Sri Lankan President Gotabaya Rajapaksa on Saturday was brought down by the protestors, who stormed his official residence in Colombo, forcing him to flee the island nation. Speaker Mahinda Yapa Abeywardena, following an all-party meeting, has confirmed Gotabaya will step down on Wednesday, paving the way for the formation of a new government.
Along with Gotabaya, Prime Minister Ranil Wickremesinghe has also offered to resign from his position. "Under the acting president, the present parliament can appoint a new prime minister and an interim government... Afterward, under a set time, an election can be held for the people to elect a new parliament," said a letter released by the Speaker's office.
Sri Lanka, since its independence in 1948, has been facing its worst economic crisis, which has led to a shortage of most of the essential commodities in the country, including fuel, medicines, and food. Prices have also reached an all-time in the island nation which has filled people with anger against their government.
This crisis has left people wondering whether the island nation is on the verge of another civil war. But for this, we will have to look at what led to the economic crisis in Sri Lanka and why the government has failed to control it:
The Sri Lankan government in 2015 was warned about certain risks - hot money, worrying borrowing practices, superficial quick-fixes, and monopoly of Foreign direct investment flow - by the Institute of Policy Studies of Sri Lanka.
However, WA Wijewardena, former Deputy Governor of the Central Bank of Sri Lanka, believes that the government at that time failed to address those concerns, leading to confusion in the island nation.
Later, the Sri Lankan government carried out several reforms, including an automatic fuel pricing formula, that reduced several risks. However, most of these reforms were reversed in 2019 by the new government led by Gotabaya Rajapaksa.
Gotabaya's government further cut taxes, increasing the budget deficits. According to reports, there was a 33.5 per cent decline in registered taxpayers following the tax cuts. This led to a massive loss of revenue for the government following which it started printing money, a move criticised by the International Monetary Fund (IMF).
Sri Lanka's foreign debt also increased to USD 56.3 billion in 2020, worsening the situation further. By the end of this year, Sri Lanka would need to pay USD 4 billion to debtors, but its reserves stood only at USD 2.3 billion in April, as per Reuters.
THE ADVENT OF COVID-19 PANDEMIC
The beginning of the COVID-19 pandemic further deepened the crisis for Sri Lanka. The subsequent lockdown in the island nation and other parts of the world battered the country's economy, leading to unrest among people, who started protesting against the government.
With the situation going out of their hands, the Rajapaksas declared a temporary state of emergency in April, giving security forces powers to arrest and detain suspects. However, two days later, the entire Sri Lankan cabinet resigned, isolating the Rajapaksas.
Few days later, a protester was shot dead, leading to clashes in various parts of the country. Later, the government issues a shoot on sight order, but protesters defy the curfew imposed by it.
RESIGNATIONS AND PRESIDENT FLEES COUNTRY
In May, Prime Minister Mahinda Rajapaksa resigned from his position, few days after his residence was attacked by the protesters. After this, Ranil Wickremesinghe was appointed as the new premier, but he too has offered to resign from his position.
On Saturday, President Gotabaya Rajapaksa, who has reportedly fled the country, has also announced that he will resign from his position on Wednesday.
WHAT's NEXT?
It's tough to say what will happen next in Sri Lanka, which is going through its worst economic crisis. With the resignations of the President and the Prime Minister, experts have called the situation "dicey" and warned of a "power vacuum" in the island nation.
"If a clear transition is not put in place the president and prime minister's resignation will create a power vacuum that could be dangerous," political analyst Kusal Perera was quoted as saying by Reuters. "The Speaker can appoint a new all-party government but whether they will be accepted by the protesters remains to be seen."