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1 1 (July 11, 2022)

handle is hein.crs/govehyw0001 and id is 1 raw text is: Congressional ____ Sa Research Service Sri Lanka in Crisis July 11, 2022 Sri Lanka is in the midst of an economic and political crisis that may have far-reaching ramifications for the country's political development and regional relations. Flawed agricultural policies (see below), a tax cut, limited foreign exchange, declines in remittances and tourism, and the increasing costs of food and fuel in part due to the war in the Ukraine all arguably contributed to the current crisis. Mass demonstrations protesting the government's inability to alleviate food, fuel, and medicine shortages and address power cuts culminated in protesters storming the presidential palace and the prime minister's residence on July 9th. President Gotabaya Rajapaksa fled to Male', Maldives, and then Singapore, and formally resigned on July 15. There are reports the U.S. Government rejected Gotabaya's recent visa request. The Parliament announced it would convene on July 16 and select a new president within a week. Prime Minister Ranil Wickremesinghe, now also acting president, announced a state of emergency and imposed a curfew in the country's western province, including Colombo, following Gotabaya's departure. Wickremesinghe has stated he will resign once a new government is in place. The Economic Crisis Sri Lanka defaulted on its debts for the first time in May 2022, and the government informed creditors it would not make payments until it was able to restructure its debt. Sri Lanka reportedly owes $51 billion, with $7 billion due in 2022. Sri Lanka's largest external creditors are the Asian Development Bank (13%), Japan (10%), China (10%), and the World Bank (9%). Some analysts forecast that Sri Lanka's economy will contract by more than 6% in 2022, while the World Food Program estimates that over 22% of the population are food insecure. Inflation reached a year-on-year record of over 50% in June 2022. Rajapaksa had banned imports of synthetic agrochemicals, including chemical fertilizers and pesticides, as part of a policy to move Sri Lanka to organic agriculture without a transition period. This, and fuel shortages, led to an estimated decrease in agricultural yields of 20% and 70% for the growing season ending in March 2022. Remittances from overseas workers have declined to less than half of 2019 levels, and tourism is down due to the COVID-19 pandemic. Media reports suggest some Sri Lankans, particularly ethnic Tamils, are fleeing the country for destinations such as India and Australia, raising the prospect of a new refugee crisis. Congressional Research Service https://crsreports.congress.gov IN11969 CRS INSIGHT Prepared for Members and Committees of Congress

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