In Sri Lanka, an economic crisis foretold

The island’s economy, which was already reeling from the shock of the Easter Sunday bombings, was brought to its knees by COVID-19, an ill-advised agricultural policy and misguided economic decisions. Meera Srinivasan reports on how the government’s lack of a plan to deal with an impending disaster has caused untold misery

Ajith Kumara has lived every day of the last two years with the same soundtrack — a deafening snatch of Beethoven’s Für Elise blaring through his speakers. When the pandemic spelled gloom for many, he left his job as a truck driver to become a mobile vendor. Sri Lanka’s familiar choon paan (tune bread) vans, with the 1810 classic as their signature tune, have been taking bread and other bakery products to people’s doorsteps for decades. They were especially valuable during the stringent lockdowns, when stepping out meant risking police arrest. Driving around Colombo’s suburbs with a curfew pass from his employer, Kumara landed on his feet during tough times, but the current economic crisis may pull the rug from under him.

“Business has fallen by more than half. If there is fuel for the van, there is no gas at the bakery. If there is gas, there is no electricity. If there is electricity, we can’t find baking ingredients, or there is not enough water,” he says, parked at Dematagoda, a Colombo working-class suburb where many low-income families displaced by development at the city centre have been rehoused. “When we somehow find everything, and bring bread and buns for sale, people say they can’t afford to buy them anymore. This is the situation.”

It is dire, by all accounts. Hospitals are putting off surgeries without enough medical supplies, ink and newsprint shortages have forced newspapers to suspend editions, and schools have postponed term exams because there is no paper to print the questions.

For a daily-wage worker like Kumara, if earnings are slashed by half, it means one meal less a day. The 48-year-old vendor works for a small bakery, spending part of his daily earnings on hiring his vehicle and precious diesel. He saves the rest to support his family of four in Minuwangoda, in the neighbouring Gampaha district. “People are starving today. That is what they [those in power] have done to us,” he says.

Kumara was among the 6.9 million people who voted for President Gotabaya Rajapaksa in November 2019, propelling the former soldier to the country’s most powerful seat. That, followed by a thumping two-thirds majority in parliament in 2020, made the Rajapaksas nearly as formidable as they were in 2010, just after the “victory” in the war. But their renewed popularity after five years in opposition, which even withstood the early blows of the pandemic, is now crumbling. The scale of this economic crisis is unprecedented, making it arguably the worst in the island’s history.

The Sri Lankan rupee has plummeted in value against the U.S. dollar with importers now needing LKR 300 (and much more on the black market) to buy one dollar. The country’s foreign exchange reserves were already under strain after the Easter Sunday terror attacks of 2019 halted tourist arrivals and foreign investment inflows slowed down. Reserves are now barely enough to pay for a month’s imports. The dollar crunch and severe shortages of essentials are grabbing global headlines, often accompanied by pat explanations of a “Chinese debt trap” or “Ukraine war impact”, with much less airtime for Sri Lanka’s own story.

Families are skipping tea and foregoing meals, queuing up for hours to buy cooking gas or kerosene, and coping with day-long electricity cuts in this season of sweltering heat. They see “failed leadership” as the reason for their plight, not some complex macroeconomic puzzle.