Pathmanaban, 61, rues the day he decided to head home to Trincomalee in Sri Lanka from Tiruchi in Tamil Nadu, in 2018. Now working as a waiter in a small restaurant just outside the town in the east coast of Sri Lanka, Pathmanaban says life has been very hard since he accepted the offer of repatriation.
He explained: “At least there [in Tiruchi] I could get food. There was no pressure to work so hard. I came because my children wanted me to come back…. Here, I barely make LKR 1,000 a day [About INR 225]. After buying rice and a few other essential items, there is no money left for anything else.” His reasoning explains why nearly 200 repatriated refugees are back in Tamil Nadu.
Pathmanaban, who left Tiruchi after an exit permit was issued to him, was resettled with the help of the United Nations High Commissioner for Refugees (UNHCR), the Sri Lankan government, and a non-governmental organisation. But that did not ensure him a steady job or even a livelihood. He said that while many Tamils were leaving the area, with some even heading for unknown destinations, he had decided to stay put since he was old and the idea of beginning life afresh did not appeal to him.
Two organisations handling refugees, one in Tamil Nadu and the other an international agency, confirmed Pathmanaban had been a refugee in Tiruchi. Pathmanaban was a non-camp refugee, but his wife and son had a camp registration.
In 2018, as many as 1,283 refugees headed back to Sri Lanka from India. But in Sri Lanka, they have not received much support. While some of the educated young repatriates have found work, a large majority continues to subsist on dole or leads a hand-to-mouth existence.
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In subsequent years, the numbers declined—963 (2019), 196 (2020), 96 (2021), and 208 (until April 2022). In May this year, the UNHCR suspended its cooperation with the repatriation process, upsetting the Sri Lankan Mission in India.
The lives of most of the repatriated refugees are no different from those of the lower income groups of Sri Lanka, and more so in the Tamil areas—north, east, and the plantation areas. While the north and the east were affected by the war and a hostile Sinhala state, the lot of the plantation Tamils has remained stagnant for many decades, mainly because of low wages and lack of access to education and health care.
Mealtime in a shanty in Colombo, Sri Lanka, on October 5. | Photo Credit: AP/PTI
The rising cost of transport (150 to 200 per cent), linked to the price of fuel and its availability, is forcing low-income earners to look for jobs closer home even if the wages are low. “I get about LKR 16,000 a month,” said a hotel employee in Jaffna. He works for one of the biggest chains in the business. “I send LKR 10,000 home, and somehow manage with LKR 6,000 here because the hotel gives me food,” he added.
Rising poverty
Former Minister and MP Harsha de Silva asserted in Parliament that the government had not delivered on the front that mattered: “You look at the reality on the ground. How many people are poor… poverty was only 11 per cent when Gotabaya Rajapaksa took office [as President]. Today, according to the World Bank, it is 27 per cent. According to Peradenya University, it is 40 per cent. Poverty has increased threefold. We have to acknowledge that. So, all that I am saying is I agree that reforms are necessary. I agree that government revenue must increase. But I also urge you to consider the fact that a lot of people are in absolute poverty and that they cannot spend enough to get 2,030 kcal a day.”
“It is not just the poor; even the middle class finds it difficult to make ends meet in Sri Lanka.”
It is not just the poor; even the middle class finds it difficult to make ends meet in Sri Lanka. A cursory survey of food items on a supermarket shelf reveals a sharp spike in prices: a 5 kg bag of premium basmati rice costs LKR 9,990, while normal white raw samba rice of the same weight costs LKR 2,300 (at Arpico on November 22), and a loaf of bread is close to LKR 200. The good news is that supermarket shelves are no longer empty—which is a marked improvement from April 2022. Also, fuel is available, though not in abundance.
Alarming macro picture
The economic crisis is far from over. The macro picture is still alarming: A massive depreciation of the Sri Lankan rupee (officially, 44.9 per cent versus the dollar as on November 11), worrying exposure of the two state-owned banks to government (closing in on the two trillion rupee mark), a budget deficit of 7.9 per cent, a sluggish pick-up in tea exports and tourism, the announcement about leaving the Asian Clearing Union, and the government’s inability to increase revenue fast enough despite the many steps that it has taken.
If tourism and remittances from abroad do not pick up fast enough, Sri Lanka will have to pin all its hopes on the International Monetary Fund. Remittances were $355.4 million in October 2022, up from $317.4 million in October 2021. From January to September, the central bank printed over 1,537 billion rupees, a trend that the IMF is certain to frown upon.
However, Tourism Minister Harin Fernando is upbeat and claims that tourism is picking up. “We are quite resilient. We are positive people. Sri Lanka as a nation always comes back stronger. That is what I have realised in three months [on the job],” he told a news television channel.
