Worldview with Suhasini Haidar | Lessons from Sri Lanka’s crisis
The Hindu
In this episode of Worldview with Suhasini Haidar, we discuss some of the lessons from Sri Lanka.
As Sri Lanka’s crisis continues to spiral out of control, the country gets a new Prime Minister: what are the lessons from India’s neighbourhood?
After weeks of turmoil on the streets of Colombo, citizens’ protests, fatal police shooting of a protester, violent assault on peaceful protesters by Rajapaksa supporters, and incensed mobs burning down property in retaliation, Prime Minister Mahinda Rajapaksa stepped down this week, paving the way for opposition leader and former Prime Minister Ranil Wickremsinghe to be appointed in his place.
The task before Mr. Wickremsinghe to restore Sri Lanka’s finances which are in the worst situation since the island’s independence is immense.
1. Foreign exchange reserves are around $50 million this month, far lower than what it needs to repay loans, and about 1/4th of what is needed to buy much needed food, fuel and medicines.
2. Tourist arrivals were down by half last month, another important source of dollars, and something that accounts for about 5% of the GDP. Many more have cancelled plans to visit Sri Lanka due to the instability and violence
3. Crucial exports like tea have dropped nearly 10% in the past year, due to a drastic drop in agricultural production following a controversial decision to ban fertilizer imports overnight, power cuts impacting processing
4. While GDP estimates are likely to be far lower, the situation is too uncertain to make any real estimates at present