Sri Lanka: Debt restructuring and restraining dissent

October 26, 2023
Sri Lanka
Anti-government protest in Sri Lanka's capital Colombo in 2022. Photo: Supun D Hewage/Pexels

More than a year after the popular uprising in Sri Lanka that removed an autocratic president, the regime in power continues to reinforce authoritarian tendencies in implementing debt restructuring reforms.

While outright physical repression and violence against protests have retracted marginally, there are ongoing efforts to curtail fundamental freedoms of speech, association and dissent. This attack on basic human rights is attempted through a new anti-terrorism bill as well as an online “safety” bill.

The reconstitution of the ruling regime following the popular uprising has maintained the dominance of the previous Rajapaksa regime. However, the Rajapaksa-led political party has fragmented and remains weak, unable to hold any rallies with any significant public support. In turn, the ruling regime has postponed local government elections, by restraining funds to the electoral commission.

President Ranil Wickramasinghe announced at his United National Party convention, on October 21, that presidential and parliamentary elections will be held next year.

The announcement is limited, however, in terms of substantial efforts towards revitalising representative democracy.

In the background is the appointment of a Commission of Inquiry to investigate existing electoral laws and regulations within the next six months. The aim of the inquiry is to raise the electoral participation of women and young people and enable electronic voting options for citizens in the diaspora. However, the timeframe is unrealistic, given the electoral commission’s limited resources and the time required for extensive public deliberation.

There are also efforts to alter the makeup of the 225-seat parliament, which is currently elected via proportional representation. Under the changes, 160 members would be elected in a first-past-the-post election and the remaining 65 members would be appointed from National party lists and District party lists. This is a direct effort to limit the democratic process and to strengthen top down party rule.

Debt restructuring

Meanwhile, the economy is being further marketised through the International Monetary Fund’s (IMF) prescriptions for debt restructuring based on restraining state provision of public goods and services as well as social welfare.

The negotiation with the IMF is also influenced by negotiations with China in terms of debt restructuring. Most of these negotiations are hidden from public scrutiny, and the main effort is to privatise and commercialise state owned enterprises.

Social welfare cuts have exacerbated the suffering of working-class communities living with increased costs, reduced wages and a lack of jobs. A key component of sky-rocketing costs is the rising price of electricity, implemented as a “cost-recovery” policy under IMF loan conditionalities. The price hike represented nearly a doubling of electricity cost for most consumers.

In order to raise state revenues, the tax base has widened along with increased direct taxes from 20% of tax revenue to at least to 30‒40%. In addition, indirect taxes have also expanded. The government pension funds, particularly the Employee’s Provident Fund is also proposed to be deregulated, enabling more risky market exposure.

The 2024 budget, announced in September, allocated Rs 424 billion (US$1.3 billion) for Defence, Rs. 410 billion (US$ 1.2 billion) for Health and Rs 237 billion (US$733 million) for education. The budget for the Ministry of Women, Child Affairs and Social empowerment was reduced from Rs 152 billion (US$470 million) to Rs 78 billion (US$241 million).

Climate change, energy, food security

Meanwhile, several provinces in the island’s dry zone, including the northern, north-central, and eastern provinces continue to experience drought-like conditions with below average rainfall since August. Nearly 150,000 people in the north and eastern provinces lack safe drinking water. People in these former conflict zones also continue to suffer from a heavy military presence and land theft.

The wet zone in Sri Lanka’s southwest has experienced heavy rainfall, leading to floods and landslides. Despite ongoing energy and food insecurity, the government has made little effort in climate mitigation, particularly shifting from fossil fuels towards renewable energy sources.

Protests continue

Dispersed protests across the island continue against economic austerity and restraints on political protests and dissent. The main protests have targeted pension reforms and rising costs of living. Farmers in the dry zone continue to protest, demanding access to water.

According to a September 2023 report by the United Nations High Commissioner for Human Rights, the government suffers from a “continuing accountability deficit — be it for war crime atrocities, more recent human rights violations, corruption, or abuse of power”.

While civil society groups have engaged in a range of anti-war protests in solidarity with Palestine, Wickramasinghe has made comments supporting Israel. Meanwhile, former president Mahinda Rajapaksa has suggested a political solution rather than a military one, exposing the hypocrisy of ethno-nationalist political leaders who have committed acts of genocide but are attempting to regain lost credibility and power.

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