In Marco Polo's eyes, "Sri Lanka is the most beautiful island".
In the Sinhalese language,
Thus, the beauty of Sri Lanka is not just a legend, but an undisputed beauty.
For example, the reputation of "the pearl floating in the Indian Ocean".
More sensational titles include "The Land of the Smiling Lotus" and "Tears of the Indian Ocean".
But at the beginning of 2022, due to the impact of the new crown epidemic, Sri Lanka has been full of "tears on the verge of bankruptcy".
Now, with the global shocks caused by the Conflict between Russia and Ukraine and the deeper depths of the world economic crisis, Sri Lanka has completely erupted into the country's biggest crisis in the 21st century.
So, sri Lanka, where the sea is not dry and rocky, why has she not been able to stop the tears of the crisis? And sri Lanka's Buddha lotus, will it bloom brilliantly?
I. The Kingdom of The Buddha Lotus was once a "model of the Third World"
Sri Lanka has more than 30 names in Chinese texts.
The first record of the exchanges between the two countries in the history of the country is found in the Book of Liang, and since then, sri Lanka's many contributions can be found in later texts.
According to historical reality, as early as 410 AD, China and Sri Lanka had a written record of mutual friendship.
The tang, Song and Yuan dynasties were more frequent in exchanges.
Today, the "Bhushi Ceylon Hill Buddhist Temple Stele" in the National Museum of Colombo, Sri Lanka, was erected when Ming Zhenghe went to the West.
According to research, the "Shijia Pit" stone stele on Qingquan Mountain in Fujian Province is
。
The Tomb of the Prince of Sri Lankan RoyalTy
As a result, in the 1950s and 1970s, its economy, society and people's livelihood were all called "development models among third world countries".
Unfortunately, in the 1980s, a 26-year-long civil war broke out.
The civil war not only slowed Sri Lanka's economic development, but also caused ethnic divisions between sinhalese and Tamils.
A total of 84,400 people died at the same time.
Sri Lankan Civil War
Since then, with the mediation of all parties, Sri Lanka has basically achieved national reconciliation and once again embarked on the road of rapid development.
But by January 2022, news of the "collapse of the Sri Lankan state" was constantly in the news.
The "bubble" behind the "rapid development" is on the verge of bursting.
Entering March, the crisis gradually deepened, and Sri Lanka was suddenly short of fuel.
During the clashes, several military and police vehicles were burned down.
Sri Lankan police used tear gas and high-pressure water guns to drive away the demonstrators.
On the evening of 1 April, Sri Lankan President Gotabaya Rajapaksa declared a state of emergency.
Since then, with the global shock of the Russian-Ukrainian conflict and the economic crisis sliding deeper, Sri Lanka has finally been unable to bear the weight of the economic crisis.
During the clashes, 7 people were killed and 231 injured.
Among them, the deceased included 2 parliamentarians.
Second, the "10 factors" caused the collapse of the Sri Lankan state?
So, what exactly caused Sri Lanka to become the first country to declare bankruptcy in 2022?
According to expert analysis, there are "10 major factors":
1. The after-effects of the "colonial economy" and the death of the "free economy"
It became a British colony in 1815.
In 1948, Sri Lanka gained independence more than 130 years later.
During the British colonial period, Sri Lanka developed into a developed agricultural country mainly because of its rich island land.
Its economy is typical of the self-sufficient agrarian economy. Subsequently, with the influx of Western colonial capital, Sri Lanka changed from a traditional self-sufficient agricultural economy to a colonial economy dominated by a plantation economy.
Since then, these three economic forms have been returned to sri Lanka as the main form of national wealth.
But the 26-year-long civil war has taken a huge toll on Sri Lanka's three traditional economic forms.
However, due to the reality of thin industry, small market and low base, Sri Lanka's economy has not essentially shed its dependence on the "plantation economy".
More realistically, the "free economic reform" that strengthens the efficient flow of factors and the effective allocation of resources has not only failed to realize the freedom of "resources" and "factors", but also failed to give birth to new, high-end and forward-looking industries.
On the contrary, under the reform of the "free economy",
The effectiveness of the "free economy" reform has not been effectively highlighted.
2. The inefficiency of the "party valve" and the "tug-of-war" of resources
Sri Lanka has a population of more than 22 million people.
However, the small island nation needs to carry such a large population, and it can also be said to be "one of the countries with a large population density per unit area".
In such a country with "fewer lands and more people", a "Buddha-nature" political operation mechanism of "two parties taking turns to govern" has been formed.
Sri Lanka, since independence, has formed the "Liberal Party" and the "United National Party leadership alliance".
Even after 2019, the ruling "Sri Lanka People's Front" and the opposition party "United People's Power" are still composed of members of the above two parties.
The two parties have very different "political values.".
Like what:
This not only undermines the interests of the investing countries, but also undermines the development efficiency of Sri Lanka.
It also wastes limited development resources.
This kind of "rip-off" economic development strategy, under the long "war of attrition", has undoubtedly made Sri Lanka's sustainable economic development gradually difficult.
3. The fragile development base is difficult to support high welfare demands
First, unrealistic high target demands, Sri Lanka's economic development indicators and goals can be said to be very high, under the condition of weak foundation is even high and far-reaching. In fact, in the context of the great development of the world economy,
Second, the long-term imbalance of the economic structure, the low-end development of Sri Lanka's pillar industries has led to the lack of competitiveness of Sri Lanka's exports.
Third, in the unbalanced development of the economy, under the constraint of the budget deficit, Sri Lanka is increasingly dependent on external resources such as foreign direct investment, foreign aid and commercial loans, and the internal "hematopoietic" function is missing.
