Amid Shortages and Turmoil, Sri Lanka Grinds to a Halt
Sri Lankan economists warn that the country could face a famine-like situation in a few months.
By M.R. Narayan Swamy July 03, 2022
For all practical purposes and intents, Sri Lanka’s once booming economy has collapsed.
With traditional sellers unwilling to supply fuel due to lack of payment for previous shipments, and Colombo not having foreign exchange to buy stocks that may be on the way, petrol and diesel have almost run out.
Whatever quantity the country still has is being made available only to essential services, virtually locking down the island nation of around 22 million people and emptying the streets of most vehicles.
Barring a skeletal staff, the government has closed down almost all its offices. Both private and public sector employees have been told to work from home. Schools are shut. Many train services are axed as staff fail to make it to work. All due to lack of fuel.
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For the same reason, post offices are open only three days a week.
As delivery vans cannot run without diesel, major supermarkets in and around Colombo have stopped receiving fresh stocks, making access to food difficult for most people. Many neighbourhood grocery stores have been hit badly too.
For months now, thousands of Sri Lankans have spent long hours, at times entire days and even nights, standing in serpentine queues for fuel. Many have returned home disappointed. Tempers have flared and there have been clashes besides sheer exhaustion.
At least 16 people have died across the island while standing in queues under a blazing sun or after returning home because they could not cope with the stress.
One still sees queues at fuel stations – but only of government vehicles.
As if all this torture was not enough, food prices continue to rise without any mercy, forcing the mass of poor to forego at least one meal a day. Even those still with assured incomes realize that their money’s worth is no more the same.
Since the Sri Lankan rupee was floated in March, it has lost more than 80 percent of its value. Amid the hyper-inflation gripping the country, Prime Minister Ranil Wickremesinghe has said that Colombo needs $5 billion over the next six months to ensure basic living standards. This includes $2.3 billion to buy fuel, $900 million to import food, $250 million to get cooking gas, and $600 million for fertilizers.
Unable to get or afford cooking gas, numerous families even in urban areas have turned to firewood to cook. Electric cookers can be used only if there is electricity. Power outages are frequent and last for hours, again due to absence of adequate fuel.
Hospitals across the country have run out of medicines and spare parts for costly medical equipment. The government is unable to import either. Many industries are shut or are on the verge of closure due to lack of raw materials.
“We have a scary situation, and we may face a famine-like situation in two to three months,” economist Ahilan Kadirgamar said in a telephone interview from Sri Lanka. “Already, there are severe shortages while prices are very high.”
A senior government source admitted that the situation was very serious.
“The economy is on the verge of collapse,” he said, speaking cautiously from Colombo and seeking anonymity. “There will be a 60 percent drop in the coming harvest and we are facing a severe food shortage.”
However, he felt that people will not starve “as villagers have basic vegetables and fruits from home gardens.” Not everyone agrees.
After warning of an impending food crisis, desperate authorities are asking Sri Lankans to go for home gardens and have allowed the use of even barren land held by the government to grow vegetables.
Another official, who also requested anonymity, added: “This crisis is not going away soon. It will last at least six months, if not more. And it will take two to three years to get the economy back on rails.”
Colombo residents complain they are living in hell.
“I can’t believe what is happening,” said Rohan Gunawardene, a retired man who lives in a posh area in the capital. “We had read about shortages in the north and east during the (civil) war. Now this is happening everywhere in Sri Lanka.”
Sri Lanka’s failure to honour its international debt payments was the clearest sign that the rot runs far deeper. Since then, India, Sri Lanka’s giant neighbour, has done the maximum to keep the economy going. Help has also come from various countries including Bangladesh, Japan, China, Iran, the United States and international organizations. But handouts, however generous, cannot perennially keep Sri Lanka afloat.
The International Monetary Fund (IMF), which Sri Lanka had refused to tap earlier, has told Colombo to carry out sweeping tax and growth-oriented reforms besides curbing corruption to get an aid package.
Sri Lankan President Gotabaya Rajapaksa last week spoke with his Russian counterpart Vladimir Putin to seek urgent supplies of fuel and gas. His Cabinet colleagues are scouring the world pleading for help.
The latest country Sri Lanka has approached is oil-rich Qatar. But it had to eat humble pie by lifting a ban on Qatar Charity – imposed two years ago when Sri Lankan intelligence agencies wanted to jail a Muslim activist who used to get funds from Doha for charity work.
Said Colombo resident Gunawardene: “Officially, Sri Lanka is now bankrupt. The Prime Minister has told Parliament that the government has run out of money. This is far more serious than the shortages of food, fuel, and medicines.”
The situation is no different in the Tamil dominated regions in Sri Lanka’s north and east where a terrible war for separation ended in 2009 and where anger persists against the brazen abuse of human rights.
But residents there have not thrown their lot with the unending protests in Colombo and elsewhere in the largely Sinhalese regions against the government – an indication that the ethnic divide has not gone away.
The Samagi Jana Balawegaya, Sri Lanka’s main opposition party, and the Janata Vimukti Peramuna, the country’s largest leftist party, are bracing for protests to force the president and prime minister to resign, saying they are incapable of resolving the country’s deepening economic woes.
Prime Minister Wickremesinghe’s predecessor, strongman Mahinda Rajapaksa, a brother of the incumbent president, hurriedly quit on May 9 and took shelter in a military camp after violence by ruling party thugs invited terrible counter-violence during which government leaders and their property were attacked in many places, leaving many dead. Since then, an uneasy calm has prevailed.
Most Sri Lankans blame the Rajapaksa clan and politicians in general for siphoning off public money, for initiating infrastructure projects now seen as white elephants, for a ban on imported fertilizers that ruined agriculture, and for simply refusing to give up power. COVID-19 and bombings of churches in 2019 stifled the money-spinning tourism sector, dealing the first major blow.
Economist Kadirgamar believes the president and prime minister ought to go.
“This government has lost the legitimacy to lead the people out of the crisis. We need a new leadership who can lead the people,” he said.
Since the president has declared that he won’t quit even after admitting to making mistakes leading to the present mess, Sri Lanka can expect more political turbulence in the times to come.
(GUEST AUTHOR: M.R. Narayan Swamy
M.R. Narayan Swamy is a New Delhi-based journalist and a long-time Sri Lanka watcher. He has travelled extensively in Sri Lanka and is the author of three books and numerous articles on the country’s ethnic conflict)