Leftist Tricks Won’t Fill the Stomachs of the Sri Lankan Working Class

The 2022 Economic Crisis 

In 2022, Sri Lanka plunged into its worst economic crisis since gaining independence in 1948. Rampant inflation, depleted foreign exchange reserves, and critical shortages of essential goods devastated public health, daily life, and social stability. The country, which is extremely dependent on imports for fuel, food, and medical supplies, faced an inability to meet basic needs, which caused severe nationwide shortages.

Sri Lanka’s foreign exchange reserves fell to dangerously low levels, rendering the state incapable of importing vital items like fuel, cooking gas, and medicine. Hospitals face critical shortages of medical supplies, putting the healthcare system on the brink of collapse. Essential food items, such as rice and sugar, became scarce, and when available, they were unaffordable for much of the population. At the peak of the crisis, food inflation exceeded 90%, forcing families to ration meals and endure heightened food insecurity.

Sri Lanka’s financial situation is mirrored all over the world, like in Argentina and Greece. Foreign currency remittances have dropped significantly, partly due to external factors. To meet maturing debt obligations, both foreign and domestic, the Central Bank has been forced to supply foreign currency. Following the typical approach of financially troubled states, it has issued liquidity as needed, issuing Treasury Bills, thereby expanding the monetary supply. Nothing new under the sun for weak economies strangled by international finance.

Sri Lanka’s large foreign debt only worsened the situation. By 2022, the country’s foreign debt surpassed $51 billion, and in April of that year, Sri Lanka defaulted on its external debt for the first time since independence. After two years of the state’s attempts to tackle the fiscal deficit, the outcome was inevitable. By the end of 2021, public debt had soared to 119% of GDP, and external debt had surged to over $56 billion, or 66% of GDP, making it impossible to meet debt obligations.

The social impact of the crisis was devastating. In 2022, according to the World Bank, Sri Lanka’s economy contracted by 9.2%, the sharpest decline in its history. The proportion of the population living in extreme poverty—earning less than $3.65 a day—doubled to about 25%, pushing millions into hardship. The middle class saw their savings evaporate and livelihoods disappear. Fuel shortages crippled public transportation, leaving vehicles stranded in long lines at gas stations. Frequent power outages further disrupted economic activity, affecting schools, businesses, and essential services. The tourism industry, already decimated by the COVID-19 pandemic, saw further losses, while remittances from overseas workers, another key income source, declined sharply.

The mass protests 

The economic collapse sparked mass protests demanding political change. President Gotabaya Rajapaksa was blamed for the financial meltdown and was forced to resign. Tens of thousands of workers, alongside their families, marched on the President’s House, and the Prime Minister’s residence was set on fire. The “triumphant” crowd exacted a small and pointless revenge on this despised bourgeois government.

The IMF’s bailout 

Ranil Wickremesinghe was subsequently installed as president by the ruling elite. One of Wickremesinghe’s first actions was to seek an IMF bailout to stabilize the economy. After months of negotiations, the IMF approved a $3 billion loan in March 2023 as part of a 48-month debt relief program, with the first $330 million tranche disbursed shortly afterward. Additional support totaling $3.75 billion was expected from the World Bank, the Asian Development Bank, and other lenders.

Like always, the IMF bailout came with stringent austerity conditions aimed at restoring fiscal discipline, which placed additional strain on an already suffering population. Pensions were cut, income taxes were raised by 36%, and subsidies on food and fuel were removed, further increasing the cost of living. Electricity bills rose by 65%, adding to the financial burdens of ordinary proletarians. While inflation began to subside in 2023, prices remained over 75% higher than before the crisis in 2021. The Sri Lankan rupee remained significantly devalued, still more than one-third weaker against the U.S. dollar, exacerbating the cost of imports and further pressuring household budgets.

The IMF program and accompanying austerity measures triggered mixed reactions. While the financial aid was essential for stabilizing the bourgeois State’s economy, the immediate social costs for the proletariat were steep. The working class faced worsening living conditions, rising unemployment, and weakened social safety nets. These challenges highlighted the difficulty of balancing fiscal reforms with keeping social peace. As Sri Lanka moved forward with its recovery plan, the road ahead remains uncertain, with success dependent on effective structural reforms and sustained international support.

The JVP’s “Marxist” Clown Takes the Election Crown

It is in this context that the 21st of September, Anura Kumara Dissanayake, a candidate from the Janatha Vimukthi Peramuna (JVP), a party often mislabeled as Marxist, has won the presidential election, placing this so-called “leftist” party at the helm of a bourgeois state that is oppressing the Sri Lankan proletariat. 

The JVP, like many political movements that claim leftist roots, adopts the usual rhetoric about adapting to “new knowledge” and local and global political conditions. However, this “adaptation” has meant nothing less than the abandonment of principles that were once only vaguely stated in order to sound revolutionary to the masses. In 2022, the JVP removed demagogic, revolutionary-sounding demands from its platform, like the “abolition of private property” and the “elimination of social classes,” which had previously been presented as “fundamental” to their program. These changes do nothing but highlight how a bourgeois, pseudo-working-class party must operate within a capitalist framework that it never truly challenged.

The JVP’s radicalism has gone as far as claiming to be the party willing to renegotiate the bailout package of the IMF. Nevertheless, right after the elections, the JVP assured an IMF delegation that the new government would implement the austerity and privatization measures previously agreed upon. These measures involve the elimination of more than half a million public sector jobs, increasing the electricity tariffs, and so on. The JVP may make loud statements in its electoral rethorics but it has never considered itself an alternative for the proletariat. After the JVP’s victory, the Modi administration of India congratulated them and expressed a desire for India and Sri Lanka to strengthen their ties. These ties, however, serve only to reinforce the power of the bourgeoisie in South Asia. Meanwhile, for the proletariat, poverty, exploitation, and suffering persist.  Indeed, after the talks with the IMF the JVP has stated that they had “agreed on the importance of continuing to safeguard and build on the hard-won gains that have helped put Sri Lanka on a path to economic recovery,” proving their commitment to hit the proletariat just as hard as their predecessors did.