Addressing Immediate and Long-Term Goals of Stability in Sri Lanka – The Organization for World Peace
Sri Lanka is currently experiencing its worst economic crisis in decades, running out of foreign exchange reserves to pay for imports of basic necessities like fuel, food and medicine, resulting in shortages of many commodities. In May, the country defaulted on its external debts and took steps to restructure it with the IMF, but was unable to resolve the crisis, unable even to pay the interest on its debts, according to PA News. The situation has been made worse by the government, made up mostly of members of the president’s family, refusing to deal with the economic crisis. This eventually led to protesters storming the presidential palace, forcing the president to resign and be replaced by a family friend.
Today, Sri Lanka is trying to recover economically through negotiations with other countries and international institutions. According Reuters, the Sri Lankan government is asking foreign oil companies to sell their products there, hoping to increase fuel supplies and bolster imports they have been unable to afford. Debts to China, which has invested heavily in Sri Lanka’s infrastructure, make up 10-20% of Sri Lanka’s total debt, making negotiations with China a key part of recovery, according to CNBC. Janet Yellen, US Treasury Secretary, said in a press conference that “I hope China will be willing to work with Sri Lanka to restructure the debt – it would probably be in both China’s and Sri Lanka’s interests”. Sri Lanka has also been involved in various talks with the IMF and World Bank to try to secure debt relief or debt restructuring assistance, but so far no results have been achieved, according to DW.
The people’s response to the economic crisis has been protest, showing their dissatisfaction with the government. These protests in particular were a good example of a peaceful way to show discontent and demand change. When protesters entered the presidential residence, it was abandoned so no one was hurt, and the protest was organized in an orderly manner so as not to cause damage to properties, according to The New York Times. Although they managed to convince the president to flee and eventually resign, the structure of government allowed the overriding problems to persist.
Overall, the government’s response to the crisis has been lacking. When it started with declining tourism, weak exports and deep tax cuts, the government refused to acknowledge the problem, according to the BBC. This denial prevented early action that could have limited the severity of its effects and allowed for faster recovery. A 2019 report found that paying down debt was the country’s biggest expense, according to the UN, after which the government could have taken steps to restructure debts or change domestic policy to better support repayment. Later, the new president was chosen by parliament rather than directly by the people, and is an ally of the previous one. Thus, he is still hated by protesters and civil unrest is expected to continue, despite some attempts to address some of the protesters’ demands, according to The New York Times.
The focus on Sri Lanka’s economic recovery also prevents the international community and the national government from responding to the immediate needs of the people. DW reported that the World Bank has refused to grant funds to Sri Lanka “until an adequate macroeconomic policy framework is in place”. While this framework is absolutely necessary, it is likely to take a long time to create, as demonstrated by the World Bank’s own study report on the establishment of a functional macroeconomic policy framework in Brazil that began in the early 1990s and continued to face challenges 10 years later. This requirement reflects a universal tension between providing aid to those who need it most and ensuring that aid is not mismanaged, as economist Anit Mukherjee pointed out in PA News. Those willing to provide aid need to find ways to ensure that aid will go to those who need it, but the current method of requiring a functioning economy before providing aid is clearly not working. in this case.
One of the main issues with how aid is currently channeled is how it is channeled, mainly through governments and for specific purposes. Because so much aid is provided by the government, it depends on the government’s ability and willingness to distribute it appropriately. However, many countries, including Sri Lanka, are in dire economic straits due to mismanagement and corruption in government, creating a roadblock where aid will not be forthcoming until the corruption is gone. not solved, but it is difficult to solve corruption without help to support the population.
We have tried to solve this problem by earmarking help for specific purposes, such as YOU SAIDfinancing small-scale agriculture. While this can help prevent aid from going to people who don’t need it, it also means that the countries providing the aid determine who needs it most, rather than getting the points. view of those affected. It can also allow rich countries to force those in need of aid to develop in a way that benefits them, as Ishaan Tharoor has accused China of doing in Sri Lanka in The Washington Post.
Direct government-to-government relations are clearly not an ideal way to help countries struggling with their own economic policies, as each government has its own interests that likely differ from those of the struggling population. On the contrary, non-governmental organizations should be at the center of the aid we provide, and there must be a balance between meeting the immediate needs of people and supporting the recovery of the economy. While ensuring that basic necessities such as food, medicine and fuel are provided to the people of Sri Lanka, incentives must also be given so that Sri Lanka continues to produce goods, both for own consumption and for export to replenish foreign exchange reserves. NGOs, especially those based in Sri Lanka who know where help is most needed, are best placed to work. They circumvent any existing corruption in government and provide local expertise that can help direct aid to where it is most needed.
There are also political reforms that can help Sri Lanka recover in the long term, by decentralizing power from those who would use it for their own gain and at the expense of the majority of the country. Increased investment in education, whether by government or by NGOs working on the ground, can provide a more diverse group with the tools to enter government, leading to greater diversity of thought and politics. Moreover, rolling back tax cuts and concentrating taxes on the wealthy will provide Sri Lanka with the revenue needed to import basic necessities and discourage any extreme accumulation of wealth that would deepen disparities.
Ultimately, we should immediately focus on addressing the urgent needs that people cannot live without, while keeping in mind the potential impact of this support on long-term economic recovery. Once more resource stability is established for the population, we can consider longer-term reforms that will help recovery and prevent future crises. However, these plans should not be required before providing aid, because those who suffer the consequences of bad government should not be punished again by being denied aid they desperately need. By working with NGOs and local leaders, the international community can help chart a course that allows economic development at a sustainable pace without exacerbating existing suffering.