As Sri Lanka faces its worst economic crisis ever, with power outages and a shortage of essential goods leading to mass protests, its nationals have begun seeking refuge in India.
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The Indian Coast Guard on Tuesday detained six Sri Lankan nationals, including three children, all residents of Jaffna and Kokupadaiyan in the northern region of the island, who were reportedly fleeing unemployment and food shortages. They were rescued from an island near Rameshwaram in Tamil Nadu.
Sri Lanka ordered troops to gas stations on Tuesday as sporadic protests broke out among the thousands of motorists who queued daily for scarce fuel, AFP news agency reported.
Three elderly people have died since Saturday while waiting in line to get fuel, police said. Oil prices have skyrocketed during the country’s currency crisis, resulting in inflation and shortages of essential supplies.
In a move that will hurt students, the island nation has indefinitely canceled all exams due to a dire paper shortage.
Sri Lanka’s financial crisis stems from a critical shortage of foreign exchange, which has prevented traders from financing imports. The country’s tourism sector, the main source of foreign exchange, dried up during the Covid pandemic and reckless borrowing from China to finance infrastructure projects has caused debt to rise.
The 2019 serial bombing of Colombo over Easter had already hit the country’s tourism sector hard, with direct repercussions on the economy and forex reserves. The pandemic has only exacerbated the crisis.
Experts say the country’s heavy reliance on imports for its essential items is also responsible for the crisis, as it relies almost entirely on imports for its daily necessities such as sugar, pulses, grains and medicines. Shortage of foreign currency to pay import bills has also led to food shortages, they say.
China refused to help Sri Lanka, which has called for a restructuring of its massive Chinese debt burden in the face of the COVID-19 outbreak that has negatively impacted the tourism industry, the Hong Kong post reported.
India had announced a USD 1 billion credit line to Sri Lanka for the purchase of food, medicines and other essential items on March 17 during Sri Lankan Finance Minister Basil Rajapaksha’s two-day visit to India. Last month, India extended a $500 million credit line to Sri Lanka to help it purchase petroleum products.
President Gotabaya Rajapaksa has said Sri Lanka will seek an International Monetary Fund bailout to combat the crisis. He said last week that IMF aid was needed to find “a new method” to repay foreign debt and government bonds this year, with about $6.9 billion for debt service this year, AFP news agency reported.