Ranil Wickremesinghe’s election as the President of Sri Lanka in a crucial Parliament vote on July 20, 2022, gives India an opportunity to take the lead in the foreign aid game in its neighbourhood. Sri Lanka has been facing economic turbulence since its pre-emptive default on its foreign debt obligations in mid-April this year — the mass protests in its wake eventually forcing the former President of Sri Lanka, Gotabaya Rajapaksa, to flee the country on July 12.
Deepening woes
Following the debt default and a shortage of dollars, the Sri Lankan economy is experiencing stagflation. Inflation has spiralled to over 50%, translating into higher food and fuel prices. Many families are surviving on one meal a day. The economy could contract by at least 6% in 2022. Some three-quarter of a million people are becoming the ‘new poor’. Sri Lanka’s worst economic crisis since its independence in 1948 is due to a tepid recovery from the COVID-19 pandemic, the Russia-Ukraine conflict shock and economic mismanagement under the administration of the Rajapaksas.
