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Sri Lanka is on the brink of collapse

Unable to pay for food, fuel, fertilisers and medicines, Sri Lanka faces an economic collapse as anti-government activists call for protests this weekend

People wait to apply for their passport at Sri Lanka's Immigration and Emigration Department, amid the country's economic crisis. Photo: Pradeep Dambarage/NurPhoto via Getty Images

Sleep has become a novelty for Sujith Fernando. Crippling anxiety and his rumbling stomach regularly keep him and his family awake at night.

Fernando, 43, a quiet father-of-four from the coastal town of Negombo, has worked as a fisherman all his life and was content feeding his family with his daily catch. But, over the last month, his simple life on Sri Lanka’s western coast, part of the island favoured by British holidaymakers, has been shattered as the country has run out of fuel, meaning he can no longer take his small fishing boat out to sea.

“For nearly a month, skipping meals has had to become a regular pattern. Buying food is really expensive and the only way to survive is cooking a pot of rice and trying to find some curry, which has even become a luxury now,” said Fernando. “There are days we can cook something for the children and me and my wife survive on a plain cup of tea.”

These desperate scenes are increasingly being replayed across Sri Lanka, where four in every five households are now forgoing meals, according to the United Nations.

Home to 22 million people, Sri Lanka is enduring the world’s worst economic crisis. Colombo owes over £41bn to international lenders but only has around £40m of foreign exchange reserves left, meaning it can no longer import essential goods.

“Our biggest plans for the future were for our children’s education. But, with the dire economic situation in the country, all our dreams have been shattered and finding three meals a day itself has become a challenging task,” said Fernando. “Things are out of control and it is hard to live anymore.”

Colombo, long associated by British tourists with stunning heritage buildings and spectacular cuisine, is currently enduring daily power cuts of over 10 hours because of nationwide fuel shortages. The healthcare system is on the verge of total collapse and food inflation has soared to over 80% due to widespread shortages.

The inability to import goods has been worsened by a catastrophic decision to ban chemical fertilisers, which caused a drop in domestic yields and pushed up prices, with the cost of staples, including onions, tomatoes and rice, quadrupling since January.

“The next couple of months will be the most difficult ones of our lives,” admitted Ranil Wickremesinghe, Sri Lanka’s new 73-year-old prime minister, in mid-May.

Wickremesinghe does not tend to exaggerate. He previously served as Sri Lanka’s prime minister four times and witnessed the country’s devastating 1983-2009 civil war, which claimed the lives of over 100,000 people, according to the United Nations.

Charu Lata Hogg, a Sri Lankan analyst at the London-based Chatham House think tank, believes initial post-civil war optimism, such as that exhibited by the World Bank in 2019 when it lauded Sri Lanka as a lower middle-income country with booming textile, tourism and manufacturing industries, had papered over some large cracks.

When the civil war erupted in Sri Lanka in 1983, members of the country’s Tamil Hindu minority began launching violent attacks against the state, which was dominated by the country’s Sinhalese Buddhist majority. Tamils had been subject to brutal persecution by Sinhalese elements since the country’s independence from the United Kingdom in 1948 and their civil rights were eroded by laws that made it difficult for them to gain citizenship in their own country.

But after a horrific conflict, the Sri Lankan military claimed victory over the insurgents in 2009.
Post-conflict reconciliation is widely considered to have been a failure, with over 20,000 people, largely Tamils, still missing and much of the country still fragmented along religious and ethnic lines.

“There was a collapse in accountability right from the start and we saw both the rise of Sinhalese Buddhist nationalism and the suppression of Tamil civil and political rights,” explains Hogg. “Sri Lanka’s post-independence history has been littered by political violence which has been rooted in governmental mismanagement, corruption and a lack of transparency.”

Gotabaya Rajapaksa, Sri Lanka’s current president, emerged from the conflict as a hero to many Sinhalese Buddhists, who constitute around three-quarters of Sri Lanka’s population. Appointed defence secretary by his brother Mahinda, then prime minister, he was tasked with ending the conflict by any means possible. Four years later he succeeded but at a great humanitarian cost.

His forces allegedly murdered up to 40,000 Tamils in the final stages of the war and he is also accused of running a fleet of white vans used to abduct some of the country’s leading human rights activists and journalists from the street; many of whom remain missing.

