There is more than one reason for Sri Lanka’s present crisis. While some are beyond the control of the Sri Lankan government, there are others that could have been prevented or anticipated and the intensity of the problem could have been reduced by implementing pragmatic measures. 

It is true that foreign exchange inflow due to tourism has severely fallen due to  two years of the pandemic. The Sri Lankan government could do nothing about this.

The decision of the government to switch over to organic farming and import organic fertilizer from China led to disastrous consequences. 

The efficacy and overall advantages of organic fertilizers over chemical fertilizers are still a matter of debate. Organic fertilizer has a low shelf life and has to be stored, packed and transported in low temperature and sealed conditions. The farmers need to be trained adequately well in handling organic fertilizers.

None of these precautions seem to have been adequately taken in Sri Lanka. No country has switched over to organic fertilizer in the massive way that Sri Lanka did.

Farming fiasco

Further, the organic fertilizer supplied by China was declared sub-standard and was rejected by the testing laboratories in Sri Lanka. However, China rejected the complaint and insisted that Sri Lanka should make the entire payment. Obviously, to keep China in good humour, Colombo paid a huge sum to China for organic fertilizer that was not used.

Due to the use of organic fertilizer, production of crops such as tea came down severely and the export of such agro products declined, contributing to Sri Lanka’s foreign exchange crisis. 

Certainly, the government of Sri Lanka should admit this mistake. But it has not done in the way that it should be done. 

Sri Lanka has been availing loans from China which amount to around 10-15 percent of its total debt at high interest. 

Since 2000, China has become the leading provider of commercial loans to Sri Lanka for infrastructure projects including the Hambantota port. About half of Sri Lanka’s foreign debt was owed to capital markets. While taking such loans, the repaying capability and the capacity to serve the debt by paying interest was not adequately planned or calculated. 

Debt burden

All the past governments in the last decade or so are responsible for making Sri Lanka debt-ridden.  Several of such loan amounts were utilized for non-revenue yielding projects. The Rajapaksa government is largely responsible for such wasted investment.

Individuals can declare themselves insolvent and run away. But countries with millions of people do not have this option and have to find a way out.

If such crises are not sorted out by good planning and governance, the consequence would be very severe. The mass protests will lead to violence. With a debt burden of more than $35 billion, there is no way Sri Lanka can repay such debt or service the debt for the next several months. 

Obviously, Sri Lanka needs support from friendly countries to tackle the present crisis. While India has responded with great speed by providing diesel and other credit, there is a limit beyond which India cannot assist Sri Lanka to overcome the crisis.

In such a situation, Sri Lanka should give up the prejudice it has developed vis-à-vis the IMF and some countries, which are rich enough to help it at this stage.

Move away from China

Sri Lanka should realize that its relationship with China has only resulted in a scenario where it has been forced to surrender Hambantota port to China and get into a debt trap. There is little common between China and Sri Lanka. Sri Lanka is a democratic country and China is a totalitarian regime. Sri Lanka has people devoted to religions such as Buddhism, Hinduism and Christianity.  

China’s gain in the bilateral relationship is much more as Sri Lanka’s location provides several strategic advantages for Beijing in military terms and transportation.

Obviously, Sri Lanka has to become closer to countries like the US, Canada and Japan and in Europe.  In today’s condition, Sri Lanka certainly needs financial and technological support which only countries like the West and Japan can provide.

This requires that Sri Lanka has to move away from depending on China.

Western countries have been accusing Sri Lanka of human rights violations unjustifiably. This issue can be sorted out by skillful diplomatic moves by the Sri Lankan government. 

Rajapaksa family concern?

There is this accusation that Sri Lanka is governed like a family concern by the Rajapaksas. This impression should be removed. What is needed now is cooperation between all political parties realizing that scoring points by one political leader or the other would be counterproductive.

Let a national government be formed and a task force appointed to guide the country to overcome the economic crisis over the next one year. Let there be an election after this period gets over. 

(The writer is a Trustee, NGO Nandini Voice for the Deprived, Chennai. Views are personal. He can be contacted at nsvenkatchennai@gmail.com)