Sri Lanka’s economic collapse needs immediate global attention: UN experts

The island nation had defaulted on a debt of $51 billion by May 2022



By PTI

Published: Thu 21 Jul 2022, 8:38 AM

Sri Lanka’s economic collapse "needs immediate global attention, not just from humanitarian agencies, but also from international financial institutions, private lenders and other countries who must come to the country’s aid", explained independent UN human rights experts.

On Wednesday, they expressed alarm over record-high inflation, rising commodity prices, power shortages, crippling fuel crisis and the economic collapse in Sri Lanka, at a time when the country grapples with unprecedented political turmoil. They noted that this crisis has had a serious impact on human rights in the country.

Attiya Waris, the UN independent expert on foreign debt and human rights, said that time and again, “we have seen the grave systemic repercussions a debt crisis has had on countries, exposing deep structural gaps of the global financial system, and affecting the implementation of human rights”.

Former Sri Lankan President Gotabaya Rajapaksa stepped down on July 15, after fleeing the country, as protesters stormed key government buildings in Colombo, the capital city. On Wednesday, lawmakers elected six-time Prime Minister Ranil Wickremesinghe as Sri Lanka’s new President.

Mass protests broke out in the country in March following severe shortages of food, fuel, medicines, and other essential items, compounded by a series of ill-conceived economic reforms like tax cuts and servicing debt payments that ate into the country’s forex reserves, the UN noted.

“Prolonged disrupted access to food and healthcare has severely affected people with illnesses, pregnant women and lactating mothers who are in serious need of life assistance,” it added.

Earlier this year, as part of its continuous engagement with the authorities, UN experts urged the Sri Lankan government to guarantee the fundamental rights of peaceful assembly and expression during peaceful protests, as thousands of people gathered in front of the President’s office in Colombo, demanding his resignation over corruption and mishandling of the economic crisis.

In May, UN High Commissioner for Human Rights Michelle Bachelet condemned the violence that erupted across the country, killing at least seven people.

As foreign reserves dried up, unable to make interest payments on the loans, the island nation had defaulted on a debt of $51 billion by May 2022. After suspending all debt payments, the government took steps to restructure the country’s debt with the International Monetary Fund (IMF). In June, IMF staff noted that significant progress had been made on the staff level arrangement on the Extended Fund Facility.

“Any response towards mitigating the economic crisis should have human rights at its core, including in the context of negotiation with the IMF,” said Attiya Waris.

The UN experts noted that the issue of rising institutional debt had been flagged in a previous visit report to Sri Lanka in 2019. It showed that debt repayments were the country’s largest expenditure, and emphasised the need for complementary alternatives and the pursuit of less-harmful policy options.

In July 2022, inflation in the country hit a record high of 54.6 per cent while food inflation rose to 81 per cent.

The snowballing economic and debt crises were ultimately deepened by the government’s hasty and botched agricultural transition. Under such conditions, the World Food Programme launched an emergency response warning that nearly 62,000 Sri Lankans were in need of urgent assistance.

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