By Revan Aponso
Tents line the Galle Face Green in the capital city of Colombo as protestors take to the streets in retaliation for the recent economic crisis in the country. “Gota go home!” they shout, demanding the resignation of President Gotabaya Rajapaksa and an end to years of corruption and instability largely brought on by members of the Rajapaksa family. Over the past year, Sri Lanka has been going through its worst economic crisis since its independence from the British. The Sri Lankan rupee is facing its worst exchange rate at 330 rupees to the dollar as of April 2022. Additionally, due to low foreign reserves, crucial commodities such as fuel, paper, and electricity have become scarce.
How did it get to this point?
For context, Sri Lanka has had a long outstanding foreign debt amounting to $7.3 billion. The government currently has an option of paying it off or defaulting on it. Defaulting will hurt its reputation on the world stage, making it harder to borrow money at affordable rates in international markets in the future. Due to the current situation, however, Sri Lanka may have no other choice. In turn, the rising debt, along with a loss of revenue from the pandemic-struck tourism industry, has resulted in low foreign reserves.
The biggest problem, however, is the decline in value of the rupee coupled with the prices of necessities rising. “Basic things have gone up in price” Avinaesh Kandasamy, a general manager for a jewelry brand in Colombo, tells The Economics Review. Regarding the price of fuel, one of the biggest victims in the crisis, Kandasamy comments “When you fill-up a full tank of gas, you never know when you’re going to be able to fill it up again.” He recalls people in Colombo waiting in cues for “hours on end” to fill up their tanks due to the large shortage of fuel in the country.
Sachin Unamboowe, a stockbroker also in Colombo points out more drastic impacts of the crisis. “Ever since I started working in Sri Lanka, I’ve been earning in rupees,” he explains. Due to currency depreciation, however, Unamboowe notes that he has lost “60% of the real value of [his] savings.”
While his business was not hit as hard as others in Sri Lanka, Kandasamy explains that despite the crisis, people are still happy to invest in jewelry. “Gold has gone up drastically [in value],” he says. Throughout history, “gold has always been a preferred method of investment” in countries such as Sri Lanka or India. Therefore, an increase in the demand for gold–in the form of gold bars and jewelry–became prevalent within the country. Much of this also came from people pre-planning for weddings–a significant part of Sri Lankan culture. “Whatever you do, [people would] make sure the bride has a gold necklace and a pair of earrings,” Kandasamy says.
Both Unamboowe and Kandasamy have similar fears for the country. According to Unamboowe, the country is “on the verge of a people’s revolution” and according to Kandasamy “the long term fear is that there is no future for this country”. Unamboowe also mentions the long-term process of gaining support from the International Monetary Fund (IMF) would be compromised if the government is overthrown by the people. In order to gain IMF support, the country would have to go through a 6-9 month process of negotiations and debt restructuring. “Without a government, the whole IMF process is jeopardized”, Unamboowe mentions.
Despite the crisis, Unamboowe explains that “the whole country has banded together after many years, all ethnicities, all religions”. With the effect of the crisis affecting the lives of almost all citizens of Sri Lanka, Unamboowe elaborates on a period in which all people have banded together to protest for change. “When you have no electricity for 14 hours a day, everything comes to a halt,” he said. Blackouts caused by the lack of oil in the country, along with other factors, led to peaceful protests around Colombo, with the largest one being an occupancy of the Galle Face Green, commonly known as “Gotagogamma”, which roughly translates to “Gota go village” in English. Having attended the occupancy multiple times, Unamboowe explains, “The premise is they won’t leave until the government changes”. The current government and the inadequacies of the Rajapaksa family have been large points of contention for protestors. On his view of how the government should change, Unamboowe remarks, “[The] Prime Minister should step down and they should appoint an interim cabinet of ministers and change the constitution in a way that it comes back to a parliamentary democracy.”
In the end, despite the perils of the crisis, many have stated that the protests have allowed the country to come together. Additionally, largely thanks to social media, more citizens have been able to become better informed about the situation, especially younger generations of Sri Lankans. Regarding the newfound traction, Unamboowe hopes that social media will inspire change, “Driven by the younger generation where they actually want educated people in power”. □