In a press release issued on January 25, 2023, the Central Bank of Sri Lanka noted,
…the maintenance of the prevailing tight monetary policy stance is imperative to ensure that monetary conditions remain sufficiently tight to rein in inflationary pressures. Such tight monetary conditions, together with the tight fiscal policy, are expected to adjust inflation expectations downward, enabling the Central Bank to bring inflation rates towards the desired levels by end 2023, thereby restoring economic and price stability over the medium term.
An economic crisis of unparalleled magnitude hit Sri Lanka in 2022. Inflation, at 4.2 per cent in December 2020, increased to 12.1 per cent in 2021, and surged to an alarming level at 57.2 per cent in December 2022. The Sri Lankan rupee (SLR) depreciated drastically against the dollar from 181.3 in January 2020, to 190.5 in January 2021, and at 201.2 in January 2022. By December 2022, the SLR had fallen to 367.5 to the dollar. As on January 27, 2023, it is still at 364.13. Foreign exchange reserves fell from USD 2362 million in January 2022, to USD 1705 million in October 2022, but began to increase thereafter, to touch USD 1896 in December 2022.
The crisis led to severe shortages of food, medicines, electricity, fuel and other essential items for months. In the face of the collapsing economy, Sri Lankans of all ages and socioeconomic backgrounds came together in a broad-based protest movement commencing March 2022, to seek a change of leadership, accountability for corruption and economic mismanagement, and to seek more extensive reforms.
As protests intensified, the Sri Lanka Police shot dead one man, identified as Chaminda Lakshan, and injured 10 others on April 19, 2022, in the first fatal clash with demonstrators protesting the island nation’s crippling crisis. In a Tweet on April 20, 2022, the then President Gotabaya Rajapaksa declared,
Sri Lankan citizens’ right to peacefully protest won’t be hindered. @SL_PoliceMedia will carry out an impartial & transparent inquiry the incident at Rambukkana which led to the tragedy for which I’m deeply saddened. I urge all citizens to refrain from violence as they protest.
According to an April 28, 2022, report, more than 100 trade unions, including some affiliated to the Rajapaksas’ ruling SLPP party, joined the general strike, as demands grew for President Gotabaya Rajapaksa and his family members to resign.
Later, on May 6, 2022, President Gotabaya Rajapaksa declared a State of Emergency effective midnight, May 6, 2022, for the second time in five weeks, giving Security Forces (SFs) sweeping powers, as nationwide strikes demanding his resignation brought the country to a standstill.
Subsequently, the then Prime Minister (PM) Mahinda Rajapaksa’s supporters attacked nonviolent demonstrators in Colombo, forcing him to quit as Prime Minister. Following this, there was widespread violence against those who supported the government around the nation, which resulted in the deaths of eight individuals and the burning or damage of the homes of about 70 lawmakers.
Finally, Mahinda Rajapaksa was forced to resign on May 9, 2022. After weeks of political uncertainty, President Gotabaya Rajapaksa appointed United National Party leader Ranil Wickramasinghe as PM of an interim National Unity Government. However, the economic crisis persisted, as did the protests. On July 9, 2022, hundreds of protesters invaded and occupied the offices and the official residence of the then President Gotabaya Rajapaksa, in Colombo. Ranil Wickramasinghe’s private house was also attacked by the protestors. At least 102 people, including two police officers, were injured in clashes during the protests on July 9.
Though both President Rajapaksa and Prime Minister Wickramasinghe offered to resign, President Rajapaksa finally did so on July 13, while Wickramasinghe managed to retain power as Parliament voted him in as President on July 20. Since then, a measure of political stability has been restored, with Wickramasinghe strengthening his position within the Government, as demonstrated by his success in ensuring the passage of the budget in the Parliament on December 8, 2022. While 123 Members of Parliament voted in favour, 80 voted against, while two Members abstained.
Meanwhile, on January 4, 2023, the Sri Lankan Election Commission (EC) announced that local government elections would be held across the island in March 2023, with nominations accepted between January 18 and 21, 2023. The elections must be held before March 19, 2023, when the current term of local government bodies ends. A positive result in these elections will help Wickramasinghe strengthen his position further, while any slip up may undermine the stability to his government. Indeed, fearful that popular anger may express itself in a humiliating electoral defeat, Wickremesinghe and his government have desperately attempted to call off the polls.
