Dr. Forqan Uddin Ahmed :
Sri Lanka’s new Prime Minister Ranil Wickremesinghe, a lawyer-turned politician who has been in Parliament for 45 years, has made a remarkable come back nearly two years after his United National Party (UNP) was routed and failed to win a single seat in the general election held in August 2020. The 73-year-old leader was appointed as the 26th prime minister of Sri Lanka by President Gotabaya Rajapaksa amidst the worst economic crisis in the country. He is widely accepted in political circles as a man who could manage the economy with far-sighted policies. Most members of the current Sri Lankan parliament, plagued by financial crisis, have confidence in Ranil. According to an Al Jazeera report, out of 225 members of the Sri Lankan parliament, 160 have backed Ranil as prime minister.
Sri Lanka is in negotiations with the IMF to restructure and repay its massive debt. IMF structural adjustment will include the familiar privatisation, cutbacks of social safety nets and alignment of local economic policy with the US and western interests, to further detriment of local working people’s standard of living and inevitably leading to more wealth disparity and repeated debt crises. Economic crises create opportunities for external powers to expand economic exploitation and geopolitical control. In Sri Lanka’s context, this means India, the US and China. Sri Lanka’s big neighbour India has extended a USD 1 billion credit line to provide essential food and medicine. The Sri Lankan government has stated that there are no conditions attached to the Indian loans. However, Sri Lankan analysts believe that agreements have been made giving Indian companies exclusive access to investments on the island.
Meanwhile, the increase in salaries and benefits of bureaucrats and government ministers, members of Parliament and employees has added to the pressure on the country’s economy. In 2021, in the name of using organic technology in agriculture, it stopped importing all kinds of fertilizers to save money. As a result, the yield decreases. He issued huge amount of sovereign bonds abroad in the name of financing for import. This makes the crisis even more apparent. Of these, the impact of the Covid-19 caused a massive collapse in the tourism industry and reduced the state’s revenue from this sector by 12 percent. When the time comes to repay the loans to the financiers before the start of income from the ongoing mega projects, it is seen that the amount deposited in the central bank is less than two billion dollars, which can cover the import expenditure in less than a month. There is a huge shortage of daily necessities all over the country. The government declared itself bankrupt by failing to repay 51 billion in foreign debt. People come down the street. Protests in Sri Lanka have become a casual affair today. The situation today is such that all the members of the ruling party in Sri Lanka are somehow fleeing for their lives. On May 9, a pro-government lawmaker’s car was targeted by anti-government protesters in Colombo, and he killed himself with his own pistol. Public outrage escalated to the point that angry mobs attacked, vandalised and set fire to the houses of MP, ministers in Sri Lanka. Even some ministers and MPs were physically assaulted and drowned in the river.
The Sri Lankan government has repeatedly asked China and India for help. India has agreed to lend 1 billion from their credit line. It is learned that Sri Lanka is trying to get another four to five billion dollars’ loan from China. But why a lender country would agree to help the current bankrupt country is also a matter of concern. It is true that no country would be interested in providing credits to Sri Lanka unless its ongoing political unrest is resolved. And how to end this instability now largely depends on the choice of the agitators, that is, what kind of political option they will choose. It seems, the resignation of President Gotabha and the subsequent appointment of a neutral interim president could resolve this seemingly political crisis. The sooner this happens, the better for the country, so at least it will be possible to focus on resolving the economic crisis in the aftermath of the political crisis. However, there is room for a holistic view of the situation as a whole, and the role of the international community is crucial.
Under the present circumstances, the extent to which Ranil Wickremesinghe will be able to manage the economic pressures and tensions of Sri Lanka. However, the other issues that have been raised are- will Ranil Wickremesinghe overcome the crisis in Sri Lanka? His long political experience and wisdom may enable him to cope with the economic collapse of Sri Lanka. In this case, the people of Sri Lanka need to show extreme patience and tolerance. Again, situation may come under control by easing of the debt repayments of various donor groups, including the international community. In order to revive the economy of the people of Sri Lanka, the new government will have to carry out comprehensive reforms in the administrative and financial sectors. However, it is not expected that the crisis will end overnight. Above all, Ranil Wickremesinghe will have to face a tough challenge or ordeal to revive the economy.
(The writer is former Deputy Director General, Bangladesh Ansar and VDP)
