Sri Lanka Warns Clashes at President’s Home Imperils Tourism
Inflation unrest leads to protesters clashing with police outside Sri Lanka President Gotabaya Rajapaksa’s private residence.
(Bloomberg) -- Sri Lanka’s government said the protesters’ violent clashes with police outside President Gotabaya Rajapaksa’s home were a threat to the revival of the tourism sector, appealing for calm amid widespread anger over surging costs and power cuts stemming from a foreign exchange crisis.
“Today we have a big problem with foreign exchange. One solution is to get more tourists to come. I believe the opposition wants to create a crisis and stop tourists,” Tourism Minister Prasanna Ranatunga said in a media conference to address the clashes. “In about six to seven months, we think the forex problem will begin to be resolved.”
The government was counting on a restart of tourism to build up its foreign exchange reserves after two years of Covid lockdowns at home and disruptions to global leisure travel. The sector generally accounts for about 5% of the economy.
However, tensions are on the rise after protesters on late Thursday surged past the barricades surrounding Rajapaksa’s residence and pelted stones, prompting police to fire tear gas and water cannons. Local television channels and social media videos showed the crowd screaming “Go home Gota” and demanding the resignation of Rajapaksa and his family from government.
Rajapaksa’s elder brother Mahinda serves as prime minister while Basil, the youngest, holds the finance portfolio. The eldest Rajapaksa brother Chamal controls the agriculture ministry while nephew Namal is the sports minister. These family members enjoy two-thirds majority support in parliament while the opposition remains divided. National elections will be held in 2023 at the earliest.
Stock trading was halted for the day after the bluechip index plunged 10% Friday.
Nearly 50 people were injured and protesters set fire to an army bus near the president’s home, the Daily Mirror reported. A curfew was imposed in several areas of Colombo and its suburbs, which was later lifted on Friday.
The president has not publicly commented on the clashes near his home although his office said in a statement that an organized group of extremists were among the protesters. Many of those who turned violent were arrested by the police.
The cabinet ministers at the Friday media conference echoed these comments, blaming political extremists for the clashes. “The security forces had to act, they had to stop people from walking into the president’s house,” Heath Minister Keheliya Rambukwella said.
Sri Lankans have taken to social media in recent days to criticize the Rajapaksa clan and call for people to gather in Colombo and the surrounding areas on Sunday afternoon to peacefully protest against the political situation in the country.
Rajapaksa’s government is grappling with debt obligations, limited foreign reserves and inflation which is the highest in Asia. People are queuing for hours for fuel and living with daily power cuts that stretch for more than half a day as supplies of diesel are running out and the government lacks the dollars to pay for shipments.
The government is seeking a loan from the International Monetary Fund while asking for bilateral aid from countries including China, India and Bangladesh. Sri Lanka has raised interest rates, devalued the rupee and reduced stock-trading hours in a bid to preserve electricity and foreign currency.
Sri Lanka, whose trade deficit doubled to $1.1 billion in December, had about $2.3 billion of foreign-exchange reserves in February and faces a $1 billion dollar bond repayment in July.
The IMF last month said Sri Lanka faces a “clear solvency problem” due to unsustainable debt levels, as well as persistent fiscal and balance-of-payments shorts.
©2022 Bloomberg L.P.