"All day on July 9, from morning to night, the cries of 'Gota come home' could be heard coming from the direction of the president's residence." Yang Shiyuan, a Chinese who has lived in Colombo, the capital of Sri Lanka for 12 years, told the first financial reporter.
Gotha refers to Sri Lankan President Gotabaya Rajapaksa. On the 9th, more than 100,000 people gathered outside the presidential residence, demanding his resignation, and finally broke through the police cordon and entered the presidential residence.
According to Xinhua News Agency, the Sri Lankan Speaker's Office confirmed on the evening of the 9th that President Gotabaya has informed Speaker Abevadna that he will resign on the 13th of this month.
Sri Lanka is experiencing its worst economic crisis since its founding, and the ongoing economic crisis has sparked protests in Sri Lanka, which has led the opposition to attack the ruling Rajapaksa family.
Lin Minwang, a researcher at the South Asia Research Center of Fudan University, told the first financial reporter that Gotabaya left in a hurry and the situation was out of control, which was indeed a surprise. In the future, the opposition is expected to come to power through elections, which is conducive to easing political turmoil, but it remains to be seen whether it will be able to alleviate the current economic difficulties.
Fled in a hurry
Yang Shiyuan's home is near the presidential residence. She told the first financial reporter, "The weekend in Colombo is generally deserted, and there are few pedestrians on the road." However, the Saturday of the 9th is very different.
She followed the sound downstairs to find that even the coffee houses with blackouts were full of people, many carrying Sri Lankan flags, and it was obvious that they were the crowd that had come to participate in the protests. On the road, people marched while shouting "Gota go home", and even children joined the shouting line. Although the crowd was mixed, there was no riot or smashing, and everyone pointed the finger at Gotabaya.
Finally, at about 1 p.m., the people surrounding the presidential residence broke through the barricades and rushed into the presidential residence, but Gotabaya was not included at the time. According to a source in Sri Lanka's Ministry of Defense, Gotabaya was actually moved to a safe place on the 8th.
The people who rushed into the presidential residence were not discouraged, but used it as a playground. Some people took photos all over the mansion, some rushed into the kitchen to "sweep" food, some lay on the bedroom bed to rest, some worked out in the gym, some people swam in the outdoor pool, played football on the lawn, and some protesters and people even simulated officials "meeting" in the main conference room of the official residence.
On the afternoon of the 9th, Sri Lankan Prime Minister Vikramasinghe called for an emergency political party meeting to discuss the current situation and seek a solution. According to opposition lawmaker De Silva on social media, most party leaders demanded that the president and prime minister resign immediately and form an interim government with the participation of all parties as soon as possible.
On the evening of the 9th, the news came that Gotabaya was willing to resign. Yang Shiyuan told the first financial reporter that she walked on the road and saw that people were filled with a joyful atmosphere with each other, and everyone seemed to be celebrating victory.
Under Sri Lankan law, if the president resigns, the prime minister would have taken over as the first in line to succeed him. However, the Prime Minister's Office also said in a statement on the 9th that Vikramasingha will resign to facilitate the formation of a new government with the participation of all parties.
This means that in just a few hours, the president and the prime minister have announced their resignations. According to the Constitution, the Speaker of the House will then act as President for no more than 30 days.
Vikramasinghe's previous prime minister was Mahinda Rajapaksa. On May 9 this year, due to popular protests against soaring prices and the lack of basic necessities, mahinda Rajapaksa, then prime minister, submitted his resignation to his brother President Gotabaya on the 9th. The Rajapaksa family is a prominent political family in Sri Lanka, and most of its family members are active in politics and hold important positions.
Lin Minwang told the first financial reporter that the opposition has attacked the ruling Rajapaksa family due to economic problems and wants to drive them out of Sri Lankan politics, and now the opposition has basically achieved its goal and is expected to ease sri lanka's political turmoil.
