Economic Crisis Threatens Hold Of Sri Lanka’s Most Powerful Family

Public dissent has been growing in the island nation of 22 million as energy shortages have led the country to resort to rolling blackouts and Sri Lankans have waited for hours in lines to obtain basic goods such as cooking gas and medicine. Dwindling foreign-currency reserves have left the country struggling to pay for imports and on the verge of a sovereign-debt default. The central bank on Friday nearly doubled interest rates to 14.5% from 7.5% to curb inflation, which reached 18.7% last month.

On Saturday afternoon, thousands of protesters lined a main street in central Colombo, in one of the country’s largest demonstrations yet. Protesters displayed banners and chanted slogans, calling on President Gotabaya Rajapaksa to step down.

Sulochana Dissanayake, a 36-year-old owner of an education business said it was the first time in her life she had been motivated to join a protest movement. “Always we’ve been governed by fear, told to be careful of the authorities,” Ms. Dissanayake, who said she has been protesting for more than a week. “But when you have to sit in the dark for 10 hours a day, fear doesn’t work anymore.”

Mr. Rajapaksa, who was once widely revered among Sri Lanka’s Sinhalese Buddhist majority as a war hero, is now battling to stay in power. His entire cabinet and the central bank governor resigned earlier this week , and his ruling coalition has lost its parliamentary majority after a series of defections.

The resignations included two of Mr. Rajapaksa’s brothers, Basil and Chamal, who were finance and irrigation ministers respectively. His nephew, Namal, also quit as youth and sports minister.

“People respected him as a god, as a saint, in those days,” said Ubayamath Rajasekaram, a 49-year-old homeopath who attended Saturday’s protest, referring to Mr. Rajapaksa’s role in ending the country’s 26-year civil war in 2009. “But now, today, people say he’s a monster.”

The president, who has blamed external shocks like the coronavirus pandemic and soaring oil prices for Sri Lanka’s economic crisis, has shown no indication that he too plans to step down. His brother, Mahinda, has also stayed on as prime minister. The president has invited opposition lawmakers to form a unity government—an offer that has so far been rebuffed.

“As a government, we are clearly saying the president will not resign under any circumstances,” the government’s chief whip in Parliament, Johnston Fernando, told lawmakers Wednesday. “We will face this.”

The Rajapaksas have enduring popular appeal and have weathered political storms in the past, but the handling of the economic crisis, and its profound impact on the people, will be difficult to recover from, said Nishan de Mel, executive director of Verité Research, a Colombo-based think tank. “The political leadership of the Rajapaksas has lost its legitimacy,” he said.

Mahinda Rajapaksa, 76, who served two terms as president from 2005 to 2015, is seen as the charismatic leader of the clan. While he was president, he steered the country closer to China, borrowing billions of dollars for infrastructure projects. The most prominent example is the port in Hambantota, a loan repayment that was ultimately settled by granting a 99-year lease to a Chinese state-owned company.

Gotabaya Rajapaksa, 72, joined the army in 1971 and fought in several major offensives in the civil war against insurgents from the country’s ethnic Tamil minority, rising to the rank of lieutenant-colonel before retiring in 1992. He served as defense secretary when his brother was president, overseeing the brutal end of the war.

Human-rights abuses were committed by both sides of the country’s civil war. The United Nations found credible evidence of as many as 70,000 civilian deaths in the final months of the war. Gotabaya Rajapaksa denies wrongdoing and has described allegations of rights abuses as politically motivated and unfair.

The extent of the Rajapaksa family’s influence in Sri Lankan politics has long been contentious, with accusations of nepotism and corruption contributing to Mahinda Rajapaksa’s surprise election defeat in 2015 to his former health minister, Maithripala Sirisena. The Rajapaksa family has denied wrongdoing, and the president’s office didn’t respond to requests for comment.

Gotabaya Rajapaksa swept the 2019 presidential election, harnessing his tough wartime image to promise an overhaul of national security after a series of bombings by Islamic extremists on hotels and churches killed 269 people earlier that year on Easter Sunday. Constitutional amendments passed by his party in 2020 gave the presidency even greater executive powers.

As the Rajapaksas consolidated political power, the country’s finances were already starting to unravel. The president passed sweeping tax cuts—making good on a campaign promise—that slashed government revenues just as the coronavirus pandemic halted tourist arrivals, a key source of foreign currency. Sri Lanka’s annual fiscal deficit widened to more than 10% of its gross domestic product, and its junk credit rating cut it off from raising funds from global capital markets.

By February of this year, the country’s foreign-currency reserves had fallen by about 70% to $2.31 billion, enough to cover just one month’s imports. It faces debt repayments of around $4 billion this year, including a $1 billion international sovereign bond that matures in July, a financial predicament the International Monetary Fund says is unsustainable.

Sri Lanka’s government had ignored calls from independent economists to approach the IMF for an assistance package until last month, having pinned hopes of an economic turnaround largely on a postpandemic return of international tourists and stopgap financial assistance from China and India. But Russia’s invasion of Ukraine pushed up energy and commodity prices further, compounding Sri Lanka’s import woes.

Sri Lanka’s nationwide demonstrations have intensified, but have remained mostly peaceful, and have cut across the country’s ethnic and religious divides. Protesters accuse the president of corruption and say they won’t stop until he steps down.

The president declared a state of emergency last week and imposed a weekend curfew and social-media blackout, but rescinded those orders after they galvanized protesters further.

“People won’t stop until massive change happens,” Ruwani Wickramasinghe, a 40-year-old NGO worker, said at a recent Colombo protest. “It’s not just about getting electricity back, gas back, diesel back. Those are little things compared to what they’ve done to this country.”

This story has been published from a wire agency feed without modifications to the text

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