{"id":9100,"date":"2022-07-14T16:01:21","date_gmt":"2022-07-14T13:01:21","guid":{"rendered":"http:\/\/www.liberalglobe.com\/?p=9100"},"modified":"2022-07-14T16:01:23","modified_gmt":"2022-07-14T13:01:23","slug":"sri-lanka-a-huge-social-explosion-is-brewing","status":"publish","type":"post","link":"https:\/\/www.liberalglobe.com\/?p=9100","title":{"rendered":"Sri Lanka: A Huge Social Explosion Is Brewing"},"content":{"rendered":"\n

Images from Sri Lanka highlight the depth of the country’s social and economic problems. Images of angry protesters storming the residence of ousted Sri Lankan President Gotabaya Rajapaksa have brought to the fore a social eruption that has been ongoing for several months and is centered on the very collapse of the country’s economic model and the contradictions of the international financial system.<\/p>\n\n\n\n

Already at the beginning of the year, the country was facing a serious collapse of its foreign exchange reserves and a real difficulty in servicing its large foreign debt. Between January 2020 and mid-March 2022 foreign exchange reserves fell by 70%. The central bank was forced to proceed with devaluation of the currency which continued with an even greater decline in the exchange rate.<\/p>\n\n\n\n

In the meantime the country was facing a big decline in tourism revenue (and tourist currency: From 4.4 billion dollars in 2018 and 3.6 in 2019, the pandemic meant that they fell to 682 million in 2020 and 534 in 2021). Large debt payments also meant a depletion of foreign exchange reserves.<\/p>\n\n\n\n

The government’s response to limit imports, including chemical fertilizer imports, to curb foreign exchange flight also led to a decline in agricultural production.<\/p>\n\n\n\n

Rising prices of fuel, Sri Lanka’s main import, have caused serious problems, leading to long queues at gas stations and power outages.<\/p>\n\n\n\n

At the same time, there were already shortages of basic things such as medicine, milk, LPG for kitchens, but even paper for printing newspapers.<\/p>\n\n\n\n

The problems created by the poor state of the economy, with large price increases and long power outages (up to 13 hours) formed a broad social coalition that wanted to protest. A crucial element was from one point and then it was mainly the middle class of the country that led the mobilizations. After all, she was the one who saw her consumption pattern and way of life collapse. So in the mobilizations that took place for a long time with the central slogan “Gota Go Home!” IT or advertising workers participated alongside workers in the informal economy and tuk tuk drivers.<\/p>\n\n\n

\n
\"\"<\/figure>\n<\/div>\n\n\n

The political crisis at its height<\/strong><\/p>\n\n\n\n

The protesters targeted not only Gotabaya, but all politicians in the past months. In fact, it is characteristic that Gotabaya Rajapaksa himself, scion of one of the largest political families in the country, won the elections and the prime ministership in 2019 largely based on social dissatisfaction with the neoliberal policies and corruption of the previous government. It also relied on a nationalist rhetoric that resonated after the Easter 2019 bombings by an armed Islamist group that killed 269 people.<\/p>\n\n\n\n

However, the Gotabaya government’s economic policy, which initially appeared to be trying to avoid IMF prescriptions, could not shape a different treaty. He did not find ways to boost businesses with liquidity, he was unable to tame the decline of the hryvnia, while even import restrictions were circumvented in various ways. The state-owned oil company was unable to procure sufficient reserves in time, while private entrepreneurs ignored commodity price restrictions and announced increases in rice prices. On July 7, inflation hit a 21-year high of 54.6%, with food inflation even higher at 80.1%.<\/p>\n\n\n\n

At the same time, the country had an ever-increasing debt, with 40% owed to Western banks and financial institutions and 10% owed to China. In the midst of the pandemic, the country’s credit rating was downgraded by rating agencies. Anyway, the country has a chronic external debt problem that can be traced back to the very terms that colonialism shaped a warped economic model. Later things got worse when there was also a massive divestment of public assets.<\/p>\n\n\n\n

In May the country announced that it was unable to meet payments on foreign debt, which meant it was becoming the first Asian country to default in the 21st century. The previous one was Pakistan in 1999.<\/p>\n\n\n\n

At the same time, there were all the costs of the civil conflict, which ended in 2009, but did not lead to a more harmonious coexistence between the Buddhist majority and the other ethnic and religious groups.<\/p>\n\n\n

\n
\"\"<\/figure>\n<\/div>\n\n\n

Gotabaya’s resignation paves the way for a government to be formed after consultations between opposition parties. At the same time, negotiations with the IMF for a large rescue package are expected to continue. However, there is always the question of whether the IMF’s “prescription” will ultimately lead to a new round of social crisis and political discontent and new social eruptions.<\/p>\n\n\n\n

The case of Sri Lanka reminds us that the legacy of colonialism, over-indebtedness, the misapplication of endogenous development strategies and policies of “liberalisation” of the economy without the necessary developmental background that were considered a one-way street for the Global South in previous decades, were ultimately recipes for social destruction.<\/p>\n","protected":false},"excerpt":{"rendered":"

Images from Sri Lanka highlight the depth of the country’s social and economic problems. Images of angry protesters storming the residence of ousted Sri…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[824,390],"tags":[2272,63,492,3472],"class_list":["post-9100","post","type-post","status-publish","format-standard","hentry","category-africa","category-politics","tag-debt","tag-imf","tag-social-unrest","tag-sri-lanka"],"_links":{"self":[{"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=\/wp\/v2\/posts\/9100","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=9100"}],"version-history":[{"count":1,"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=\/wp\/v2\/posts\/9100\/revisions"}],"predecessor-version":[{"id":9105,"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=\/wp\/v2\/posts\/9100\/revisions\/9105"}],"wp:attachment":[{"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=9100"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=9100"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=9100"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}