When Islamic terrorists carried out a series of suicide bombings in Colombo on Easter Sunday in 2019, killing at least 269 people, Gotabaya again presented himself as the only person who could restore law and order to Sri Lanka. Later that year, he was elected as the country’s new president.

Almost immediately, he began appointing family members and former military allies to senior government positions, rather than qualified civil servants. Mahinda returned as prime minister while another brother, Basil, was chosen as finance minister.

“It is true that Sri Lanka had a long moment in the sun after the civil war with its textiles and tourism industries but then, like many countries in Asia, (it) saw a toxic form of religious nationalism re-emerge,” said Michael Kugelman, deputy director of the Asia Program at the Wilson Center, a leading US-based policy forum.

“You can look at the track record of economic mismanagement, much of which can be attributed to the Rajapaksas and made the economy so vulnerable.”

Riding a wave of resurgent Sinhalese nationalism, the Rajapaksas had grand ambitions for Sri Lanka but were hamstrung by a lack of liquidity. So they borrowed heavily. Since 2009, Sri Lanka has issued more high-yield bonds than any other Asian country and Colombo also turned to Beijing for help, ignoring warnings of debt trap diplomacy to fund extravagant infrastructure projects.

Now, Sri Lanka owes China over £5.7bn in loan repayments in 2022 alone. A further decision by Basil Rajapaksa to introduce large tax cuts at the beginning of Gotabaya’s presidency, seemingly to appeal to the electorate, also drastically reduced revenues.

“If these proposals are implemented like this, not only will the entire country go bankrupt but the entire country will become another Venezuela or Greece,” warned Mangala Samaraweera, Sri Lanka’s outgoing finance minister.

Then the Covid-19 pandemic struck, slashing income from tourism, previously the second highest foreign exchange earner, by 61% from 2020 to 2021. Remittances from the 1.7 million Sri Lankans working abroad also fell by 22% and Colombo rapidly began burning through its foreign exchange reserves to meet interest payments and to continue importing goods amidst rising global inflation.

The international community sounded the alarm and the country’s sovereign credit rating was downgraded, locking Sri Lanka out of international debt markets.

Sri Lanka should have either regained its credit rating or restructured its debt, argues Nishan de Mel, executive director and economist at Verité Research, a Colombo-based think tank, but the Rajapaksas did neither, seemingly to save face. At the end of 2019, Sri Lanka had £5.7bn of usable foreign reserves – now it only has around £40m in the bank.

“Sri Lanka has never faced such a severe economic crisis in its history,” said Bandula Gunewardena, a spokesperson for the Sri Lankan cabinet, this week.

On Monday, WG Wethasinghe, 59, stood outside the Cardiology Unit of the Colombo National Hospital, a panicked expression on his face.

Two years ago, the father-of-three, was fortunate to survive a heart attack and now he depends on a cocktail of drugs to keep him alive, including Tenecteplase, which reduces the risk of blood clotting.

But since April, the hospital has run out of cardiac drugs. Before the economic crisis, Sri Lanka imported more than 80% of medicines but now the country simply cannot afford to replenish supplies.

“I narrowly escaped death and I badly want to live at least until I complete my responsibilities to my daughters as a father,” said Wethasinghe. “I cannot get the medicines I need from the hospital. I was initially able to buy them in the private sector but now the drugs are not available in private pharmacies as well.”

The Government Medical Officers’ Association (GMOA), Sri Lanka’s largest public health body, declared a public health emergency in April after a patient suffered a heart attack and died because hospitals in Colombo had run out of Tenecteplase.

In a second confirmed incident, a 70-year-old woman died from septic shock in Colombo after hospitals ran out of albumin, a protein injected to treat low blood volume.

“We still find drug shortages in many major hospitals. Sometimes drugs will be available for one week and then not available the next week,” said Dr Vasan Ratnasingam, a spokesperson for the GMOA. “There are existing shortages of both life-saving and essential drugs.”

Sri Lanka has run out of at least 14 life-saving drugs, including anti-rabies and anti-venom serum, hundreds of other medicines, including those for cancer patients, and other essential medical equipment. The Perinatal Society of Sri Lanka made an emergency appeal after hospitals ran out of endotracheal tubes and neonatal ventilators, which help newborn babies breathe.

