Unprecedented economic and political crisis in Sri Lanka in 2022, relief from India’s help


The massive anti-government protests subsided with the formation of a government led by his ally Ranil Wickremesinghe amid the resignations of President Gotabaya Rajapaksa in July and his older brother Prime Minister Mahinda Rajapaksa in May.

Sri Lanka was hit by an unprecedented financial crisis in 2022, leading to political turmoil in the island country that saw the Rajapaksa family lose power. The massive anti-government protests subsided with the formation of a government led by his ally Ranil Wickremesinghe amid the resignations of President Gotabaya Rajapaksa in July and his older brother Prime Minister Mahinda Rajapaksa in May. Wickremesinghe now has the responsibility of stabilizing and getting back on track the economy which was earlier badly hit by the pandemic. From April to July, Sri Lanka was in a state of anarchy.

Long queues were seen at fuel stations and there was anger among thousands of people blocking roads with empty LPG cylinders. More than 20 people died in queues due to exhaustion from standing in long lines and waiting for more than 72 hours in some cases. In April, President Gotabaya Rajapaksa sacked his brother and Finance Minister Basil Rajapaksa amid economic turmoil in the country. In May the Sri Lankan government declared a debt default of over US$51 billion in foreign debt, a first in the country’s history.

India came forward to help the neighboring country Sri Lanka in its time of need and gave it financial assistance of about US$ 4 billion during the year. In January, India announced a US$900 million line of credit to Sri Lanka after it faced a financial crisis. At that time Sri Lanka’s foreign exchange reserves were rapidly depleting. Later, India offered a US$500 million line of credit to Sri Lanka for fuel purchases. Considering the seriousness of the situation, the line of credit was later enhanced to US$ 700 million.

Chronic shortage of foreign exchange and rising inflation led to acute shortage of medicines, fuel and other essential commodities. The loan default comes amid public protests in April over the mismanagement of then-President Gotabaya Rajapaksa’s government in dealing with the country’s worst economic crisis since independence in 1948. External Affairs Minister S Jaishankar was the first foreign dignitary to visit the island amid the unprecedented chaos. Jaishankar had said in March that Sri Lanka is our closest neighbor and we will help it in every possible way.

India also asked the International Monetary Fund (IMF) to provide immediate financial assistance to Sri Lanka. In June, the then Prime Minister of Sri Lanka, Wickremesinghe, said that Sri Lanka’s economy had completely collapsed.” In June, India sent four senior government officials to Colombo to assess the economic crisis in the country. In July, thousands stormed the official residence of Gotabaya Rajapaksa, prompting the president to flee on a military plane first to the Maldives and then to Singapore, from where he sent his resignation.

His resignation marked the end of the rule of the powerful Rajapaksa family, which held power for nearly 20 years. In August, a diplomatic spat broke out between New Delhi and Colombo over the anchoring of a Chinese spy ship at Sri Lanka’s Hambantota port. The port visit of the high-tech surveillance ship also led to a Twitter spat between the Indian and Chinese diplomatic missions here.

Disclaimer:Prabhasakshi has not edited this news. This news has been published from PTI-language feed.



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