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Emergency declared in Sri Lanka

Tags: International News

Sri Lankan President Gotabaya Rajapaksa declared a nationwide public emergency on 1 April 2022 night following violent protests over the country's worst economic crisis in decades.

 Rajapaksa said the decision was taken in the interests of public security, the protection of public order, and to ensure the maintenance of supplies and essential services.

 Violent protests broke out in Colombo over shortages of essential items including fuel and other goods. 

Sri Lanka is facing  an unprecedented economic crisis as school exams have been cancelled due to shortage of paper,operations in hospitals cancelled due to shortage of medicines and the country is facing long power cuts.  

Amid the country's worst economic crisis in decades, foreign exchange reserves have fallen by 70% in the past two years and were down to  $2.31 billion as of February 2022, leaving Sri Lanka struggling to import food and fuel.

The situation is such that the electricity regulator of Sri Lanka Janaka Ratnayake has  urged more than a million government employees to work from home to save fuel.

The power cuts on 31 March 2022 were  partly caused by the government's inability to pay $52 million for a 37,000 tonne diesel shipment that was awaiting offloading.

The island nation has been unable to pay for fuel shipments because of a foreign exchange shortage, and the government has announced that it will shortly approach the  International Monetary Fund (IMF) for an emergency loan.

Since Independence Sri Lanka has already approached the IMF 16 times to get emergency loans to tide over its economic problems .

 Background to Sri Lankan Economic crisis 

  • The Sri Lankan economy is heavily dependent on tourism and due to the Corona crisis the tourism industry was badly affected.

  • The Sri Lanka policy to switch to the use of organic fertilisers was a policy disaster . Sri Lanka which imports a large part of its food was unable to quickly switch to the use of the organic fertilisers leading to loss of production of its domestic food grains. It has further  increased the dependence of Sri Lanka on imported foods.

  • Sri Lanka is a case of Chinese debt trap policy. The Rajapakse regime encouraged closer ties with China at the expense of India . China has provided costly loans to Sri Lanka to build port and airport infrastructure which is lying empty .  With the Sri Lankan government unable to pay back costly Chinese loans,the  Chinese have converted the loan into equity and have  taken over Hambantota port  built by them . The Chinese has  so far not taken any action on the plea of Sri Lanka to reschedule its Chinese debt .

  • The Rajapaksa family rules Sri Lanka. President Gotabaya Rajapaksa’s brother Mahinda  Rajapaksa is the Prime Minister of Sri Lanka and was former  President of Sri Lanka in 2004 and from 2005 to 2015. The current finance minister of Sri Lanka ,Basil Rajapaksa is the cousin of the Prime Minister  who has been accused of serious corruption allegations .

  • The Rajapaksa family  has  totally mismanaged the Sri Lankan Economy. 

Help of India 

Under its neighbourhood first policy, the Government of India has stepped in to support Sri Lanka. Since January, India has extended $2.4 billion in assistance by way of a currency swap, loan deferment and credit lines for essential imports to help Sri Lanka cope with the  dollar crisis and shortages of essential goods.

It includes 

  •  a  $400 million currency swap facility to Sri Lanka 

  •  deferred a $500 million loan repayment by Sri Lanka,

  • It has provided a Line of Credit for $500 million for fuel imports 

  • and$ 1 billion to buy food, medicine and other essential items.  

Fact File Sri Lanka 

  • Officially it is called the Democratic Socialist Republic of Sri Lanka .

  •  It is a country in the Indian Ocean  and is separated from India by the Palk Strait.

  • It was called Serendib by the Arabs  and the Europeans called it Ceylon .

  • It officially became Sri Lanka in 1972.

  • It became independent in 1948 from Britain.

Capital : Sri Jayewardenepura

President :  Gotabaya Rajapaksa 

Currency : Sri Lankan Rupee

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