Nationwide fuel shortages are also proving deadly. A two-year-old baby girl developed jaundice and died in the central Sri Lankan town of Haldummulla after her parents were unable to source petrol to drive their dying daughter to hospital.

“Conditions are so bad now, actually, we are also facing a huge fuel crisis among the healthcare staff,” explains Dr Indira Kulatilleke, senior medical officer at Colombo’s Lady Ridgeway Hospital. “Some hospitals have already been forced to close due to short staffing, others are just carrying out emergency surgeries. We are only managing to run on the donation of drugs from abroad.”

Dr Ratnasingam estimates that up to 70% of doctors and nurses are being forced to miss shifts due to fuel shortages.

“It is affecting healthcare delivery and hampering all the services that we can offer. Most patients are now being sent home without being seen by specialists,” added Dr Ratnasingam.

In theory, Sri Lanka’s healthcare professionals should have been given priority at petrol pumps but fuel shortages were so severe that motorists were forced to sleep in their vehicles whilst waiting for up to five days and nights to refuel, so patience often wore thin.

At least 11 motorists have died since March while waiting in fuel queues in temperatures well in excess of 30C. Most died from cardiac arrests.

“Almost every two days I have been following the same routine now. I struggle to pick up customers and then I return to the queue and spend two to three days without proper food or sleep. Is this a life?” asked Aijith Nishantha, 43, a trishaw driver in a fuel queue in Pitakotte, a town five miles outside of Colombo.

“Sometimes I feel like committing suicide, but when I think about my children, I can’t do that.”

On Tuesday, the Sri Lankan government announced it was suspending the sale of fuel to private vehicles, stockpiling its remaining supplies for the emergency services and to carry out cremations.Schools have been ordered to close until further notice, public and private sector employees ordered to work from home and international airliners told to bring enough fuel with them for their return journey.

It is devastating news for the country’s informal workforce, around two-thirds of the entire population, who typically depend on day-to-day earnings to support their families and who burnt through their meagre savings during the pandemic.

The disastrous decision to ban chemical fertilisers last May has also pushed inflation higher.
Gotabaya argued the ban would reduce exposure to harmful chemicals in pesticides, citing high levels of kidney disease amongst farmers. But, it was widely understood the policy was actually implemented to preserve dwindling foreign exchange reserves with Colombo spending £300m on importing fertilisers annually.

Farmers reacted with despair as they had been given no prior warning and the majority had no experience of organic farming.

While the ban was lifted in November after nationwide protests, yields of major staple crops, including rice, fell by 50% during March’s harvest season as huge swathes of farmland had been left idle.

In the picturesque village of Pitigoda, in Sri Lanka’s central Kandy province, residents say they are slowly starving. Udagedara Karunathilaka, 50, was forced to leave his entire paddy crop idle and has survived the last few months by eating jackfruit from trees in the village.

“I have never been so hungry and lived through such hardship. I wasn’t able to grow any paddy (rice) and I can’t even afford to pay for fuel to reach the market or visit my family in the surrounding villages,” says Karunathilaka, whose ribs protrude alarmingly from his chest.

Agricultural economists warn that Sri Lanka’s next harvest will again be lower than expected, this time because the war in Ukraine has pushed the price of fertilisers higher.

The United Nations has warned the country faces a “full-blown humanitarian emergency” and has already announced a £38m aid package, including emergency food aid for three million Sri Lankans. Around 56,000 children are said to be suffering from severe acute malnutrition and Colombo has introduced a four-day working week for public sector employees so they can attempt to grow their own fruits and vegetables at home to alleviate hunger.

Anger is understandably palpable. Peaceful protests calling for the resignation of the Rajapaksas began in earnest in March and quickly grew in size. Tens of thousands of Sri Lankans took to the streets in Colombo and held daily demonstrations at Galle Face, an urban park on the city’s coastline, demanding regime change, while smaller protests were held in other towns and cities.

