In April 2022, Sri Lanka ran out of money. A series of poor government decisions, exacerbated by external shocks and high inflation globally, led to foreign exchange reserves becoming so depleted that the government was unable to afford essential imports or its foreign debt payments. As a result, Sri Lanka suffered daily power cuts of up to 13 hours, shortages of cooking gas and medical supplies, and hyperinflation that reached 73.7 percent in September 2022. Thousands of people, led by the youth, took to the streets of Colombo in April last year, launching an anti-government protest movement known as ‘Aragalaya’, the Sinhalese word for ‘struggle’. The protests reached a critical point when protesters stormed and occupied the president’s palace and other key government buildings, forcing the president to flee the country and ultimately step down on 13 July 2022.

The Aragalaya movement has continued into 2023, albeit with much smaller and far less frequent protests, primarily driven by students calling for the release of protest leaders detained in 2022. However, Sri Lanka’s precarious economic situation and the resultant impact on political stability create a fertile ground for further unrest over the coming months.

THE SPOTLIGHT ON UNIONS

In recent months, there has been a spike in strikes and protests by unions, who are vehemently opposed to certain economic policies. Incumbent President Ranil Wickremesinghe is faced with steering Sri Lanka out of its debt crisis which, for immediate purposes, means securing a loan from the International Monetary Fund (IMF). While the loan may provide Sri Lanka with longer-term financial security and ability to access essential imports, it also comes with some major strings attached. In recent months, the government has hiked personal income taxes, increased fuel prices, and begun to restructure state-owned enterprises as part of IMF-mandated economic reforms. While such reforms are ultimately likely to help secure the IMF loan, and improve the country’s foreign exchange reserves in the coming months and years, they are deeply unpopular, and have driven unionised protests across sectors in February and March 2023. The sectors most affected by strikes and demonstrations include banking, healthcare, education, rail transport and ports. While it is unclear what the ultimate cost of the unrest will be, the government reported in March 2023 that at least 17 ships en route to Colombo Port had turned back amid the protests against higher income taxes.

ELECTION-RELATED PROTESTS

Unionised protest action has also coincided with increased demonstrations by opposition parties in recent months. Sri Lanka is constitutionally obligated to hold local government elections in 2023, which could not come at a worse time for the government. Amid high living costs and unpopular economic reforms, the government is understandably reluctant to face its first electoral test under the current circumstances. Previously scheduled for 9 March 2023, the polls were postponed after the government failed to release the required funds for printing ballot papers, prompting demonstrations by opposition parties that want elections to go ahead. With elections now scheduled for 25 April, further political rallies are likely as opposition parties leverage economic grievances to drive anti-government sentiment and drum up support. There is also a potential for post-election protests in the event of a disputed poll.

SOME PROGRESS, BUT A LONG ROAD AHEAD

The focus of protests has certainly changed in 2023, as electricity supply has stabilised, and access to cooking gas, medical supplies and other goods has improved. However, the purchasing power of households remains under threat amid stubbornly high inflation that remains above 50 percent as of February 2023, and steep income tax hikes. As such, anti-government demonstrations over economic grievances will continue in the coming months, compounded by political opposition leaders looking to shore up support ahead of the local elections in April. Additionally, sporadic violent clashes will continue to occur, primarily in Colombo, while the authorities remain determined to suppress unrest and dissent. Sri Lanka faces a tough year ahead, and the government must strike a careful balance between stabilising the economy while maintaining political and popular stability in the months to come.