Friday, 1 December, 2023

Lessons From Sri Lankan Crisis

Namrata Sharma

Sri Lanka is in the news these days for all the wrong reasons. The education and health system of this country was on par with Europe. A Sri Lankan could get free education till PhD and complete health facilities. Their lifestyles were simple as they were based on Sri Lankan values, culture and tradition. However, their economic systems were way above all the South Asian countries. The people were always full of compassion, down to earth and very easy to work with.

Worsening situation
The people are still the same, but their life situations have now drastically changed. There is a real possibility of starvation of more than 25 million people now. Food and fuel scarcity is hitting the country like never before. There is an emergency situation in Sri Lanka at present with all 26 ministers of the Mahinda Rajapaksha government having resigned from their posts. Four of these ministers are from Rajapaksha’s family. Sri Lankan President-- brother of the prime minister-- is trying to form a unity government to tide over this emergency situation. Although the Rajapaksha family has been known to be involved in corruption, there is still a section of the Sri Lankan population who feels that the Rajapakshas will save their country.

Sri Lanka was part of the British rule and got independence in 1948 a year after India. Since then, the country has gone through a 26-year long civil war ranging from 1983-2009 during which time the Liberation Tigers of Tamil Eelam was active demanding for a separate state for the Sri Lankan Tamils. However, the country managed to maintain the social security system of basic needs like health and education intact. There was 100 per cent literacy.

Even with the civil war, the Sri Lankans worked hard and maintained a lifestyle and economic system that became an example in the global progressive scenario. After the civil war ended, the country progressed with a quantum leap during 2009-2019. Sri Lanka was often cited as an example that countries like India could learn from to increase their economic standards. Three years ago the World Bank placed Sri Lanka in the list of countries in the world where most of their citizens’ income was in the category of High Middle Income. The per capita income of Sri Lanka had reached US$3852 while India’s was US$2100. During the civil war India deployed the peacekeeping force in Sri Lanka role from 1987 to 1990. This intervention had then received mixed response on India’s role in the neighborhood.

In the global market economy, Sri Lanka has become the sole example of economic progress in one of the poorest regions of the world. However, the economic crisis that the country is now facing actually points to the question: Is the capitalist approach and global market economy really sustainable? How has the global market really played in the rise and fall of the country?
There are a lot of speculations that successive Sri Lankan governments resorted to taking massive loans and misusing them and it is because of this that the country is presently mired in economic hardships. The political leaders who played a crucial role in ending the civil war in the country are now seen as the force in establishing a family dynasty that is pushing the country’s future over the brink by overloading the economy with unmanageable credit.

In the DNA report of 2016, Sri Lanka had a debt of US$ 46 billion, which was more than doubled within six years. Currently, according to the same DNA report, it has a debt of US$ 81 billion, which is equivalent to the annual GDP of the country. In the total loan share of Sri Lanka more than 10 per cent is from China.

Sri Lanka’s major source of income has been tourism, tea and textiles. Before the COVID-19 pandemic hit the world, the Sri Lankan government earned US$ 5.6 billion from the tourism sector in 2018, but in 2021 this earning, according to the DNA report, came down to US$ 2 billion. Instead of using the loans to prop up the industries and create more jobs, the loans have been misused for the interest of the government officials, mainly the Rajapakshas, in unproductive activities like spending during the elections to garner their prize seats. There has been very poor strategic planning on increasing in-country goods and services to move towards a self-sufficient productivity. Most of the products in Sri Lanka are from other countries, and their depleting foreign exchange is used in purchasing goods from other countries.

Alarm bells
Observing the situation in Sri Lanka, the alarm bells should be ringing loud and clear all over Nepal, too. Nepal is no better in clearing her debts and getting more and more indebted. There needs to be a serious analysis on where we are to prevent possible crisis and emergency situation that our neighbour is facing. I see the Sri Lankan crisis as a major failure of the global market economy and power play of bigger countries. Therefore, a joint effort must be implemented immediately to bail the country and its population out of this situation.

(Namrata Sharma is a senior journalist and women rights advocate and can be reached at Twitter handle: @NamrataSharmaP )