Sri Lanka faces renewed economic peril from the Middle East war and a deadly cyclone, with fuel rationing, price hikes, and emergency laws testing public patience.
COLOMBO: Sri Lanka is battling to prevent a repeat of its 2022 economic collapse as the prolonged Middle East war compounds the devastating impact of a deadly cyclone.
President Anura Kumara Dissanayake has imposed fuel rationing, raised fuel prices by a third, and increased electricity costs by up to 40% since the conflict began disrupting global energy supplies.
The panic buying of fuel has evoked painful memories of the 2022 crisis, when inflation hit 70% after Colombo defaulted on its USD 46 billion external debt.
The protests that followed toppled then-president Gotabaya Rajapaksa, who was accused of mismanagement and corruption.
The Frontline Socialist Party (FSP), which led the “Aragalaya” struggle that ousted Rajapaksa, warns Dissanayake’s administration may now face an implosion.
“We believe that a response to this economic crisis will come politically,” FSP politburo member Duminda Nagamuwa said.
He added that the government’s strong mandate has so far allowed the economic shock to be absorbed without a political explosion.
Dissanayake’s leftist JVP, or People’s Liberation Front, won a two-thirds parliamentary majority in November 2024 after his own presidential victory two months earlier.
A vendor at Colombo’s Pettah night market, Wasantha Jayalath, said he voted for Dissanayake hoping for better times but now feels the situation is deteriorating.
“We voted… thinking that a good, self-sufficient era would dawn for our country,” Jayalath told AFP.
“What we realise is that the country is going further into an abyss.”
Another trader, Priyantha Sudharshana Silva, is not blaming the administration for the crisis, citing the country’s difficult position.
Human rights lawyer Bhavani Fonseka said protests have been subdued as people are preoccupied with securing daily supplies.
“Compared to what we had in 2022… you’re not seeing that level of protest,” Fonseka told AFP.
She noted that Sri Lanka was just emerging from Cyclone Ditwah when the government imposed a state of emergency.
Fonseka warned that emergency laws granting wide powers to arrest and detain could be used to stifle popular protests, raising serious rights concerns.
Cyclone Ditwah, the worst disaster since the 2004 tsunami, killed 641 people and affected almost the entire country late last year.
The cyclone caused an estimated USD 4.1 billion in damage, according to the World Bank.
The government announced plans in December for 500 billion rupees (USD 1.6 billion) in extra spending to fund the country’s recovery from the disaster.
Colombo also secured USD 206 million in emergency financing from the International Monetary Fund (IMF) in December to deal with the aftermath.
An IMF delegation is currently in Sri Lanka to review its four-year USD 2.9 billion bailout loan before releasing a USD 700 million instalment.
Sri Lankan authorities have said they may ask the IMF to modify the loan’s austerity conditions given the worsening economic circumstances.
