Sri Lanka's worst economic crisis, countrywide protests explained in 10 points

Sri Lanka crisis: Protestors hold banners and placards saying 'Go home GOTA' during a demonstration.

Sri Lanka is all set to get a new cabinet today even as more protests bloomed in the island country struggling with food, medicine and fuel shortage. Economic worries have gripped the nation with record inflation and frequent power cuts, a crisis that prompted the incumbent government to announce that they will seek a bailout from the International Monetary Fund.

Here is the Sri Lankan crisis explained in 10-points:

1. 1) After Sri Lanka’s civil war ended in 2009, the country recovered quite quickly and soon became an upper-middle-income nation. The country relies heavily on tourism and brought in high-end restaurants and malls providing jobs to a massive number of people. Now, the country is struggling with their enormous debt load, the loss of income due to the coronavirus pandemic and the war between Russia and Ukraine that has hiked the prices of goods globally.
2. 2) Trading was stopped at Sri Lanka's stock exchange seconds after it opened Monday when the blue chip index dropped 5.92 percent following the mass cabinet resignation. The S&P index fell more than the five percent needed to trigger a circuit breaker that halts trading for half an hour, the Colombo Stock Exchange said.
3. 3) Sri Lanka's president Gotabaya Rajapaksa has offered to share power with the opposition as calls for his resignation escalated across the crisis-hit country. 26-cabinet ministers of the Sri Lankan Parliament, barring President Rajapaksa and his brother Prime Minister Mahinda Rajapaksa, resigned on Sunday. The country's central bank governor Ajith Cabraal was the latest to resign today.
4. 4) A state of emergency was declared on Friday, the day after a crowd attempted to storm President Rajapaksa’s house in capital Colombo. At least 664 people were arrested for violating the curfew, officials said.
5. 5) The 36-hour nationwide curfew ended this morning even as police and troops were placed on high alert amid the looming threat of more protests. Spontaneous protests have broken out in several parts of the country, including small towns and villages, as people struggle with the shortage of basic necessity – food.
6. 6) The peaceful protests intensified on Sunday - the full day of curfew – as people chanted “Go lunatic, Gota lunatic”, “go home Gota” and “Gota fail” attacking the Rajapaksa government. Activists said they would hold larger demonstrations in several key towns to demand the Rajapaksa family to step down. The south Asian nation is home to around 22 million people.
7. 7) Most of these protests had been organized through social media platforms like Facebook, Twitter and WhatsApp. Social media sites were then partially blocked by the government for 15 hours after the Human Rights Commission of Sri Lanka ruled the ban was illegal. However, the internet blackout didn’t deter protesters especially across the smaller towns.
8. 8) The crucial lack of foreign currency has added to country’s massive $51-billion foreign debt as the pandemic-induced-lockdown impaired tourism and the key revenues generated from it. The government has acknowledged that this is the country’s worst shortage of essentials since its independence from Britain in 1948.
9. 9) Last month, India announced a $ 1 billion line of credit to Sri Lanka and assured that the government will continue to extend all possible support to the country. In February too, India extended a $500 million line of credit to the country for purchasing petroleum products amid the energy crisis.
10. 10) Many economists say Sri Lanka's crisis has been exacerbated by government mismanagement, years of accumulated borrowing and ill-advised tax cuts.