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Saturday, April 1, 2023

What went wrong with Sri Lanka’s economy?

Sri Lanka, a South Asian country, is undergoing an unprecedented economic collapse, placing its government in grave peril.

Sri Lanka, Colombo and South Asia, Sri Lanka, are experiencing an unprecedented economic collapse that puts their government in serious danger.

Much of the public anger was directed at President Gotabaya Rajapaksa and his brother Mahinda Rajapaksa, who accused his critics of driving the country into an economic crisis.

Highlights for protest

Sri Lankans have had to wait in long queues to buy their necessities for months due to the currency crisis, which has caused shortages of food, medicine and imported fuel. Due to the lack of oil, there was a major power outage.

The government had to raise revenue, especially as foreign debt increased due to major infrastructure projects and was partially covered by Chinese loans. But a few days after taking office, Rajapaksa pushed for the largest tax cut in Sri Lanka’s history.

This move caused rapid chaos in the world market. Creditors lowered Sri Lanka’s rating, and the fall in foreign exchange reserves prevented Sri Lanka from borrowing more money. Shortly afterwards, a pandemic broke out, and tourism collapsed again as debt rose.

The Ukrainian war drove up world food and oil prices, making imports more affordable.

Rajapaksa brothers

National protests call for the Rajapaksa brothers to be expelled, a dramatic reversal of Sri Lanka’s most prominent political dynasty.

The majority of Sinhalese Buddhists on the island hailed Mahinda and Gotabaya Rajapaksa as heroes for bringing the 30-year civil war against Tamil insurgents to an end in 2009. They have grown in popularity despite suspicions of war crimes. Gotabaya was the military strategist who helped end the war and a brutal campaign that crushed the rebels.

Rajapaksa, a family of powerful landowners in the southern province, dominated local elections for years before Mahinda was promoted to national affairs in 2005 when he was elected president.
Gotabaya ran in the presidential election in a highly-formulated nationalist campaign that defeated voters frustrated by the previous administration’s attack.

Critics accused Rajapaksus of relying too heavily on the military to enforce policies, pass legislation undermining independent institutions, and virtually monopolising decision-making.

What is going to happen next?

President Rajapaksa did not have a prime minister or cabinet, and his government was immediately dissolved upon his brother’s resignation.

You can now select the next Prime Minister and Member of Parliament to form a government. His election requires the support of a majority of 225 parliamentarians. It is unclear whether he still has sufficient congressional support for his candidate to pass.

The president may try to build a national unity cabinet, but convincing opposition MPs to join will be challenging.

Suppose the president resigns while the prime minister is absent. In that case, the president will serve as interim president for a month while parliament elects members to serve as president until elections are held.

The Rajapaksa isolation campaign will be difficult. It needs the backing of the Speaker of the Folketing, the Supreme Court, and at least 150 members to pass. The process is more difficult because the opposition is not the majority in parliament.

An attempt to sue a federal court throughout the 45 years that Sri Lanka has been controlled under the presidential system has failed.

Despite his extensive authority, the president needs a prime minister and a cabinet to perform his executive duties. Fears of a military takeover have arisen due to the current ambiguity about the president’s and executive’s next steps, particularly if the violence intensifies.

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