The economic situation remains precarious and has the potential to derail political stability at any time.
Despite the major politico-economic upheavals, the country remained free of terrorism, though one terrorism-linked fatality was reported. On November 28, 2022, a suspect linked to the April 2019 Easter Sunday attacks, who was out on bail, was killed by unidentified assailants in Mattakkuliya in Colombo. According to the Police, the assailants had arrived in a car and killed the 38 years old suspect, whose identity is yet to be disclosed. There was no terrorism-linked fatality in 2021.
The Colombo High Court Trial-at-Bar continued to hear the Easter Sunday attacks cases filed by the Attorney General against 25 accused on 23,270 charges, including conspiracy to carry out terrorist attacks, and aiding and abetting the attack on Easter Sunday. On January 5, 2023, the Court rejected the bail request made on behalf of all 25 suspects who were in remand custody. The case is to be called up before the Court again on February 1, 2023. On September 1, 2021, a Trial-at-Bar Bench, comprising High Court Judges Damith Thotawatta (President), Amal Ranaraja and Navaratne Marasinghe, had been appointed to hear all cases related to the bombings.
Meanwhile, on January 11, 2022, a live hand grenade was found inside the premises of the All Saints Church in Borella in Colombo. Police later recovered four pistols, one revolver, two swords, a knife, and another weapon from the residence of a 76-year-old retired doctor, who was among the six persons arrested in connection with the incident. The case is still under investigation.
Further, on April 23, 2022, the Sri Lanka Navy arrested a suspect, a resident of Kuchchaweli, in possession of explosives, at Sallimunai beach, Trincomalee District.
Moreover, the threat to security from drug cartels with established foreign linkages, persisted. In over hundred incidents of drug seizures in 2022, around 350 persons were arrested. In a major incident, on December 23, 2022, the Sri Lanka Customs seized SLR 165 million worth of narcotics sent into the country from Spain, UK, Germany, Canada, and the Netherlands. Earlier, on December 14, 2022, the Sri Lanka Navy, along with the Police Narcotics Bureau and State Intelligence Service seized over 200 kilograms of Heroin and crystal methamphetamine from two multi-day fishing crafts in the deep sea, off Sri Lanka’s Southern seas. Seven suspects were arrested during the operation.
The continued respite from terrorism has been a big relief to the security establishment, even though residual challenges persisted. Indeed, in 2021, 18 organizations and 577 individuals had been blacklisted in the country for financing terrorism under the United Nations Regulation No. 1 of 2012, according to the Defence Ministry. Through an Extraordinary Gazette Notification dated August 1, 2022, the Ministry of Defence, removed six organisations and 316 individuals from the 2021 list, but added three new organisations and 55 new individuals to the list. Thus, as on August 1, 2022, at least 15 organizations and 361 individuals were blacklisted in the country. The organisations that were de-listed in the August 1, 2022, Notification included six international Tamil organizations – the Australian Tamil Congress, the Global Tamil Forum, the World Tamil Coordination Committee, the Tamil Eelam People’s Congress, the Canadian Tamil Congress and the British Tamil Forum. Of the 15 existing groups in the list five are Islamist groups that include National Thowheed Jama’ath (NTJ), Jama ‘athe Milla’ athe Ibrahim, Willayath As Seylani, Darul Adhar alias Jamiul Adhar Mosque, Sri Lanka Islamic Student Movement and Save the Pearls.
The island country is indeed going through a tough politico-economic crisis. Luckily for it, the now defeated Liberation Tigers of Tamil Eelam (LTTE) no longer pose any significant threat, though the vigil against residual elements of the outfit remains a security imperative. Moreover, though the sweeping action has been taken by SFs against persons and organised linked to the Easter Sunday attacks, and these have hit Islamist extremist elements hard, forcing them into dormancy, given their established foreign linkages, it will remain necessary not to provide any leeway, lest they create significant threats in future.