Sri Lanka’s economy on the brink of total collapse, says country’s Central Bank chief

If political stability is not restored in Sri Lanka, economy cannot be salvaged, says Nandalal Weerasinghe

Updated - May 11, 2022 11:12 pm IST

Published - May 11, 2022 09:33 pm IST - COLOMBO

Soldiers check documents of a driver at a  checkpoint in Colombo on Wednesday.

Soldiers check documents of a driver at a checkpoint in Colombo on Wednesday. | Photo Credit: AFP

Sri Lanka’s Central Bank chief on May 11 warned that the economy would “collapse completely” unless political stability is urgently restored and a new government is appointed to run the crisis-hit country.

Addressing reporters in Colombo, Nandalal Weerasinghe, who assumed charge as Governor of the Central Bank of Sri Lanka just over a month ago, said: “If there is no government in the next two days, the economy will completely collapse, and cannot be salvaged by anyone.”

Dire situation

His remarks came as a stark reminder of the dire situation of the island’s economy, crashing after a much-neglected Balance of Payments issue over the last two years led to a severe dollar crunch. The country is preoccupied with violent clashes and unrest this week, triggered by Mahinda Rajapaksa supporters who attacked peaceful protesters demanding the ruling clan’s resignation over the economic crisis.

Subsequently, Mr. Rajapaksa stepped down from Premiership, and the Cabinet stands dissolved constitutionally, with just the President at the helm and no Opposition party willing to work under him unconditionally.

The parties, civil society groups, and student organisations have come up with specific proposals that include President Gotabaya’s resignation and the abolition of executive presidency.

While the leadership is stuck, with no inclination yet of conceding ground, distressed citizens endure severe food, fuel, and cooking gas shortages as fears of starvation loom. The assault by a pro-Rajapaksa mob and the retaliatory attacks by infuriated citizens have heightened fears of further escalation in violence, even as sporadic incidents are reported.

At least eight persons were killed and about 200 were injured in the clashes. In the widespread counterattacks, arsonists torched over 100 buildings belonging to government members and burnt dozens of vehicles. They checked vehicles on the road looking for “Rajapaksa supporters”, and assaulted many, including a senior police officer. They pulled down a statue of Rajapaksa’s father and torched their ancestral home in the southern Hambantota district. An island-wide police curfew is in place, and both, military and the police have been given orders to go on the offensive to “contain riots”.

Mahinda evacuated

Meanwhile, Mr. Mahinda Rajapaksa was evacuated from Temple Trees, his official residence in Colombo, and taken to a naval base in the eastern port city of Trincomalee on May 10 for his “security”, according to Kamal Gunaratne, Secretary to the Defence Ministry. Addressing a media conference on May 11, he said: “The former PM is at the Naval Dockyard in Trincomalee. He will be there for a few more days. We will provide him with whatever security he needs and for as long as he wants.”

As violence intensified, the former Prime Minister was flown to Trincomalee, some 300 km north-east of capital Colombo, and home to Tamils, Muslims, and Sinhalese. He was not safe in the Sinhala-majority south, where he once commanded much respect and adoration. However, his son Namal Rajapaksa told AFP that his father “will not flee” Sri Lanka.

Amid fears of military rule flagged by some past and present leaders, the Defence Ministry secretary, who was a controversial top field commander during the war, said: “There is no danger of a military coup in Sri Lanka. It is very difficult to do such a thing in this country. I say it with full responsibility.”

Army chief Shavendra Silva said troops in armoured personnel carriers were deployed across the island, including in Colombo, to contain violence. “We are using Buffels (armoured cars) to carry our troops,” he told reporters, on camouflaged military vehicles being spotted in the capital.

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