The 22% left behind

Sri Lanka is currently negotiating debt restructuring with its creditors. Economists are worried that if these debts are not substantially reduced, the Government will have to restructure its domestic loans as well, which might lead to a banking crisis and further destabilise the nation. 

Low-income individuals who depend on Samurdhi and state provident funds, which have significant holdings of Government bonds, are among those who would be most at risk. 

Human Rights Watch stated today that the economic crisis in Sri Lanka is pushing millions of people, approximately 22% into food insecurity and poverty; endangering access to healthcare, and education through a sparse liveable wage.

Human Rights Watch conducted interviews with 20 people in Colombo in July who were trying to make ends meet despite declining salaries, inflation of over 50%, and occasionally inaccessible basic goods. Those questioned claimed to have made cuts, eating only two meals each day, and taking out loans to cover necessities like rent and energy costs. 

Many critics and policy experts attributed some of Sri Lanka’s economic crisis to Government corruption. The World Bank said that before it provides new financing, it is closely working with implementing agencies to establish strong controls and fiduciary supervision to ensure that these resources reach the poorest and most vulnerable. The IMF has sought structural reforms to address corruption vulnerabilities as well.

Between 2015 and 2019, Ranil Wickremesinghe was the Prime Minister when three measures to combat corruption were created under the Sirisena administration, none of which were made public. One is based on a 2019 national action plan that was developed after extensive consultations and is referred to as a composite anti-corruption and bribery law. 

One refers to the declaration of assets by public authorities, while the other deals with the proceeds of crime and asset recovery. While these efforts prioritised re-joining the Stolen Assets Recovery (StAR) initiative – a joint program of the World Bank and the United Nations Office on Drugs and Crime, for example, these efforts should not be forgotten, especially when now President Wickremesinghe’s clean track record is being dragged through the mud by some critics.

Leading Sri Lankan policy experts concur that Samurdhi, for all the good it accomplishes, is political, poorly targeted, and designed with significant leaks. Others claim that Samurdhi is a sizable patronage scheme that has been heavily politicised and claims that there is strong internal resistance to reform in the administration. 

In times of economic crisis, international financial institutions and governments that hold Sri Lanka’s debt or are taking part in debt restructuring negotiations are required by international law to take action to preserve human rights. In accordance with the United Nations Guiding Principles on Business and Human Rights, private creditors are required to rectify any negative effects on human rights that they may be a part of.

According to the UN, 5.7 million people in Sri Lanka require humanitarian aid, with 4.9 million of them ‒ 22 % of the population ‒ experience food insecurity, which means they do not always have access to sufficient quantities of nourishing food. 

A UNICEF poll conducted in late 2020 revealed that 36% of families had already cut back on their food consumption because of the pandemic. In a survey done in April 2022, just as the economic crisis began, that percentage quadrupled to 70 %.