"State bankruptcy", Presidential Prime Minister resigned, where does Sri Lanka go?

Author:Look at the think tank Time:2022.07.12

Sri Lanka, known as "Indian Ocean Tears", has a recent situation full of bitter tears. After encountering the most serious economic crisis and demonstrators in the past 70 years, the country's president Gotabaya Rajapaksa and Prime Minister Vikramainha said they would resign. With the fading of the two veterans of politics, this island country with a population of 22 million people goes more and more attention.

The analysis believes that the chaos in Sri Lanka is closely related to the profound evolution of the international situation, improper domestic governance, and the long -term economic structure of the country. Its encounters also sounded the alarm for other dilemma.

Sri Lanka, who has performed well 4 years ago, why did he step by step to this situation today?

On July 9, 2022 local time, a large number of protesters gathered near the presidential palace, and the scene was chaotic. The police sprayed tear gas to dispel the protesters. Source: Surging Image

Text | Zhang Quan

This article comes from the above -Guan News APP. The original first was published on July 10, 2022. The original title was "State Bankruptcy". Presidential Prime Minister resigned. ", Does not mean looking at the view of the think tank.

揪心心

If time goes back to 4 years, the outside world may not have thought that Sri Lanka will go to this step today.

In 2018, as a dynamic emerging economy in South Asia, Sri Lanka's performance was impressive. The country's per capita GDP (GDP) is about $ 4,100, which is doubled higher than India. The employment rate and bank stability indicators are also remarkable. However, in just 4 years, the country that was prosperous in the past has "changed style", and it must not make people feel wrong.

"The current Sri Lanka is a country that has fallen into the most serious economic crisis in more than 70 years." US financial media CNBC pointed out -inflation rises to a record level, food prices have soared, foreign exchange is getting depleted, power supply and oil supply and oil supply ... Recently, it is announced that "the country has bankruptcy" means that "an unprecedented economic crisis will last at least until the end of 2023."

Under the crisis, how difficult people are. The media's lens records a worry -free scene: the mother rubbed the rice ball and mixed it with lentils and spinach. This may be the only meal she and the children. Considering that food prices rose by 80%in June, it is not surprising that embarrassment is not surprising. According to the United Nations Children's Foundation, Sri Lanka is on the edge of the humanitarian crisis, and 70%of families have reduced food intake since the beginning of the year.

In addition to food, fuel and basic drug inventory are also rapidly bottoming out. On the road, a few kilometers of queues can be seen everywhere ...

"Can't eat well" and "can't move" ... The people with limited life have continued to rise, and they refer to the leadership. Since the beginning of this year, they have repeatedly protested on the street, causing the then prime minister Maxinda Rajapaksa to step down in May. A few days later, the Prime Minister was held by Vikramainha. He also served as the Minister of Finance and led the rescue negotiations between Sri Lanka and the International Monetary Fund (IMF).

However, the Prime Minister's replacement did not turn around. On the 9th, the angry demonstrators occupied the presidential official residence, the presidential office area and the Prime Minister's palace. They jumped into the Presidential Mansion's swimming pool to swim and incinerate the Prime Minister's Palace to vent their dissatisfaction. The protests also conflicted with the police, causing at least 55 people to be injured.

Facing the strong pressure of public opinion, both presidents and prime ministers announced that they would resign, of which Gotapabaya Rajapaksa would resign on the 13th. According to the Constitution, the parliament of parliament will be president on behalf of the president, with no more than 30 days. Within 30 days, the parliamentary election members as presidents completed the remaining two -year term.

Multi -blow

From the good economic performance in the past, to the double turbulence of the political and economic fields today, why did Sri Lanka go step by step to this situation today?

Hu Shisheng, the director of the China Institute of Modern International Relations, believes that there are both external reasons for the profound evolution of the international situation and the internal factors of Rajapaksa. In contrast, the former is a more important pusher.

Hu Shisheng believes that several things have a direct impact on the economic governance of the current regime.

First, the Sri Lanka serial explosion in 2019, which caused a major incident of about 800 people and injuries, severely cracking down on the country's tourism industry. Although Rajapaksa had not yet come to power at that time, it would undoubtedly have a test of his future regaining economic pillar.

The second is the outbreak of the new crown epidemic in 2020, which combats the country's economy from multiple dimensions -not only hurts the tourism industry, but also brings a large number of foreign workers to the country, leading to a sharp decrease in overseas Chinese exchange income. The epidemic has also triggered the industrial chain to "disconnect", and the country's economy believes that the exports of tea and the mid -to -high -end textile industry are greatly affected.

Third, since the Russian conflict, global inflation has intensified and the price of food prices has soared. For Sri Lanka, which requires imported materials to meet the needs of national needs, this means that foreign exchange will be consumed sharply. In addition, the Fed's tightening of the capital outflow caused by the tightening of monetary policy has also made the situation more serious.

"These incidents can be described as three consecutive strikes on President Rajapaksa." Hu Shisheng said that in fact, since the throne of the president in 2019, Rajapaksa had obvious political advantages -he has historical achievements and historical achievements and end of the civil war. In prestige, in the parliamentary election in 2020, his People's Front Party won nearly two -thirds of the parliamentary seats with an absolute advantage. In addition, the infrastructure projects carried out for the revitalization of tourism are also being promoted. "Daji". "Originally everything was ready, only Dongfeng was owed. But in the end, Dongfeng did not wait, and the evil wind came. The political advantage failed to transform into the effectiveness of governance." On the other hand, improper economic decision -making and slow adjustment of adjustments also made The crisis is worse.

