[ CSI ] Sri Lanka (12 July 2022) – At the brink…

Previously, DPA CSI rated Sri Lanka 10/100 on 14 May 2022. Lets see how much has changed since.

Security

Sri Lanka currently do not face national security concerns. No foreign military threat, terrorism nor insurgency.

Political

Sri Lanka civilians had stormed the official residences of both President and Prime Minister of Sri Lanka since Monday (11 July 2022) as the President Gotabaya Rajapaksa got evacuated away onto a naval vessel currently at sea off Colombo. Prime Minister Ranil Wickremesinghe tweeted his resignation on Saturday (9 July 2022) however, the resignation is not official just yet.

This resulted in a leadership crisis as the country is without a leader.

Four other ministers also stepped down on the weekend in an exodus of senior officials.

Why protesters are poised to topple Sri Lanka’s government

Thousands of protesters were refusing to budge from the official residences of ‘s president and its prime minister on Monday, having occupied both homes for days. A wave of national outrage over the cost of living in the impoverished country appeared set to toppled its leaders, and the largely peaceful sit-ins of both men’s opulent homes – and the protesters’ refusal to leave – was literal and symbolic representation of the defiance.

Opposition leaders are in a deadlock over the formation of a new coalition government and were reportedly unable to agree on who will be the next President and Prime Minister. Speaker of Parliament, Mahinda Yapa Abeywardena is currently next in line as interim President should both apex leaders resign.

The current political crisis and the inability of the government to resolve any of the critical issues essentially led to DPA rating Sri Lanka having “Governmental Failure”.

Society

Sri Lanka society has basically went out of control with mass civil disobedience, with leaders’ official residences occupied by protestors and the security forces unable to dispense or end the rioting/protest.

Sri Lanka crisis: From declaring emergency to President’s resignation, here’s a timeline of events thus far

Sri Lanka is mired in a deep political and economic crisis and on Saturday the country’s president offered his resignation after being forced to flee his residence in the face of a huge crowd of protesters who eventually stormed the compound.

Wickremesinghe’s residence is set on fire. Police say he and his family were not at the scene. Rajapaksa later offers to step down on July 13, parliamentary speaker Mahinda Abeywardana says in a televised statement.

Excerpt from article from NewIndianExpress.com

However, on the bright side (dim one at that), there is no State of Emergency called at the moment.

Economics

Currently, there is nearly no supply of petrol, cooking gas or diesel. Massive power cuts is common place across the entire country and food prices had increased sharply over the past months.

Schools are closed, government offices work four days a week – and many of them work from home.

Lessons from Sri Lanka’s economic crisis

For poorer nations, there is no way out except fiscal prudence and strong leadership The visuals of Sri Lanka’s presidential palace being overrun by protesters, like the storming of the Bastille, and Prime Minister Ranil Wickremesinghe’s private residence being burnt to ashes sent shockwaves across the world.

Despite the unimaginable crisis unfolding in the country, there is no reports of high unemployment yet.

However the crisis is visible on the GDP front as the first half of 2022 GDP growth rate is at -1.6%, falling from the 2% growth of the 2nd half of 2021 according the the numbers revealed on TradingEconomics.

All these various factors would mean that Sri Lanka’s economy is currently in shambles.

Financial

Based on the latest annual inflation numbers for the June of 2022, it jumped from 29.8% to 54.6%. According to Trading Economics, this is the highest inflation rate ever recorded in Sri Lanka.

The depleted foreign exchange reserves continues to be the limiting factor while there is insufficient gold reserves in the Sri Lanka’s coffers. With debt over 100% of it’s GDP, Sri Lanka’s financial rating is a huge fail at DPA CSI’s rating of -5.

Conclusion:

With all the factors combined, Sri Lanka’s DPA Country Stability Index is rated at 0/100 : which indicates that Sri Lanka is now at the very brink of being officially a “Failed State“. The DPA CSI rating is now still at “Country In Crisis“

There is currently no end in sight for Sri Lanka’s troubles and if unemployment starts to hit the country – Sri Lanka will fall further into the abyss and into “Failed State” territory.