Sri Lanka economic crisis: President Gotabaya Rajapaksa flees as protesters storm residence

Sri Lanka’s President Gotabaya Rajapaksa fled his official residence in Colombo on Saturday moments before thousands of protesters broke through police barricades and stormed the compound.

Meanwhile, prime minister Ranil Wickremesinghe called an urgent meeting with his cabinet ministers after the president fled his residence.

Colombo, Sri Lanka right now. The Presidential Palace has been stormed, President Gotabaya Rajapaksa is said to have fled. Unbelievable scenes. Live reports on @IndiaToday: https://t.co/p6JV6FzCub pic.twitter.com/8zlJdBfN2P

— Shiv Aroor (@ShivAroor) July 9, 2022

Local TV channel NewsFirst showed video footage from the protest where people can be seen holding Sri Lankan flags and helmets.

A top defence source told AFP that the president was escorted to a safe location.

Demonstrators from across the country arrived in buses, trains and trucks to Colombo earlier on Saturday to news outrage over the government’s failure to protect them from economic ruin. Protesters shouted “Gota go home,” using a common shortened version of the president’s name.

ALSO READ | How Sri Lankan economic crisis unfolded | Infographic

According to Reuters, at least 21 people, including two police, were injured and hospitalised in the protests.

Sri Lanka is going through one of the worst economic crises that the country has witnessed. Many blame the country’s decline on President Gotabaya Rajapaksa. Protests since March have demanded the president’s resignation.

HOW THE CRISIS UNFOLDED IN SRI LANKA

The current economic crisis in Sri Lanka is a result of badly-timed tax sops, poor investments in projects, and Covid-induced restrictions.

1. In 2019, the Sri Lankan government announced several tax cuts, leading to a huge dip in revenue. This came at a time when the historically weak government finances were still looking for ways to pay off the sovereign bonds that Sri Lanka’s governments had been issuing for the past 13-14 years, without provisioning for repayment.

2. The international debts for Sri Lanka have mounted to unmanageable amounts. The nation now owes about USD 7 billion. Among its debts is a USD 1-billion international sovereign bond that matures in July. Sri Lanka’s public debt has risen (in projection) from 94 per cent of its gross domestic product (GDP) in 2019 to 119 per cent of the GDP in 2021, the International Monetary Fund (IMF) said in early March.

ALSO READ | Sri Lanka crisis: Politicians’ homes set afire, shoot-at-sight orders as protests against govt intensify

3. Sri Lanka’s foreign exchange reserve has fallen 70% since January 2020. This stalled its imports, leading to an acute shortage of several essential items. Its currency has undergone substantial devaluation.

4. The loan arrangements with China too contributed to the Sri Lankan economic crisis. Most of the loan it received from China in the past decade was invested in low-return projects, such as the construction of ports, airports, and coal power plants. The loan amounted to nearly USD 5 billion.

5. The final blow that led to the crisis in Sri Lanka was dealt by the Covid-19 pandemic. One of its major contributors, tourism, was severely hit during the pandemic. Taking the industry to abysmal lows. When the pandemic looked to subside and travel curbs were scrapped, tourist in-flows increased, with nearly 25% of visitors arriving from Ukraine and Russia till February. However, the impact of the Russia-Ukraine war trickled down and the tourist in-flow from these countries stopped. Its traditional tourist sources, India, China, the UK and Germany, have not recovered to pre-Covid levels.

(With inputs from AFP and Reuters)

— ENDS —