Sri Lanka declared a state of emergency on Wednesday after President Gotabaya Rajapaksa fled overseas to escape anti-government protests, as thousands of people took to the streets, again furious that he had not yet stood down.
The country's worsening economic crisis had taken another a dramatic turn with protesters storming of the Presidential palace, prompting President Gotabaya Rajapaksa to resign and flee leaving the country’s future hanging in the balance.
Here’s how Sri Lanka became mired in the worst economic, political and humanitarian crisis its witnessed in over 70 years.
1.) The coronavirus pandemic, which decimated foreign-currency earnings from tourism along with and global inflation pushed Sri Lanka’s economy over the edge. But, its financial position had taken a major hit stemming from an accumulation of debt and sweeping tax cuts that drained government revenue. Moreover, a ban on chemical fertilizers in favor of organic alternatives in 2021 also resulted in disastrous crop failures.
2.) As its debt pile grew, Sri Lanka took to international sovereign bonds to roll over existing debt at commercial interest rates. But as the country's financial position continued to deteriorate, it's credit rating tumbled cutting off its access to on-market borrowing.
3.) As Sri Lanka’s sovereign-debt crisis crippled its economy, it sparked months of political turmoil and public protests. With its foreign reserves drained to near zero, the the island country fell into default in May and has been struggled to procure essential imports including fuel and medicines.
Read more: 'Don't fall ill': Sri Lanka doctors warn of drug shortage
Currently, almost 22 million people are struggling to secure daily necessities as growing inflation sent prices soaring. Lengthy power cuts and long queues for fuel have plagued the country since April.
Read more: Bankrupt Sri Lanka runs out of fuel
4.) Much of the anger has been focused on President Gotabaya Rajapaksa, whose powerful family has dominated the country's political landscape for about two decades. The economic crisis has intensified accusations of nepotism and corruption from both protesters and political opponents, which the Rajapaksa family has denied.
Read more: The Rajapaksas in retreat: A look at Sri Lanka’s once powerful political family
5.) Anti-government demonstrations, which have been taking place for months, took a dramatic turn on July 9, crowds of protesters stormed and occupied the official residences of President Gotabaya Rajapaksa and Prime Minister Ranil Wickremesinghe. They also set fire to Wickremesinghe’s private home.
6.) Both Rajapaksa and Wickremesinghe said they would resign, making way for an all-party government which will be tasked with restoring the economy, negotiating a debt restructure with creditors and progressing talks with the International Monetary Fund for financial relief.
7.) As Rajapaksa fled to Maldives, Wickremesinghe was appointed to be acting president, the parliamentary Speaker announced Wednesday as thousands of protesters demanded both men step down.
"Because of his absence from the country, President Rajapaksa told me that he has appointed the prime minister to act as the President in line with the constitution," Mahinda Yapa Abeywardana said in a brief televised statement.
8.) Meanwhile, Sri Lanka's political parties have resolved that, once both the President and the Prime Minister formally step down, the Speaker would take the role of acting president before parliament votes for a new president. That vote will take place on July 20.
9.) Talks are underway with the IMF for a potential bailout for Sri Lanka. Commenting on it, Anit Mukherjee, a policy fellow and economist at the Center for Global Development, a nonpartisan think tank in Washington, told NBC News any assistance from the IMF or World Bank should come with strict conditions to make sure the aid isn’t mismanaged.
10.) India has also assured all help regarding food and medical aid, subject to requests from Colombo, sources in the know have told Moneycontrol. "If the need arises, India will ship food packages and other rations to the country as it has done for COVID-related supplies last year or for assistance to Afghanistan in the current year," an official said.
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