that the government is unable to import essential things. People are facing power cuts for 13 hours. On Thursday night, thousands of people had started violence and arson in front of the presidential residence.
In Sri Lanka, there is a shortage of medicines, food inflation is at its peak, there are lines up to two kilometers long for fuel at petrol pumps. In fact, in January, the country’s foreign exchange reserves had declined by more than 70 percent to $2.36 billion, which is continuously declining. Due to the lack of foreign exchange, most of the essential goods, medicines, petrol and diesel in the country are not being imported from abroad. Now the situation is such that the price of a cup of tea has reached 100 rupees.
Sri Lanka going through worst phase since 1948
What happened to Sri Lanka should open the eyes of other countries. Sri Lanka’s credit ratings are in an abyss. The debt on it is 119 percent of the GDP, in which the share of Sovereign Bonds is close to 40%. One of the major reasons behind the Sri Lankan economic crisis is China’s investment there in the last two decades. China distributed a lot of debt to Sri Lanka. Colombo’s liability to China in 2021-22 was $2 billion. The Hambantota port has already been leased to China for 99 years.
Sri Lankan President Gotabaya Rajapaksa had sought help from China in December 2021, but Beijing backed down. Colombo wanted the debt to be restructured so that it could get some help in dealing with the economic crisis. The statement of the Chinese spokesperson was termed by the Sri Lankan media as ‘crocodile tears’. Sri Lankan citizens are also protesting against Chinese projects. In such a situation, Sri Lanka sought help from its old friend, India. India did not disappoint.
India extended a helping hand, delivered diesel-rice
India has transported 40 thousand tonnes of diesel from the ship to help Sri Lanka, which is facing the crisis. Soon 40 thousand tonnes of rice is also going to reach there from India. By Saturday evening, this oil started being distributed in the cities of Lanka. Soon 40 thousand tonnes of rice is also going to reach there from India. Indian traders have started loading it. India has promised $1 billion in aid to Sri Lanka. Meanwhile, the Indian Embassy in Colombo has rubbished reports that India is going to send troops there.