Foreign Ministry spokesman Zhao Lijian said at a regular press conference on June 30 that as a traditional friendly neighbor, China has always paid close attention to the difficulties and challenges facing Sri Lanka, and has been feeling this and has been helping Sri Lanka's economic and social development within its capabilities.
The biggest crisis since independence
Vikramasingha told Sri Lanka's parliament on July 6 that the country was bankrupt. "We are now negotiating with the International Monetary Fund as a bankrupt country, and that is both a fact and a reality, and next year will be quite painful, and it may not get better until 2024," he said.
The Sri Lankan government said on May 19 that it was in a default for the first time since independence in 1948 because it could not pay creditors. Sri Lanka thus became the first Asia-Pacific country to default on its foreign debt since the 21st century, according to bond rating agency Moody's, the last time that happened was Pakistan in 1999.
Debt defaults damage a country's reputation, making it harder to borrow much-needed money in international markets in the future. Sri Lanka is well aware of this, but defaulting is a no-brainer. "Today, the Treasury is looking for $1 million is a challenge." Vikramasingha said on May 16.
Yang Shiyuan often goes to a coffee shop for coffee on weekdays, and she soon finds that Sri Lanka's predicament has been mapped to this small shop. The coffee shop's paper cups need to be imported, but due to the lack of foreign exchange, the coffee shops have recently been unable to provide paper cups, and can only take the cups with them and drink them. Yang Shiyuan thought, this is good, no paper cup saving and environmental protection.
But in July, she found that there were no sugar packets left in the coffee shop. Due to the extreme lack of foreign exchange, it is difficult to import the energy, food and medicine that the people so desperately need, and the demand for "luxury goods" such as paper cups and sugar packets must be left on the sidelines.
Meanwhile, the Sri Lankan rupee has fallen to historic lows. Yang Shiyuan told the first financial reporter that foreigners in Slovakia, including Chinese, everyone's business is now very miserable, and it has also superimposed exchange rate losses. She gave an example to reporters that last year's 1 million rupees could be exchanged for 40,000 yuan, but now it is only about 18,000 yuan, making her work in the business travel service industry suffer heavy losses.
If foreigners are worried about business, Sri Lankans are more anxious about survival. The United Nations World Food Programme (WFP) said a few days ago that "in the face of record food price inflation, soaring fuel costs and commodity shortages, some 6.26 million Sri Lankans, or 30% of the country's households, have not eaten three meals." Inflation in Sri Lanka reached a record 54.6% in June and is expected to rise to 70% in the coming months.
Sri Lanka was once a middle-income country that was the envy of neighboring South Asian countries.
Lin Minwang told the first financial reporter that in the long run, Sri Lanka's economic policy has indeed made mistakes, paying too much attention to large-scale infrastructure construction, and neglecting to promote the development of the foreign exchange-earning industry. In the short term, mainly affected by the outbreak of the epidemic and the Conflict between Russia and Ukraine, tourism and overseas remittances, which were the bulk of Sri Lanka's foreign exchange earnings, have now decreased significantly.
To alleviate the post-pandemic foreign exchange shortage, Sri Lanka announced in April 2021 a ban on the import of fertilizers, pesticides, herbicides and fungicides in order to reduce foreign exchange outflows and implement organic agriculture. However, the ban led to a massive agricultural crop failure in Sri Lanka, which forced high prices to buy grain from abroad to replenish reserves, which only exacerbated the foreign exchange shortage.
Some economists warn that the crisis in Sri Lanka is a wake-up call for other developing countries, especially those with weak economic foundations and high external dependence, which are at greater risk. Especially after the Fed started the interest rate hike cycle, capital outflows from emerging market countries are inevitable.
Back in April, IMF President Kristalina Georgeva warned the Fed and other rate-raising central banks to "be mindful of spillover risks to fragile emerging and developing economies." The IMF also said in a report the same month that 60 percent of low-income developing countries are either already in debt crisis or at high risk of debt crisis.