The announcement follows weeks of nationwide protests against the Rajapaksa family, which has dominated Sri Lankan politics since 2005; its members include both incumbent President Gotabaya Rajapaksa and Prime Minister Mahinda Rajapaksa. Despite the mass unrest and historically low popularity ratings, the Rajapaksas have so far refused to leave office. With enough legislators to resist impeachment and the tacit support of the military, the current leadership is unlikely to step down on anyone else’s terms.
Sri Lanka has long pursued economic growth through debt financing, a strategy that was largely successful from the 1970s through the early 2000s. Despite three other defaults that were quickly restructured, the country’s economy grew at a robust average rate of 4.9 percent between 1973 and 2001. At the time, Sri Lanka’s debt was more open to restructuring. Its official status as a low-income country allowed it to access to favorable loans from the International Monetary Fund (IMF) and the World Bank, and little of its debt was held by private investors or other countries.
But as Sri Lanka’s economy grew, sweetheart loans from the IMF dried up; the country ultimately graduated to middle-income status in 2019. Colombo had to convince funding agencies and private investors that it was worthy of investment. Many investors still saw the potential for high, risk-adjusted returns. In addition to its economic growth, Sri Lanka had finally entered an era of peace after a three-decade civil war that ended with a decisive government victory in 2009. Despite allegations of human rights violations by the military in the war’s waning days, most observers expected political stability to follow.
Some investors were also interested in the geostrategic returns that came from engaging with Sri Lanka’s leadership. Beginning in the early 2000s, China increased its investment with a number of ventures, including a deep-sea port and an international airport near Hambantota, the Rajapaksas’ hometown. Although the port does not move much cargo, it could serve as an important connection point for China’s Belt and Road Initiative. In 2017, Beijing offered to buy control of the port, helping Colombo to address some of its balance of payment issues. (Contrary to popular belief, China did not forgive its loans to Sri Lanka in return.) The airport, on the other hand, has simply lost money.
Meanwhile, the Rajapaksa leadership pushed policies that have weakened Sri Lanka’s already precarious economic standing. Upon returning to power in 2019, the Rajapaksas announced plans to transition the country to organic farming in 10 years. Gotabaya Rajapaksa advocated a ban on synthetic fertilizers and pesticides, catching farmers unprepared and leading to record agricultural production declines. Despite inheriting the looming debt crisis, the Rajapaksa government also cut taxes while increasing spending, including subsidies for farmers. The pandemic made matters worse, decimating the vast tourism industry and weakening remittance flows as many Sri Lankans returned home from overseas jobs.
In response to the economic calamity, Sri Lanka’s diverse political and ethnic groups have united in opposition to the Rajapaksa government. Facing such daunting prospects, many political leaders would have stepped down by now. In fact, the rest of Sri Lanka’s cabinet resigned under public pressure on April 3, including several members of the Rajapaksa family. But Gotabaya and Mahinda Rajapaksa remain at the helm, seemingly with the support of the military and the police, which have kept protesters at bay.
The military is not likely to turn on the Rajapaksas for two reasons. First, Sri Lanka is not a garrison state. The army is powerful, but it respects civilian government—making Sri Lanka different from other countries in the region. Second, the Rajapaksas have deep connections with Sri Lanka’s military. When Mahinda Rajapaksa became president in 2005, he made Gotabaya Rajapaksa the secretary to the defense ministry. As the civil war wound down, the Rajapaksas overlooked alleged human rights violations and later stopped potential international investigations, earning significant loyalty from the military.