No food, no fuel and no jobs: the economic disaster engulfing Sri Lanka

July 20, 2022

Montana Lending

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Before the collapse of the Sri Lankan economy, Nazir, 50, spent scorching days hauling carts full of rolls of cloth, piles of coconuts and sacks of garlic through the narrow streets of the market in Pettah to Colombo.

Now dressed in a black cap, T-shirt and gray pants, Nazir sits idly in front of dozens of empty carts, listening to speeches on his mobile phone. He turns up the volume and points to the screen: “Aragalaya!referring to the popular uprising in Sri Lanka that overthrew its president last week.

On a good day, Nazir earned the equivalent of $8, just enough to feed his family of six, of which he is the breadwinner. “Now the business is dead,” he said. If he’s out of work today, he’ll go home with less than a dollar in his pocket.

Sri Lanka’s economic collapse has been blamed on former President Gotabaya Rajapaksa, who flew to Singapore after initially fleeing the country on a military plane to the Maldives as a wave of protests rocked the island nation.

Protesters were furious with the president for borrowing heavily to build China-backed projects and his eccentric policies, which included a ban on fertilizer imports.

Erratic economic management has been compounded by a drop in tourism revenue due to the coronavirus pandemic and the war in Ukraine, which has failed Sri Lanka and sent its currency plummeting.

Sri Lanka, which has run out of foreign currency, has experienced severe fuel shortages, leading to mile-long queues for petrol © Arun Sankar/AFP/Getty Images

Sri Lanka’s debt stands at $51 billion, just over half of which is owed to bilateral and multilateral lenders, including China.

The economic fallout has had devastating consequences. “My family is skipping meals,” Nazir said. “At dinner, we share pieces of bread with coconut sambal. I use firewood for cooking because there is no fuel or kerosene.

Stories like Nazir’s reverberate through the Pettah Market, which was once a teeming maze of clothing shops and stalls selling everything from the latest electronics and washing up liquid to spices and coffee.

But the half-empty streets surrounding the country’s most important market, located directly behind the port of Colombo, are an indication of a failing Sri Lanka, which has been battered by soaring prices, rising unemployment, poverty and hunger.

With foreign currency reserves depleted, the nation of 22 million has run out of money to import fuel, leading to mile-long queues at gas stations. The fuel shortage has effectively driven many people out of work and forced schools, offices and businesses across the country to close.

On the other side of the market, MT Niyas, 55, drinks his second coffee of the day at the Lucky Cool Spot, a café serving workers with buns, hot drinks and cigarettes sold individually.

His sunburned body covered from head to toe in flour, Niyas said his daily wage for carrying sacks on his back had more than halved to SLR 2,500 ($7) as the trucks stopped working. arrive, while bus fares doubled to 70 rupees.

“I’ve worked here since 1981 and it’s the worst I’ve ever had,” Niyas said. “It’s good that the former president is gone. All we ask of whoever replaces him is that we can eat three full meals a day. It can’t be that hard!

MT Nias
MT Niyas: “All we ask. . . is that we can have three full meals a day” © Antoni Slodkowski/FT

Nisham, the 26-year-old bearded owner, steps in as he clears tables for new customers, gives change and pours fresh tea: “The workers came maybe 10 times in a long day for a tea quick or to chat. Now they come maybe twice a day.

He announces dizzying price increases in the last quarter: the price of milk powder has tripled to reach SLR 3,000 per kg, while those of sugar and even tea, which Sri Lanka exports all over the world, have more than doubled.

Nisham is open about his hatred for the Rajapaksa family, which has dominated Sri Lankan politics for decades. But there’s also a hint of wounded pride, echoed in many other conversations. “We have many natural resources in our beautiful country: tea, rubber, coffee, precious stones,” he said. “We should be able to do better than that.”

He and his fellow traders complained that ghost brokers stepped in to fill the void after banks stopped lending money. A 65-year-old woman named Aruna, who sells curry leaves, said she borrowed SLR 10,000 to keep her business afloat. But she has to repay SLR 1000 per day for 12 days.

Day laborers like those at Lucky Cool Spot are among the hardest hit, but they are no exception. The World Food Program said 3 million people were receiving emergency humanitarian aid after food inflation hit 80% last month. Nearly 90% of all households skip meals or skimp to make food last longer, the organization added.

Afzal Fasehudeen, a construction engineer who came to Pettah to stock up on leeks and carrots, had no doubts who was responsible for the crisis.

“This whole disappearance was caused by massive mismanagement and a complete lack of proper planning. The Rajapaksas have started construction projects right, left and center – it’s ridiculous,” Fasehudeen said.

As the construction boom came to a screeching halt, Fasehudeen said he and many of his friends who finished college two years ago were planning to leave the country.

“My business could soon go bankrupt. I don’t want to leave, but if nothing changes in the next few months, I will try to find a job in one of the Gulf countries,” Fasehudeen said.

“Everything increases, but not income. People are angry.