Millions in Sri Lanka Still Feel Pain of Economic Downturn Despite Nascent Recovery
Now, the long waits outside fuel stations have gone, markets are again stacked with food and the streets of the capital Colombo are calm.
A year after Sri Lanka’s economic collapse brought a new government, the island nation is past the worst of the crisis. But the country’s economic woes are far from over.
For many the dilemma is that while food is now available, it is unaffordable.
Costs of all basics — food, fuel, electricity, and medicines have spiraled, taking a huge toll on millions in lower income groups.
“What we see now is the most vulnerable communities struggling and still facing hardships in getting three meals a day. The socio-economic indices indicate that still the crisis is far from over and it’s a long path to recovery,” according to Bhavani Fonseka at the Center for Policy Alternatives in Colombo.
Among the scores of community kitchens that sprang up across the country last year to address the hunger crisis were those run by The Voice for Voiceless Foundation in Colombo. It continues to provide about 600 meals a day.
“There is still a huge need,” the foundation’s national director, Moses Akash, told VOA. “What we find is that with prices of electricity and other utilities having risen hugely, people have lesser money left to buy food.”
The organization has cut back its operations due to a shortage of funds and spiraling food prices, said Akash. “We now focus on giving meals to children because many were facing malnourishment as families were unable to afford items such as milk or eggs.”
The World Food Program says the crisis that the country faced last year has been alleviated but has not gone away. According to the WFP, about 17% now face food insecurity, compared with about one quarter of the population last year. That adds up to about four million people in the nation of 22 million.
“The most vulnerable cross section in terms of food insecurity are people relying on social protection assistance, unskilled workers relying on daily wages and households with lower levels of education,” Abdur Rahim Siddiqui, Country Director at the World Food Program in Sri Lanka told VOA.
However, there are signs of revival in some sectors. Tourists have begun returning to the country’s pristine beaches, bringing back jobs in a crucial industry that has long been the backbone of Sri Lanka’s economy.
On a recent visit to India, President Ranil Wickremesinghe, who took charge after protestors stormed his predecessor’s home and office a year ago, expressed optimism about his country’s economic revival.
“I have set Sri Lanka firmly on a path of economic reform and Sri Lanka is already witnessing the stabilizing outcomes of these measures and the revival of confidence both within and outside the country,” Wickremesinghe said during a recent visit to New Delhi.
Sri Lanka turned the corner after it secured a bailout package of about $ 3 billion from the International Monetary Fund in March. But while the IMF loan extended a lifeline and removed Sri Lanka’s “bankrupt” tag, it came with tough conditions that require imposing higher taxes and steep cuts to government spending and welfare programs.
The next task for the country is to restructure both its domestic and foreign debt on which it defaulted last year. With more stringent reforms still to come, there is uncertainty over what lies ahead.
“How does it impact state-owned enterprises for example? Would people lose their jobs? There are a lot of conversations now as to what the restructuring will mean for people’s pensions and savings,” said Fonseka.
Analysts say while the reforms will lead to more pain and fuel popular resentment, Sri Lanka will have to stay the course.
“The worst is seemingly over but it can come back if the present trends don’t continue, if the government of the day does not plan and execute the policies it has outlined in a judicious manner,” according to Harsh Pant, Observer Research Foundation in New Delhi.
That means that for millions, the tentative signs of economic recovery will bring little cheer in the foreseeable future.
The economic crisis was blamed on the COVID-19 pandemic and economic mismanagement by former President Gotabaya Rajapaksa’s government.
Many are also disappointed that demands for political change and accountability have failed to materialize in the country that last year witnessed its biggest street protests in decades, with anger directed at the former president and his family over allegations of corruption and mismanagement. The Rajapaksas had controlled the affairs of the country for the most part of the last two decades.
The protests ended after Rajapaksa resigned. The new president Wickremesinghe took a tough approach to the demonstrations and there is still simmering anger in the country. Many protestors were disappointed when he came to the helm.
Some question whether the practices that led to the crisis have changed.
“The demand was for a system change that would ensure greater transparency and political accountability. But has there really been change or is the new administration a new avatar of the old?” said Fonseka.
She adds that there are still many questions about accountability regarding economic crimes and corruption.