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COLOMBO, KOMPAS.com – Sri Lanka is suffering from its worst economic crisis since its independence from Britain in 1948.
Months of power outages, shortages of food, fuel and medicine have angered the public. There was a large demonstration demanding the resignation of the government which ended in Sri Lankan riots this week.
What’s wrong with Sri Lanka actually, why Sri Lanka goes bankrupt and causes Sri Lanka failed to pay its debts? The following review is quoted from AFPThursday (12/5/2022).
1. Abandoned luxury projects
In the Hambantota district, a large port has become a financial burden since it started operating, with total losses now reaching 300 million US dollars (Rp 4.4 trillion) in six years.
Nearby are other Chinese-backed luxury projects, namely a large conference center that has rarely been used since it opened, and a $200 million airport that was short on funds to pay its electricity bills.
The projects were created by the ruling Rajapaksa family, which has dominated Sri Lankan politics for nearly 20 years.
2. Unstable tax cuts
Sri Lankan Prime Minister Mahinda Rajapaksa signs documents during an oath ceremony at the sacred Kelaniya Raja Maha Buddhist temple, outside the capital Colombo, August 9, 2020. Sri Lankan PM resigned Monday (9/5/2022) in the aftermath of the severe economic crisis and large demonstrations that hit the country.-President Mahinda Rajapaksa was removed from office in 2015 over reaction to his government’s infrastructure efforts, which were ensnared by claims of corruption.
His younger brother, Gotabaya Rajapaksa, succeeded him four years later and promised economic aid and a crackdown on terrorism following the deadly Easter Sunday 2019 attacks in Sri Lanka.
Days after taking office, Gotabaya appointed Mahinda as prime minister and announced the biggest tax cut in Sri Lanka’s history, exacerbating a chronic budget deficit.
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