Sri Lanka declares emergency after violent protests over economic crisis

Authored by reuters.com and submitted by magicEightballA_A

Sri Lankan army commandos walk past the damaged vehicles after they were set on fire by demonstrators at the top of the road to Sri Lankan President Gotabaya Rajapaksa's residence during a protest against him, as many parts of the crisis-hit country face up to 13 hours without electricity due to a shortage of foreign currency to import fuel, in Colombo, Sri Lanka April 1, 2022. REUTERS/Dinuka Liyanawatte

COLOMBO, April 2 (Reuters) - Sri Lankan President Gotabaya Rajapaksa declared a nationwide public emergency late on Friday following violent protests over the country's worst economic crisis in decades.

Rajapaksa said in a government gazette notification that he took decision in the interests of public security, the protection of public order and the maintenance of supplies and essential services.

Hundreds of protesters clashed with police and military on Thursday outside Rajapaksa's residence in a suburb of the capital, Colombo.

Register now for FREE unlimited access to Reuters.com Register

Police arrested 53 people and imposed a curfew in and around Colombo on Friday to contain sporadic protests that have broken out over shortages of essential items, including fuel and other goods.

The Indian Ocean island nation of 22 million people faces rolling blackouts for up to 13 hours a day as the government scrambles to secure foreign exchange to pay for fuel imports. read more

The country's lucrative tourism industry and foreign workers' remittances have been sapped by the pandemic, and public finances were hit further by deep tax cuts promised by Rajapaksa during his 2019 election campaign.

Ordinary Sri Lankans are also dealing with shortages and soaring inflation, after the country steeply devalued its currency last month ahead of talks with the International Monetary Fund for a loan programme.

An alliance of 11 political parties has urged Rajapaksa to dissolve the cabinet and form a government with all parties to deal with the crisis, local media said, in a nation where both India and China are competing to build influence.

Police used tear gas and water cannons to disperse crowds near Rajapaksa's residence on Thursday, after they torched several police and army vehicles.

At least two dozen police personnel were injured in the clashes, an official said, declining to comment on the number of protesters hurt.

Tourism minister Prasanna Ranatunge warned such protests would harm economic prospects. "The main issue Sri Lanka is facing is a forex shortage, and protests of this nature will hurt tourism and have economic consequences," Ranatunge said.

The United Nations representative in the country, Hanaa Singer-Hamdy, called for restraint from all groups involved in the clashes. "We are monitoring developments and are concerned by reports of violence," she said on Twitter.

Trading on the country's stock market was suspended for a third consecutive day on Friday after the main blue-chip index fell 10%.

Reporting by Uditha Jayasinghe; Writing by Euan Rocha and Sanjeev Miglani; Editing by William Mallard

Our Standards: The Thomson Reuters Trust Principles.

Unemployed_Sapien on April 2nd, 2022 at 18:04 UTC »

Since 2007, Succesive Sri Lankan governments have been issuing sovereign bonds without a plan of repaying the loans. Their reserves were built by borrowing foreign currency funds, rather than through higher earnings from exports of goods and services, this left Sri Lanka exposed to external shocks. Then the government spent the foreign currency on repaying the debt and the central bank has been running down foreign exchange reserves to prop up the Sri Lankan rupee, which came under pressure. As a result, there was no foreign currency left in the economy to do things like import food, which is one of the reasons why we've seen inflation rise to double digits.

In 2019, Sri Lanka's president Gotabaya Rajapaksa's new taxation policy led to a tax cut from 15 to 8% for 5 years. Giving up outdated archaic taxes and a single rate VAT was introduced.

On April 2020, Rajapaksa made good on his election promise and introduced Organic Agriculture over a period of 10 years. Imposing a nation-wide ban on importing synthetic fertilizer and pesticides. The result was brutal and swift, A country which was self sufficient in rice was forced to import $450Million worth of rice and domestic prices of this staple surged to ~50%. Sri Lanka's primary source of export Tea crop was also devastated.

All this was also compounded by the pandemic.

e9967780 on April 2nd, 2022 at 16:42 UTC »

Having watched the country from afar for 30 years, one can’t pin all the problems on the current govt alone. This has been building up since the last 30 years when the civil war started in 1983. Instead of opting for a political resolution, govt after govt resorted to the military option making them borrow money that they no longer can service.

What they have to do is undo the bloated bureaucracy and cut down on the many subsidies that makes them live beyond their means, just like the people were not amenable to a political solution for their civil strife, this too is a no go.

After the current govt, there is no one who can actually solve the problems unless a country like India or China bails them out, but in lieu such countries bailing out, they would need something in return. Let’s see how this progresses.

https://www.wsj.com/articles/sri-lankan-officials-met-with-bankers-in-bid-to-solve-debt-crisis-11645648797

SSG_SSG on April 2nd, 2022 at 14:12 UTC »

Thanks for the post. It doesn’t sound like a good situation. Are there any stated aims for the protests e.g. is the objective to have the gov step down and new elections? Or just voicing frustration?