Sri Lankan economy on the verge of collapse as troops suppress unrest

that of Sri Lanka economy It will “collapse” unless a new government is called urgently, the head of the central bank warned Wednesday, as security forces fanned out into the streets to restore order after the spasms of mob violence.

Police say nine people have died since Monday, when frustration over a dire economic crisis escalated into clashes between supporters and opponents of President Gotabaya Rajapaksa, injuring more than 200.

Opposition parties rejected Rajapaksa’s overtures for a national unity government to resolve a political stalemate and instead demanded his resignation.

Central Bank Governor Nandalal Weerasinghe said it is imperative that a new administration takes over by Friday or else the country will suffer a catastrophe.

“The economy will collapse completely and no one will be able to save it,” he told reporters.

“The country was about to lose ground when I took over a little over a month ago. I thought I could brake, but with Monday’s events the brakes no longer work. “

Shortly after taking over as head of the bank in April, Weerasinghe announced a default on Sri Lankan foreign debt of $ 51 billion, saying the country had no money to pay its creditors.

He said political stability is key to implementing the reforms needed to address Sri Lanka’s uncontrollable debt crisis and severe shortage of foreign currency to import essential goods.

Security forces largely curbed public disorder after they were deployed to impose a nationwide curfew with orders to “shoot on sight” anyone involved in looting or violence.

“If the situation is not kept under control, there could be total anarchy,” a senior security official told AFP on condition of anonymity.

– Deserted streets –

The capital Colombo was nearly deserted Wednesday except for soldiers guarding checkpoints, near the charred remains of buses that had been set ablaze by anti-government crowds.

With armored personnel carriers and a strong security presence, the Sri Lankan military chief held a press conference to deny speculation about a looming coup.

“Never think that we are trying to take power,” said Kamal Gunaratne, secretary of the Sri Lankan Defense Ministry.

“The military has no such intentions.”

A small crowd continued to defy curfew near the president’s office on the waterfront, where a protest camp had held a vigil over the past month demanding that he resign.

“We want to get out of the whole Rajapaksa clan because they are so, so corrupt. They ate in Sri Lanka like a caterpillar eating a fruit, ”activist Kaushalya Fernando told AFP.

In a tweet, Rajapaksa on Wednesday called for “all Sri Lankans to join hands to overcome economic, social and political challenges”.

But the main opposition party SJB reiterated that it will not be part of any government with Rajapaksa still president, even after his brother Mahinda resigned as prime minister on Monday.

– turning point –

For months, Sri Lankans have suffered from a shortage of essential goods, fuel and medicines during the island’s worst economic recession since independence in 1948.

The crisis entered a darker phase on Monday, when government supporters attacked protesters who had been peacefully protesting for weeks demanding the resignation of the president with sticks and clubs.

The crowd then reacted across the country, setting fire to dozens of houses of ruling party politicians.

Mahinda Rajapaksa was rescued Tuesday during a pre-dawn military operation and taken to a shipyard for security reasons after protesters attempted to storm her official residence.

Echoing the UN and EU head of rights, the United States said on Tuesday it was concerned about both the violence and the deployment of the military.

“We emphasize that peaceful protesters should never be subjected to violence or intimidation, whether by military forces or civilian units,” State Department spokesman Ned Price told reporters.

India has meanwhile been forced to deny rumors on social media – some of which used old images of Mahinda aboard a helicopter – that she was helping members of the Rajapaksa family escape.

“The Indian High Commission would like to categorically deny speculative reports in the media and social media sections about India sending its troops to Sri Lanka,” a statement read.

With vital tourism revenues torpedoed by the pandemic, Sri Lanka last month defaulted on its foreign debt, part of it stemming from Rajapaksa vanity projects built with Chinese loans.

The International Monetary Fund this week embarked on a “virtual mission” of staff-level talks about a possible bailout.

IMF head of mission Masahiro Nozaki said the lender aimed to “be fully prepared for political discussions once a new government was formed.”