As a result, the foreshadowing of economic collapse was laid.
4. Terrorist attacks and the severity of the new crown virus epidemic
For example, highly dependent tourism, as well as export industries.
According to publicly available data,
According to statistics, in May of that year, the number of tourists entering Sri Lanka fell by more than 70% year-on-year, and in June it fell by nearly 60%. According to the data, Sri Lanka's tourism revenue exceeded US$3.6 billion in 2019, down 17.6% from 2018.
In 2020, the COVID-19 pandemic broke out again, the global economy shrank, and Sri Lanka's economy made it worse.
According to statistics, this has led to a continuous decline in 70% of the export foreign exchange earning business of the country, and the tourism industry, which has 10% of the gross domestic product (GDP) revenue, is on the verge of collapse.
In addition, labor remittances and foreign aid inflows have shrunk sharply.
At the same time, the Sri Lankan rupee exchange rate fell sharply.
This has led to an increase in the cost of repayment of Dollar loans, which account for 60 per cent of the external debt.
5. The weight of excess debts that cannot be covered
According to publicly available data,
In Terms of Sri Lanka's debt share, about 47% of Sri Lanka's loans by the end of 2021 came from international capital markets with higher interest rates and shorter repayment periods.
China is similar to Japan, about 9%.
The Sri Lankan government's external debt is reported to be $51 billion. With the downgrading of its sovereign credit rating, it is more difficult for it to obtain financial support internationally, resulting in a vicious circle of its exchange rate, foreign exchange and so on.
With a serious imbalance in revenue and expenditure, the Crisis in Sri Lanka is naturally hard to recover.
6. Failures in responding to tax and monetary policy
In addition, there is a lack of experience in responding to crises.
For example, in November 2019, after the election of Gotabaya Rajapaksa as president, a series of economic measures were promulgated to try to solve the country's long-standing economic problems.
But I didn't expect it to backfire, and even exacerbate the crisis.
At that time, Rajapaksa cut taxes sharply.
This has made Sri Lanka, which is already unable to make ends meet, even more unable to cope with the crisis.
Like what
In this regard, Rajapaksa is not aware of the risks.
Instead, Rajapaksa predicted that "if these policies are implemented, the whole country will not only go bankrupt, but it will also become another Venezuela or another Greece." ”
In addition, there is the monetary policy of Rajapaksa.
allegedly
Rajapaksa's policies have directly accelerated inflation in Sri Lanka.
As a result, "", directly led to the difficulties in the lives of ordinary residents of Sri Lanka.
7. The global shock of the Russian-Ukrainian conflict
The Russian-Ukrainian conflict continues to ferment and has far-reaching implications.
The Russian-Ukrainian conflict has had more impact on the world landscape and the global economy than any war in recent decades.
For Sri Lanka, it is manifested in the energy crisis, the food crisis and the currency crisis.
With rising global inflation and soaring food and oil prices, this means that foreign exchange will be consumed sharply for Sri Lanka, which needs to import goods to meet its national needs. In addition, capital outflows triggered by the Fed's tightening of monetary policy have also made the situation more severe.
8. Outflows of U.S. interest rate hikes
This rate hike is the largest single rate hike since November 1994.
This is the Fed's third rate hike this year.
Logically, the Federal Reserve has greatly tightened monetary policy, further exacerbated the turmoil in the global stock market and foreign exchange market, increased capital outflows and currency depreciation in other countries to a certain extent, and promoted the appreciation of the US dollar and the return of cross-border capital to the United States, which is equivalent to "wool" in the world.
60% of Sri Lanka's loans are denominated in US dollars.
As a result, the Fed's interest rate hikes have further accelerated sri Lanka's difficulties in international financing, not only raising the threshold, but also increasing costs.
As a result, Sri Lanka was directly unable to cope with the economic crisis that was already on the verge of collapse.
9. The great power game has increased the cost of Sri Lanka's integrated economy
At present, the world is opening the prelude to the great changes that have not been seen in a century.
The power game of all parties has made Sri Lanka integrate resources to develop the economic cost of increasing, and even the development momentum will be eliminated and invisible.
Like what
In the scramble for Sri Lanka, India even in the 70s and 80s of the last century, the bracket was involved in the country's civil war.
Even at the expense of launching proxy wars.
Even more, it directly leads to the failure of some effective strategies and measures.
10. Contradictions such as the internal security environment and ethnic religions have intensified
Sri Lanka is known as a "Buddhist" country, especially the country's "Buddha Lotus", which is not only symbolic, but also represents a culture.
But in fact, the country is an "Islamic state" that does not compromise.
As a result, Sri Lanka cannot do "Buddhism" at all.
The terrorist attack directly resulted in the death and injury of 800 people.
Not only did it boost tourism, but it also caused ethnic rifts.
Sri Lanka has been inhabited for generations by Sinhalese, Tamil, Moorish (Muslim) and other ethnic groups.
Although other ethnic groups account for a relatively small proportion, the power of religious belief should not be underestimated.
Therefore, Sri Lanka lacks an environment for "cluster heating and economic development". When a crisis breaks out, a violent conflict breaks out directly.
3. Summary
In summary, even Sri Lanka in 2018 still showed the characteristics of a "vibrant" emerging economy in South Asia.
To get rid of such a crisis, some academic experts believe that Sri Lanka must think of international support, support from major powers, and deep changes in internal institutional mechanisms to get out of this round of systematic national crisis.
Finally, may the beautiful land of Buddha Lotus blossom again.