Sri Lanka has been in crisis for the past few weeks. Prices of fuel and other commodities have risen and the supply of various commodities has declined which has led to the rising cost of living. Moreover, the central bank’s reserve currency is the lowest. The country’s economy is on the verge of collapse due to different reasons including economic mismanagement, the impact of the pandemic, wrong decisions in mega-development projects and ill strategies to address geopolitical challenges. People of different classes and professions started protesting against the economic downturn across the country. By this time, anti-government protests erupted in Sri Lanka, demanding the resignation of the President and Prime Minister for the economic crisis.
Given that the crisis is not resolved immediately, more catastrophic outcomes are likely in the days ahead, both economically and politically. It is pertinent to note that the government dissolved the parliament and proposed to form a national government to address the economic problem in Sri Lanka, but the opposition and some lawmakers of the ruling coalition rejected the call. The opposition Samagi Jana Balawegaya (SJB) affirms its efforts to move a no-trust motion against the government in the parliament. Moreover, the Tamil National Alliance (TNA) on Sunday told that it is ready to support opposition parties in a no-confidence motion against the Lankan government and is prepared to impeach the running President leaving a higher chance of political instability in the coming days.
It is to be noted that the government took different steps to alleviate the economic crisis, in addition to steps to deal with political challenges. It managed assistance and supplies, including fuel, from India that have eased the catastrophic situation somewhat. Also, it is seeking more funds from India and China and going to talk with IMF for loans and declared some other steps. But the government’s efforts still remain largely rhetoric rather than real in getting loans, which are undeniably very important at this moment to mitigate the economic crisis. Consequently, the government has failed to secure loans for importing fuel and other goods. In this situation, more needs to be done to effectively deal with the economic shocks and upheld the economic, social and other rights of the citizens.
Of course, the government needs to make both short and long-term efforts to tackle the extant crisis and avoid further catastrophic consequences in Sri Lanka. In this respect, emergency borrowing from available sources, including international financial institutes such as the IMF and Asian Development Bank (ADB), can help to buy fuel and other important goods and improve the situation. Indeed, meeting the demand for energy is important immediately as it will help restart/accelarate the operation of different export-oriented businesses, which are capable of earning foreign exchange. Notably, power cuts are crippling businesses, especially export-oriented ones. In addition, immediate supplies of fuel will help operate public transport, only 50 percent of which is currently operational.
Of course, holding discussion on the loan with other parties can be effective. Moreover, providing fertilizer subsidy, as declared by the Prime Minister, is important. The weakening institutional checks and balances in Sri Lanka need to be well addressed. Also, a long-term plan is needed to improve governance which has played a significant role in the current economic crisis. The government needs to realize that it is difficult to ensure political stability without mitigating reasoned criticisms. In this respect, meaningful dialogues with the opposition can be effective in avoiding further political crises. It is also desirable that the government provides adequate space for protesters without torture.
No less important is that Sri Lanka needs to make effective and wise checks and balances between India and China, the two geopolitical rivals in the region, which have a significant influence on Sri Lankan economy and politics. But the country needs to understand that the employment of well-devised strategies in its relations with these two countries is important. Simultaneously, making effective relations with other countries can be helpful in the long run.
Nota bene: The editorial views expressed are written by the Editorial Team (the Chief Editor) of Dhaka Opinion Magazine.
