The news is not good. The crisis is dragging on.
The latest news is that the government has suspended foreign debt repayments, in effect defaulting on its loans. This is disastrous for its credit rating and means that it will be charged higher interest rates if it tries to borrow money in the global markets. Its only hope is for loans from international agencies like the International Monetary Fund, the World Bank, the Asian Development Bank, and countries like India and China. All of them are likely to make demands that, while maybe enabling the government to import fuel and food and in the short term ameliorate the suffering that has caused such widespread anger, will likely create other problems in the long term. These multinational agencies like the IMF, WB, and the ADB are run on neoliberal principles and they are likely to demand cuts in spending on the country’s public educational system (that has produced very high literacy rates of over 90%) and the national health system (which has resulted in good health outcomes and life expectancy of over 77 years, higher than many countries with larger per capita GDPs.)
The new governor of the Central Bank has almost doubled interest rates from 7.5% to 14.5% in an effort to curb the soaring inflation caused by the previous governor authorizing the printing of huge amounts of money to fund the government, and has vowed to act independently.
All 26 cabinet members had resigned in order to give the president Gotabaya Rajapaksa and his brother Mahinda Rajapaksa the freedom to form a new cabinet though it is not clear how that is going to help. The opposition has refused to join a so-called national unity government, feeling that this is a ruse to share the government’s mismanagement with them. A new bare-bones caretaker cabinet has been formed but the new Finance Minister Ali Sabry resigned after just one day and then immediately revoked his resignation. This shows how chaotic things are.
The fact that there were 26 cabinet ministers is a sign of the problem. Why should there be as so many ministers (and another 26 deputy ministers) in a parliament that has just 225 members? The answer is that cabinet positions have become items of patronage, handed out as rewards and bribes to cronies. Being a cabinet minister carries status and also brings with it many perks and privileges and opportunities for corruption. But the multiplication of ministries brings with it bloated bureaucracies and lack of coherence in government policies as they vie for influence and money.
Meanwhile 41 members of the ruling party’s 150 members have left the government, leaving it in a minority. They have not joined the opposition (yet) so there may not be a no-confidence motion that brings down the prime minister. The president is elected independently so he cannot be removed by such a vote. Sri Lankan political particles have splintered and morphed into new ones so much and so many times that there are now many small parties and coalitions get formed and reformed and alliances keep changing. There are currently 15 parties represented in parliament but the two largest are not strictly parties but coalitions that formed for the last election. This makes for instability and all manner of wheeling and dealing in the effort to create and maintain majorities.
Mass demonstrations continue throughout the country demanding that the president and prime minister also resign but they are refusing to do so. The president imposed a state of emergency and ordered curfews in order to quell the protests but the demonstrators ignored them and the president then revoked the emergency declaration.
The two Rajapaksas seem determined to stay in office while the mass demonstrations calling for them to go show no sign of ebbing. It is an impasse.