La faillite du Sri Lanka sonne comme un avertissement pour ses voisins

La faillite du Sri Lanka sonne comme un avertissement pour ses voisins

Analysis. A State taken by the throat which no longer has enough dollars to import goods and provide essential services to the population such as electricity, healthcare, transport or food supply. Dry petrol pumps, empty stores, declassed inhabitants, crushed by galloping inflation (+ 30% in April): Sri Lanka has become synonymous with total bankruptcy. The crisis culminated in the resignation, Monday, May 9, of Prime Minister Mahinda Rajapaksa after violent clashes in the capital Colombo.

April 12 marked a historic milestone in the economic and financial crisis ravaging the island nation of 22 million people: the government temporarily halted payments to international creditors. For the first time, Sri Lanka was lacking.

The causes of this monumental fiasco are known: a massive debt of 51 billion dollars (48.3 billion euros), including 31 billion in public external debt, a widening of the budget deficit due to populist tax reductions decided when the state coffers were empty, an agricultural reform that plunged the country into food insecurity and, finally, the Covid-19 pandemic, which dealt a fatal blow to the tourism sector and brought expatriates back to the country, drying up foreign currency receipts. Added to this are the consequences of the war between Russia and Ukraine. “It’s a combination of external economic shocks and policy mistakes”summarizes Ganeshan Wignaraja, from the Institute of South Asian Studies at the University of Singapore.

“A class of parasitic businessmen”

Coming out of the health crisis, the country’s financial situation was alarming enough to prompt the government to urgently request IMF assistance. But the executive, formed by the duo of the Rajapaksa brothers, preferred to continue to borrow and beg lines of credit from its Chinese and Indian neighbors, two rivals in a hurry to strengthen their hold on the Indian Ocean island.

Those responsible for the disaster are identified: the brothers Mahinda and Gotabaya Rajapaksa, respectively prime minister and president, sowed the seeds of the crisis. The eldest, Mahinda Rajapaksa, has already occupied the chair of Prime Minister between 2004 and 2005, then that of President of the Republic between 2005 and 2015. Eleven years in power, interrupted by four years in opposition, before becoming Prime minister of his younger brother, Gotabaya, elected in turn President of the Republic, in 2019.

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