Last year, Sri Lanka faced its worst economic crisis to date, accompanied by political upheaval that left its population reeling as they struggled to make ends meet. In this article, Shyamika Jayasundara-Smits briefly outlines how things played out in 2022, showing that while the crisis has had a devastating impact on the country’s stability and prosperity, 2023 signals a time for action – and change.

Sri Lanka entered 2022 beset by economic crisis and political upheaval. The economic crisis culminated in Sri Lanka defaulting on payment for the first time. This led to the government being completely cut off from most sources of international funding, including from official multilateral and international commercial sources.

The government’s effort to blame its debt default on the lost revenue from tourism due to the COVID-19 pandemic and increased fuel prices resulting from the war in Ukraine did not carry much weight. One analyst stated that ‘this is the most man-made and voluntary economic crisis of which I know’.

Although many Sri Lankans did not understand what default meant, the effects of the crisis were keenly felt. The foreign currency crunch that followed progressively restricted imports of food, fuel, fertiliser, medicine and other essentials. By August 2022, the annual inflation rate had reached nearly 70 per cent and inflation of food prices had reached nearly 85 per cent — the sixth highest food inflation in the world. 750,000 people have already fallen into poverty. One UNICEF report shows that the food crisis has already taken its toll on young mothers and newborn babies.

The economic crisis has also hit the previously well-off middle class, who now struggle to eat their usual three meals a day. In rural areas, heartbreaking stories have emerged of children fainting at schools because they have not had breakfast. The emergency aid, including food and fertiliser, received from the World Bank, UN World Food Program, Australia and India, was not enough to feed everyone. Food shortages were exacerbated by declining local agricultural output.

Urban Sri Lanka became plagued by lengthy queues for fuel and food, with Sri Lankans waiting under the scorching sun and in torrential downpours. The crisis triggered mass protests by thousands of people from all walks of life. The main protest slogan, GotaGoGama (Gota go home), pointed toward former president Gotabaya Rajapaksa’s personal responsibility for governing Sri Lanka directly into a crisis and demanded his resignation.

The mass resignation of cabinet ministers jeopardised the former president’s attempt to cling on to power. As a last resort, he formed an all-party government, but this lacked support from other politicians who were aware of the political costs of taking part. Still, the former president showed no sign of stepping down and instead made his brother, prime minister Mahinda Rajapaksa, resign.

Before resigning in May, former prime minister Rajapaksa wasted no time mobilising his political supporters to attack peaceful protesters outside his home and at the main protest site, Galle Face Green. The anti-government protesters retaliated by targeting the Rajapaksa supporters’ properties and businesses. Some went even further by burning down the Rajapaksa family’s ancestral home and a museum honouring their parents. In response the state rolled out a variety of repressive measures, including Sunday curfews, social media blackouts, tear gas and water cannons. Presidential orders prohibited any public gathering and protest leaders were arrested.

The peak period of protests from March to July was followed by a massive anti-government march held at Galle Face Green in Colombo on 9 July. Gotabaya Rajapaksa finally fled the country and sent his resignation from Singapore via email on 14 July. As the former president fled his residence, people flocked to occupy it. Some even had a dip in the presidential swimming pool and took selfies while relaxing in the president’s bed.

In the absence of the president, the perpetually unpopular Ranil Wickremesinghe was appointed acting president, under Article 37 (1) of the Constitution. This was announced via an extraordinary gazette notification. Sometimes nicknamed ‘the Eel’ (Aanda) for his ability to glide through any political trap, Wickremesinghe’s dream of becoming president finally came true amid Sri Lanka’s worst nightmare.

The public legitimacy of Wickremesinghe’s rule was immediately clouded. While Wickremesinghe was appointed via a parliamentary process according to Articles 40(1) (a) and 40(1) (c) of the Constitution, there have been allegations that the exiting president paid bribes to lawmakers to secure parliamentary approval for Wickremesinghe’s appointment.

Wickremesinghe has managed to bring slight relief to the people as fuel, electricity, medicine and food items have slowly begun to be replenished. Wickremesinghe’s poor reputation among conservative voters, who widely considered him to be an elitist, Western-style cosmopolitan, was dropped — at least for now — when he secured a bailout package from the IMF by flaunting his liberal sensibilities. Wickremesinghe secured a commitment from Japan to lead the debt restructuring talks with Sri Lanka’s creditors, which are essential to secure a US$2.9 billion bailout package from the IMF. Even a subtle attempt to push Wickremesinghe under the bus any time soon will likely provoke a relapse toward another crisis.

2023 comes with some concerns over the conditions on government spending that an IMF bailout will entail, as well as hope for the opportunities it will provide to promote financial stability. One can expect fewer angry protests in 2023, as the cross-class spirit of Aragalaya (Revolution) has already begun to wane since Wickremesinghe started laying the ground work for rescuing the economy and disciplining society.

As global calls for ‘debt justice’ continue to gather momentum, there is an opportunity for Sri Lankans to take the lead in this emerging movement by rekindling their past ‘Aragalaya’ spirit and channelling it towards the global political arena.

This blog was first published in East Asia Forum.

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