After in power in 2019, the Rajapaksa government implemented a large -scale tax cut, which led the country's annual loss of more than 1.4 billion US dollars. Another controversial policy was to try to prohibit import fertilizer, but with the large -scale apology of rice in 2021, Sri Lanka had to spend blood to buy food from overseas. In November of last year, although the fertilizer ban was revoked, it had an irreparable impact on food, tea, and rubber production.

Lin Minwang, deputy director of the South Asian Research Center of Fudan University, pointed out that the economic structure of Sri Lanka and the policy preference for "debt development" are also the cause of this crisis.

From the perspective of economic structure, Sri Lanka mainly focuses on agriculture (fishery), primary processing, and ordinary service industries. In the case of economic and waves, there is limited space, which depends on external markets. When the risk exposure opens, the accumulated debts often become the last straw that crushes the country. According to reports, the Sri Lankan government's foreign debt scale reached $ 51 billion. As its sovereign credit rating is lowered, it is more difficult to "fate" in the international market, resulting in a vicious circle in its exchange rates and foreign exchange.

"Huayuan" is difficult

The problem is that after the two leaders "let Xian", can the situation of Sri Lanka be changed? What is its domestic political situation and economic prospects?

Hu Shisheng believes that both Rajapaksa and Vikra Masinha can be called a political party. The former comes from the prominent political family, and the latter has served as the Prime Minister five times. If these two big guys are difficult to clean up the endgame, other families and power tasks can be imagined.

Hu Shisheng judged that Sri Lanka's "political shuffle" would be manifested as a few aspects: First, the prestige of the Rajapaksa family will be hit -the long half -year economic stop to the people is too deep, I am afraid that it will take a long time to take a long time. Solution. Secondly, it is more likely to be a leading position in the two parliamentary party to recommend the technical bureaucrats of non -family background among the two parliamentary party. Rajapaksa either retired behind the scenes and conspired with the governors to seek national development plans.

Lin Minwang believes that the opposition obviously wants to drive the Rajapaksa family down in one fell swoop through the economic difficulties of Sri Lanka. After he stepped down, the United States was likely to use interest as a bait, using Western -led international organizations and economic governance structures to attract Sri Lanka to serve the "Indo -Pacific Strategy".

From the perspective of economic prospects, Hu Shisheng believes that Sri Lanka has a certain economic foundation and is at an important strategic location of "Oriental Maritime Cross Road". Some infrastructure facilities have been completed and needed to "return". If you can take a breath through the external "emergency", the future sustainable development prospects are optimistic.

But now the biggest question is whether the country can have politicians who dare to bear the risk of failure, and lead the people to tighten their trousers and live the most difficult life. "The people of Sri Lanka should recognize that the more the country is in turbulence, the more the doubts of the international aid forces will increase; the longer the economic off -time time, the greater the probability of the industrial chain being transferred and replaced. Therefore, politics is undoubtedly the most important. As for the economic situation, I think it may take at least one year to slow down. "

Right now, Sri Lanka is also "self -rescue" through various ways, including considering the privatization of state -owned airlines, seeking loan assistance from some countries and international organizations, and debt reduction, and sought cheap energy supply from some countries. At present, India has promised to provide about $ 3 billion in assistance loans, credit quotas and credit swaps. The Iranian government has agreed to Sri Lanka's "installment of tea" -the repayment of oil debt by paying tea. IMF will continue to negotiate with Sri Lanka for a $ 3 billion aid plan. It is expected to reach a preliminary agreement later this summer.

Public opinion believes that the current funds that Sri Lanka can obtain is far from reaching the number of operations that the country will maintain operation in the next six months. Regardless of whether it is short -term bailout or the "comprehensive loan assistance plan" for four years, IMF may set more harsh conditions. "Help money" may become a heavy burden.

trigger the alarm

The crisis of Sri Lanka also sounded the alarm for other dilemma.

Since March, Turkey, Egypt, Tunisia and other countries have high inflation, the exchange rate has plummeted, and facing debt defaults. In early April, Lebanon announced its bankruptcy of its central bank and the central government. The situation in Latin American countries is not optimistic. Ecuador, Uruguay and many other countries in many regions of foreign debt liabilities far exceed 20%of the international security line level. Other risks listed by the Associated Press also include Myanmar, Laos, Pakistan, etc.

A report released by the United Nations Global Crisis response group last month showed that about 1.6 billion of 94 countries faced at least one aspect of the crisis of food, energy and financial systems, of which about 1.2 billion people were in the "perfect storm" country. It is very vulnerable to the crisis of life costs and other long -term pressure. "The population of high grain prices and shortage of supply may become a gunpowder barrel for political instability." Bloomberg wrote. So, will Sri Lanka trigger a Domino brand effect?

Hu Shisheng believes that some small economies have a single economic structure. If the government's own stability and control are poor, it is easy to display vulnerability under the international wind and waves. In this sense, the experience of Sri Lanka should not be a solitary case. This year, only in South Asia, there are many countries in the South Asian region. If you continue to continue, I am afraid that there will be similar situations in Europe. However, it is also necessary to see that if a country is located, its industrial chain is relatively complete, then the country is still expected to be resolved through assistance.

Some analysts point out that in response to various systemic risks, emerging economies should adjust economic structure, boost domestic demand, and improve macro -prudential policy regulation. At the same time, we should give full play to the role of multilateral platforms such as the Twenty Groups, strengthen the coordination of macroeconomic policies, and build a dyke embankment for the stability of political economy.

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