BEIJING – Three dead and at least 150 injured in clashes in Colombo, the capital of Sri Lanka on the verge of bankruptcy, between militants of the ruling party and opposition demonstrators. A curfew immediately imposed throughout the country, Prime Minister Mahinda Rajapaska offered his resignation to his younger brother, the Head of State Gotabaya, effectively dissolving the executive and thus paving the way for a possible new government of national unity.
Armed with sticks and iron clubs, thousands of loyal brothers of the two brothers clashed in Colombo with the demonstrators who since last April 9 have camped in front of the residence of the president and the prime minister to ask that both leave. A deputy from the ruling party committed suicide after opening fire on two protesters who were blocking his car, killing one and seriously injuring the other. Dozens of paramilitaries in riot gear and soldiers were deployed to restore order.
In fact, for weeks in the capital and in other cities of the country, there has been a protest against the Rajapaska clan, which has been in power in old Ceylon for 17 years: there is a lack of fuel, food, medicine. Consequences of the world energy crisis caused by the war in Ukraine, combined here with the collapse of an entire economy based on tourism and which went upside down with the pandemic. But above all of the populist government’s cuts to power, of years of public spending fueled by foreign debt that led to the decrease in foreign exchange reserves in the nation’s coffers, which evaporated over the past two years, reaching just $ 50 million this week, leaving Colombo without money to guarantee the population even the most basic basic necessities.
Plunged on the brink of default, grappling with the worst economic crisis since gaining independence from the UK in 1948, Sri Lanka is desperate for help to patch up its huge $ 51 billion foreign debt. It has already held several talks with the International Monetary Fund for both immediate funding and a long-term bailout. The World Bank has so far moved: $ 600 million for essential imports. And India and China, which for years have been competing for influence on the island, are also on the move. The Chinese-led Asian Infrastructure Investment Bank is considering granting $ 100 million in emergency support to the country, Colombo’s finance minister said Sunday. Chinese loans to Sri Lanka amount to about 3.38 billion dollars, making it the main creditor: China holds 9.8% of the country’s total debt, on par with Japan. The two countries are in talks for a $ 1.5 billion line of credit and a new loan of up to $ 1 billion. But China appears to be cautious. Since January – since Foreign Minister Wang Yi visited the island – the Rajapaska government has been asking for a restructuring of the debt that its country owes to Beijing. There has not yet been an answer. Colombo has already negotiated a $ 500 million line of credit with New Delhi for oil imports and is in talks for another $ 1.5 billion to finance imports.
Over the past six months, according to central bank data, market prices for rice and wheat have doubled. Diesel prices rose 60%, leading to widespread shortages and blackouts. On April 12, Sri Lanka had to suspend the payments it owes to foreign creditors: 7 billion dollars that it should have repaid this year and another 25 billion spread over the next five years.