Rajapaksa was due to step down on Wednesday, days after tens of thousands of Sri Lankans occupied his official residence in a stunning act of defiance as the country reached breaking point with fuel, food and medicine shortages. Prime Minister Ranil Wickremesinghe, whose home was set on fire by protesters during the weekend uprising, also promised to resign but has yet to do so and remains in hiding. Protesters accused Rajapaksa of corruption and financial mismanagement, and of running the island nation virtually out of money – especially the foreign exchange reserves it needs to pay its debt and import essential resources for its people. For months, the government has been urging Sri Lankan expatriates and overseas workers to transfer money from abroad through the country’s banking system. Foreign bank remittances are a “key pillar” of the country’s foreign exchange reserves, according to the Central Bank of Sri Lanka, but the shift to informal means of sending money and a lack of trust in the government contributed to the sharp drop in remittances from abroad. Without more foreign cash in the country’s coffers soon, food, medicine and fuel shortages could go from bad to worse. Persistent fuel shortages they have already left people unable to travel to work or take their children to school, while there are daily power outages. Food prices have risen astronomically 80 percent in June compared to a year earlier, and the United Nations has warned that the majority of Sri Lankans are skipping meals to get by. The president of the Sri Lanka Medical Association has warned people to avoid getting sick or injured because the health care system is in such dire straits. People wait in a long line with empty cylinders to buy natural gas at a distribution center in Colombo on Tuesday. Persistent fuel shortages have left people unable to travel to work or send their children to school. (Rafiq Maqbool/The Associated Press) “Sri Lanka is very cash-strapped. We have no dollars,” said Chayu Damsinghe, an economist at Frontier Research based in Colombo, the country’s capital. “We need to fix this soon or things will continue to snowball.” Damsinghe said increasing remittances abroad would be a short-term solution to the economic crisis and would help the country manage until there are longer-term solutions to its woes. “It will mean that fuel is available much more. It will mean that hospitals are able to function. It will mean that the risk of absolute food shortages will be massively reduced,” he said. WATCHES | Protesters occupy residences of Sri Lankan leaders:
Sri Lanka’s president and prime minister agree to resign as protesters storm leaders’ residences
Sri Lanka’s president and prime minister have agreed to step down amid chaotic protests with citizens storming the homes of both officials over the country’s severe economic crisis.
How do remittances help the Sri Lankan economy?
Money from abroad is often a financial lifeline for people living in lower-wage countries, providing disposable income for food, housing or even supporting a business. Governments such as Sri Lanka benefit from both the additional cash flows and, in particular, the exchange of foreign currency for local currency. But overseas remittances sent to Sri Lankan banks have declined since last fall, when the Central Bank pegged the currency, the rupiah, to the US dollar at a rate of 200 to 203 rupees to the dollar. Damsinghe said there was no rhyme or reason to the move, but it prompted people to turn to informal bank transfer services, where they could get a much better exchange rate. In the first five months of this year, the Central Bank said just US$1.3 billion in remittances from abroad, compared to US$2.8 billion in the same period last year. Two years ago, personal remittances from Sri Lanka abroad amounted to more than US$7 billion, according to figures from The World Bank. The government has tried to limit the informal remittance services offered incentives to use the banks and eventually withdrew the rupee’s exchange rate to allow it to depreciate against the dollar. It helped somewhat, but not enough. The amount of remittances recorded by the Central Bank rose in May, but remains about 34 percent less than a year earlier. LISTEN | United in protest, Sri Lankans fight a political dynasty: Nothing is foreign30:02 United in protest, Sri Lankans fight a political dynasty Economically, Sri Lanka is on fire. Residents face rising food costs, long fuel lines and half-day power outages. The country is facing record inflation and unemployment, the likes of which we have not seen in 74 years. But the crisis has united a nation long divided along ethnic and religious lines — all to oust the political family they blame for the disaster. This week, we hear from Sri Lankans who explain how their country found itself in a $51 billion debt hole and the island nation’s unprecedented protests. Featuring: Aritha Wickramasinghe, lawyer and human rights activist. Paikiasothy Saravanamuttu, executive director of the Center for Alternative Politics in Colombo.
Answer the call for help in Canada
Sri Lankans living in Canada are responding to the call to send money home, using the official banking system to do so. “There is an appeal from the government to send money through banks and I did,” said Nishadi Liyanage, who works as a sustainability reporting specialist for a Canadian mining company, noting that she is not doing so well. exchange rate and had to increase the amount it sends due to rising inflation. Liyanage, who has been watching the unrest unfold from Vancouver, said she feels like her country just can’t catch a break and sees people’s “happiness and optimism” dwindling. “We’re done going through a war and then, just when we were hoping to reconcile and move on with life, this new tragedy happens,” he said. A man buys vegetables at a market in Colombo on June 10. Food prices rose 80 percent in June compared with a year earlier, and the United Nations has warned that the majority of Sri Lankans are skipping meals to make ends meet. (Eranga Jayawardena/The Associated Press) Her family, which she describes as middle-income, is getting by, but it’s getting harder and harder. Because there was very limited fuel available for cooking, for example, Liyanage said her parents had to resort to using firewood to prepare food at times. “It’s, for them, way back in the Dark Ages.” But there are also people in the expatriate community who are reluctant to respond to the government’s appeals for remittances. Upali Obeyesekere is the president of the Canada-Sri Lanka Business Council, which represents nearly 100 members with various businesses in Canada. He said remittances from the diaspora business community are “almost non-existent” because many people believe the government has “ruined the country to a great extent”. “They don’t want to help until this government is in power,” he told CBC News, pointing to the “many accusations of mismanagement and fraud” that Rajapaksa and his cabinet have faced. WATCHES | Sri Lankans in Canada express concern about conditions back home:
Sri Lankan students in Canada show support for Colombo protesters
Sri Lankan university students Manoj Kaushalya Rathnayake in Fredericton, Shenaly Kuluppuarachchi in Winnipeg and Subitha Tharmakulasagaram in Montreal say they stand with protesters in their country’s capital, Colombo, calling for political reforms amid economic turmoil. The only way things will improve, Obeyesekere said, is for the Sri Lankan people to elect a new one. Damsinghe, the economist, agreed that the government, at least under Rajapaksa, did not “command the confidence” needed to carry out the “painful reforms” that may be required to rebuild the economy. He said some people sending money may not trust that the government is going to use the reserves wisely. Sri Lanka’s parliament is set to elect a new president on July 20.
The campaign provides care packages
Sri Lanka had sought a bailout from the International Monetary Fund. In a statement over the weekend, the IMF said it hoped for “a resolution of the current situation” so that talks could resume. Harsha Kumara Navaratne, Sri Lanka’s High Commissioner to Canada, told CBC News that his office had “many discussions” with Global Affairs Canada about the aid. In a statement, Global Affairs Canada said it provided $50,000 in humanitarian aid, through the International Federation of Red Cross and Red Crescent Societies, as an initial response to the crisis in May. Liyanage, meanwhile, is doing what she can from Vancouver. When she saw the situation in Sri Lanka deteriorating in the spring, she organized a fundraising campaign to help provide some relief to families more vulnerable than her own. Since April, the effort has raised more than $19,000 to provide care packages — including non-perishable food, soap and hygiene products — to more than 700 families. But he says he didn’t expect he’d have to keep fundraising for so long. Bags of essential goods are distributed to people in the southern Sri Lankan city of Matara. Vancouver resident Nishadi Liyanage created an online fundraising campaign to provide food and hygiene products to vulnerable people in her home country. (Submitted by Nishadi Liyanage)