It is difficult to share his optimism after this correspondent spoke to a few tour operators and hoteliers in the country. “Most foreign tour groups book much ahead of coming here. Some book about six months ahead. We got nothing much this year. That is why the room rates are low now,” said a representative of a chain in the tourist town of Dambulla. “We get local tourists during weekends. On week days, things are bad,” said the general manager of a large beachfront property on the east coast. Even in Colombo, hotel rates have dropped sharply, and it appears that the competition is intense, leading to room rates dropping even further.
A few senior hands in the industry hope that foreign tourists will start trickling in from next year, once people are convinced that the political trouble in Sri Lanka is a thing of the past. “Tourists want to know if Sri Lanka is stable. If our politicians get their act together, the tourists will come,” said a tour operator in Colombo.
Mahinda’s take
Former Prime Minister Mahinda Rajapaksa told Parliament in all seriousness on November 22 that the economic crisis was because of “foreign elements. Many foreign elements were interfering in Sri Lankan affairs, he claimed, and wondered why the protests were continuing even today, when the situation was much better than what it was a few months ago.
Just four years ago, on January 8, 2018, Mahinda tweeted: “Today is the third anniversary of the incompetent government responsible for the worst debt in Sri Lanka’s history.” In effect, the debt problem always existed. Mahinda and his two brothers in power, clueless about the economy, only managed to exacerbate the problem.
In the real world though, the reasons are easier to find than the foreign hand that Mahinda talks about. For example, the Sri Lanka Retailers Association said that the small and marginal businesses and enterprises were staring at going out of business because the borrowing rates were so high, up to 34 per cent. It also said that apart from the crushing interest rate the social sector levy charged on essential items drove up retail prices higher. It was not even viable to borrow at that rate, an old-time retail store owner said.
President Ranil Wickremesinghe is clear which road to take to steady the economy—selling off state assets. “The only way in which we can raise foreign exchange is by selling off some of our enterprises for dollars so that we can at least put [$] 3 to 4 billion into the reserve to strengthen the rupee,” he told a gathering on November 4.
The Presidential secretariat in Colombo. The green patch across the waterbody was the scene of the aragalaya (people’s struggle), and beyond are two major Chinese investments: the Shangri-la hotel and the Galle Face One mall. | Photo Credit: R.K. Radhakrishnan
This is easier said than done. The last time a reputed foreign player arrived to manage Sri Lanka’s airline, it was kicked out because the political executive was unhappy that he and his entourage were not accommodated on a flight of his choice from London to Colombo.
Wickremesinghe has made it clear to foreign businessmen meeting him that he is serious about selling off some of the assets. One businessman, who was part of a delegation invited to meet the President in November, said: “It sounded more like a clearance sale. He wanted to sell off the airline, the telecom and the hotels.”
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Wickremesinghe, a shaky President who depends on another political party to push his agenda in Parliament, wants the sale to happen as soon as possible so that the IMF believes that Sri Lanka is keen on moving forward with its brand of reforms. One Minister expressed the hope that the IMF board would approve the loan by the end of the year. This appears unlikely for now.
The buzz in Colombo seems to indicate that the IMF is the panacea for all evils. Even civil society leaders parrot the line that welfare schemes for the poor are a bad idea. It is clear that the goal of securing an IMF loan is more important than addressing people’s problems. It does not need a visionary to predict what will happen when IMF conditions kick in—the poor will be affected disproportionately, as seen in many countries that have taken these loans in the past.
That can create the conditions for another protest on the part of the people. And, yet again, the reason for the people to hit the streets will remain the same—acute economic hardship. Or, in poor man’s lingo: no paang [bread] on the table.
The Crux
- Sri Lanka’s economic crisis is far from over, with a massive depreciation of the Sri Lankan rupee, a budget deficit of 7.9 per cent, and the government’s inability to increase revenue fast enough.
- If tourism and remittances from abroad do not pick up fast enough, Sri Lanka will have to pin all hope on the IMF.
- Former Prime Minister Mahinda Rajapaksa told Parliament on November 22 that the economic crisis was because of “foreign elements”.
- On the contrary, the Sri Lanka Retailers Association said that the small and marginal businesses were staring at going out of business because the borrowing rates were so high, up to 34 per cent.
- President Ranil Wickremesinghe wants the sale of public assets to happen as soon as possible so that the IMF believes that Sri Lanka is keen on moving forward with its brand of reforms.
- While the buzz in Colombo seems to indicate that the IMF is the panacea for all evils, this could create the conditions for another protest on the part of the people.