The demonstrations were significant because they attracted Sri Lankans from across the country’s diverse religious, ethnic and class backgrounds; it seemed the whole nation wanted rid of the Rajapaksas. Christian priests could be seen holding “Go Gotabaya” placards alongside Buddhist monks. Civil war veterans, who had fought alongside Gotabaya, yelled anti-regime slogans alongside Muslim community leaders.

It was Sri Lanka’s “Arab Spring” moment, reflects Asanga Abeyagoonasekera, senior fellow at the Millenium Project, a Washington DC-based think tank, with Galle Face the country’s own Tahrir Square.

“The three main reasons behind the protests here were the same as the Arab Spring. Firstly, it was against Gotbaya’s autocratic rule and bringing more power to the centre,” said Abeyagoonasekera. “Secondly, we also saw rampant corruption amongst the ruling family here and the third is rising poverty. Around 30% of Sri Lankans are now living in poverty and because of the economic crisis the numbers have gone much higher.”

For several weeks, it looked like the protests would gather enough momentum to force Gotabaya into resigning. But, that all changed on May 9. A pro-government mob, including several Rajapaksa loyalists and prisoners on day release from the country’s jails, armed themselves with iron bars and attacked the peaceful protesters at Galle Face while the police looked on. Hundreds were injured, including the elderly, women and children.

In retribution, thousands of anti-government protesters stormed the homes of the Rajapaksas and their allies, torching over 50 properties, including the Rajapaksas’ ancestral home in Hambantota.

At least eight people were killed in the violence, including one sitting MP from the Rajapaksas’ party, Amarakeerthi Athukorala, who was beaten to death in the town of Nittambuwa after allegedly opening fire on anti-government protesters.

In an attempt to appease the protesters, Mahinda Rajapaksa resigned as prime minister but it still seemed the country would descend into complete anarchy. Rumours abounded the military would launch a coup or that neighbouring India would send a peacekeeping force.
Gotabaya was forced to take decisive action, declaring a state of emergency and issuing a “shoot on sight” mandate to the armed forces.

The country remains on a knife edge. Armed soldiers stand on every street corner in Colombo, checkpoints criss-cross the city and it is still common to hear the hiss of tear gas around Galle Face as protesters clash with members of the armed forces.

Gotabaya continues to hang on to power for now. Appointing a new government, including Wickremesighe, appears to have bought him some time but the majority of Sri Lankans are still demanding his resignation and activists have called for an anti-government march on Saturday.

Meanwhile, as living conditions continue to deteriorate, many Sri Lankans are exploring their options to leave the country.

“Neither the economy nor politics are stable here. I’m getting ten times as many people trying to leave as I did a few years ago, it’s 100 or 200 calls a day,” says Yusri Abdullah, managing director of Montrela Consultants, the largest visa consultancy in Sri Lanka. “People who said they would never leave, they would die for Sri Lanka. But, it is the same story, every day I get calls from people crying saying, ‘please help us’.”

Colombo has issued over 280,000 passports in the first five months of 2022, triple the number supplied in the same period last year.

The Indian authorities have estimated up to 4,000 Sri Lankans will attempt to flee by boat. Already, around 100 people have arrived and are being housed in the same refugee camps that hosted Tamils during the civil war. The Sri Lankan Navy has also intercepted several boats trying to reach Australia.

Abdullah says only around 10% of those applying to emigrate will be able to leave due to the costs involved. “There are going to be huge, huge problems for Sri Lanka in 10 years’ time. It’s the specialist doctors, the engineers, the accountants, the top educated, who are all leaving,” he adds.

Wickremesinghe has estimated Sri Lanka needs £4bn to cover the cost of essential goods this year, including food, medicines and fuel.

The country has approached the International Monetary Fund for a bailout and although a team is in Colombo it is likely to be months before funding arrives. A credit line from neighbouring India that had been used to replenish some stocks of fuel has also run out.

Despite the precarious situation, it does not appear the country has hit rock bottom yet and back in Negombo, Fernando has become increasingly irate.

“The Rajapaksa family’s corruption is the main reason for the downfall of the country. This political brain-dead old leadership has to be toppled,” he said. “The entire country must come together on Saturday to send Mr Rajapaksa home. This will be the last chance we are going to have and if we all get united we will be able to do it.

Joe Wallen is the South Asia Correspondent at the Daily Telegraph

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