Source: news.sky.com : 2022-05-09 11:50:00 :
Sri Lanka’s president and his entire cabinet will resign to make way for a unity government, the prime minister’s office has said, after tens of thousands of protesters stormed the official residences of both men.
It came after the latest in a long series of protests that have been taking place on the island nation of 22 million people since the end of March, due to an ever-worsening economic crisis.
What has led to this?
Sri Lanka, which gained independence from the UK in 1948, emerged from a devastating civil war in 2009, with a political system prone to infighting and corruption, according to monitors, and a long-term lack of investment.
In 2019, the country was rocked by Easter Sunday bombings – 250 people were killed as suicide attackers targeted churches and hotels across the country, hitting tourism receipts and worsening the political instability.
The COVID-19 pandemic then wiped out any remaining tourism industry, which makes up Sri Lanka’s fifth-largest source of foreign income.
The country also has significant debt and that has resulted in huge bills as the interest on it has to be paid in foreign currency.
Into the mix has come the impact of the war in Ukraine, which has sent worldwide food and fuel prices spiralling upwards.
Those interest payment bills and rising prices have meant Sri Lanka now has as little as $25m (£20m) of useable foreign reserves, leaving it unable to buy enough fuel – which usually has to be paid for in dollars – for its people.
Food inflation is running at 60% per year, with some items, like limes, rising in a year by as much as 220%.
All this has led to people going hungry and unable to use their vehicles. In many cases, they are desperate.
What is the latest?
After months of protests, during which demonstrators had demanded the resignation of President Gotabaya Rajapaksa and prime minister Ranil Wickremesinghe, who had only taken office in May, the situation boiled over at the weekend.
On Thursday, Sri Lanka’s central bank had said the priority was to bring down inflation, which was predicted to rise to 70%, and raised base rates to the highest level in two decades, warning the situation was unlikely to improve until 2023.
On Friday, students tried to march on the president’s house in Colombo ahead of a planned rally but were met with police firing tear gas and water cannon, before a curfew was imposed.
The following day, thousands gathered despite the restrictions for one of the largest anti-government marches in the crisis-hit country this year, packing out buses, trains and trucks as they travelled to the capital to express outrage over the government’s failure to protect them from economic ruin.
Within hours, despite more tear gas and water cannon, protesters forced their way into President Rajapaksa’s official residence and stormed through the building as he went into hiding.
As Mr Wickremesinghe tried to summon an emergency meeting, protesters overran his house, and then did the same at the Presidential Secretariat, the official office of the president.
Mr Wickremesinghe then resigned and said the president would be doing so too but as of Monday, despite a promise from the prime minister that the government will quit to make way for a unity government, there has still been no direct word from Mr Rajapaksa, who is from a political dynasty that has been in office repeatedly over the years.
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When did the protests begin and what has led to this point?
On 31 March, hundreds of protestors tried to storm the home of President Rajapaksa, demanding his resignation.
On 2 April, troops were deployed, and a 36-hour nationwide curfew was imposed. The following day, almost all of Sri Lanka’s cabinet resigned and an interim government was appointed, overseen by the president and the president’s brother, Mahinda Rajapaksa, the then prime minister.
Three days later, President Rajapaksa lost his parliamentary majority but stayed in power despite his country’s dwindling fuel supplies and currency reserves.
More protests broke out, fuelled by a shortage of life-saving medicines. Many protesters blamed Mr Rajapaksa for not managing the crisis well enough – he was accused of borrowing too much money to finance projects which had not returned enough profit for Sri Lanka.
Despite an initial unwillingness, the government eventually went to the International Monetary Fund (IMF) – the worldwide body set up to manage balance of payments difficulties and international financial crises – for a bailout but the government was told this would depend on it restructuring its debts, and negotiations have continued, delaying IMF crisis funding.
Is the government to blame?
There is little doubt that the combined impact of the pandemic and the Ukraine war have battered Sri Lanka, but experts say mismanagement has also been major factor, with many other developing countries not being affected in the same way by the dual crises.
Analysts say successive governments have spent more than they have earned, leaving the country’s finances in a parlous state.
They say Sri Lanka does not produce enough of the kind of goods and services that can be sold to other countries, for which the government should take some of the blame.
The situation was made worse by deep tax cuts brought in by the Rajapaksa government soon after it took office in 2019.
While the emergence of COVID was not under its control, the country had relied heavily on tourism as an income source and on Sri Lankans working abroad sending money home.
Economic mismanagement and Sri Lanka’s inability to repay foreign debt led to its credit ratings being downgraded, making it harder to borrow from international financial markets.
In a desperate bid to keep the economy afloat, the government drew heavily on its foreign exchange reserves, depleting them by more than 70% in two years.
How have ordinary Sri Lankans been affected?
Fuel shortages have led to long queues at filling stations as well as frequent blackouts, because the country cannot generate electricity.
Farmers who should have been planting their crops at the start of the rainy season have been unable to, because they cannot afford – or often even find – the fuel required for tractors and rotavators to turn the soil, further exacerbating rising food prices.
The government hasn’t had enough foreign currency to import many of the most basic goods that have to be bought from overseas, such as milk, cooking gas and toilet paper.
Because it is in the tropical zone, it should be easy for people to grow food, but the UN World Food Programme (WFP) says people are going hungry. Nearly nine out of 10 families are skipping meals or cutting their portion sizes to stretch out their food, the WFP says, while three million people are receiving emergency aid.
Doctors have had to use social media in a desperate bid to get equipment and medicine they need to treat their patients and growing numbers of Sri Lankans are trying to go abroad in search of work.
Is this is a coup or a revolution?
It is neither yet.
A coup only occurs when the military take over. So far, that hasn’t happened but opposition parties have expressed concern over military leaders making statements about public security in the absence of a civil administration.
Military chief General Shavendra Silva said in a statement over the weekend that the people should co-operate to maintain law and order.
While it could be said to be similar to a revolution, in that the storming of the presidential palace led the political leadership to resign, most of the elements of the state are still in operation and an alternative government is being explored.
Is the country functioning?
Currently, there is a political vacuum with opposition leaders yet to agree on who should replace its roundly rejected leaders.
If the president and prime minister are no longer in power, the constitution says power is transferred to the parliamentary speaker Mahinda Yapa Abeywardena, as temporary president. It was Mr Abeywardena who said that Mr Rajapaksa would be standing down on Wednesday.
Nonetheless, Mr Wickremesinghe reiterated on Monday he will stay on until a new government is in place because he wants to work within the constitution.
The central bank governor, who is responsible for carrying out the negotiations with the IMF that may halt the crisis, signalled he would stay on in the job although he had said in May he could resign if there was no political stability.
Is there a route out of it?
If the political leaders are able to strike a deal with the IMF, short term funding could be made available to allow it to buy the essential supplies it needs, so the economy can get up and running again. But it will not be easy.
Anit Mukherjee, a policy fellow and economist at the Center for Global Development in Washington, said any assistance from the IMF or World Bank should come with strict conditions to make sure the aid isn’t mismanaged.
Still, Mr Mukherjee said it was important to remember that Sri Lanka sits in one of the world’s busiest shipping lanes, so letting a country of such strategic significance collapse was not an option.
All this will depend on Sri Lanka’s willingness to cede some control to the IMF, which generally requires governments to ensure they will work with its staff and provide financial transparency.
India has also provided financial support, but very few countries have the financial coffers of the IMF.
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