This article is from the source 'bbc' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at https://www.bbc.co.uk/news/world-61028138

The article has changed 18 times. There is an RSS feed of changes available.

Version 7 Version 8
Why are Sri Lankans protesting in the streets? Sri Lanka: Why is the country in an economic crisis?
(7 days later)
Police take away a man injured in protests outside the president's office in ColomboPolice take away a man injured in protests outside the president's office in Colombo
There have been violent scenes in Sri Lanka, with mobs targeting the homes of prominent political figures including the ruling Rajapaksa family. Sri Lanka's new prime minister has announced measures to tackle the island nation's worst economic crisis since independence from Britain in 1948.
Prime Minister Mahinda Rajapaksa has resigned over the government's handling of the island nation's worst economic crisis since gaining independence from Britain in 1948. However, his brother is refusing to step down as president. Ranil Wickremesinghe has said the country's economic problems will get worse before they get better, and appealed for outside financial help.
Violent protests led to the resignation of former prime minister, Mahinda Rajapaksa, and other members of the government.
Why have people taken to the streets?Why have people taken to the streets?
Protests over rising prices and shortages flared up in early April in the capital, Colombo, and have grown in size and spread across the country. Protests over rising prices and shortages erupted in early April in the capital, Colombo, and spread across the country.
People are furious because the cost of living has become unaffordable.
Food prices started rising in late 2021, and people are now paying up to 30% more for food than a year ago. This has forced many people to skip meals.Food prices started rising in late 2021, and people are now paying up to 30% more for food than a year ago. This has forced many people to skip meals.
There are also fuel shortages and power cuts, and a lack of medicines has brought the health system to the verge of collapse. There have also been fuel shortages and power cuts, and a lack of medicines has brought the health system to the verge of collapse.
Why are the Rajapaksa family targets? Why is Sri Lanka's economy in crisis?
Protestors attempted to storm the prime minister's official residence while Mahinda Rajapaksa was inside, and have attacked Rajapaksa family houses elsewhere in Sri Lanka. Sri Lanka's foreign currency reserves have virtually run dry, and as it heavily reliant on imports, it can no longer afford to pay for staple foods and fuel.
The family has played a prominent role in Sri Lankan politics for years, occupying top positions in various administrations. The government blames the Covid pandemic, which affected Sri Lanka's tourist trade - one of its biggest foreign currency earners. It also says tourists were frightened off by a series of deadly bomb attacks on churches in 2019.
Mahinda Rajapaksa was president during the country's long-running civil war, which ended with the defeat of the Tamil Tiger rebels in 2009.
His younger brother, Gotabaya, who served as defence minister at that time, is now Sri Lanka's president.
Gotabaya has said he has no intention of quitting as president, and last week declared a state of emergency.
Two other siblings, Basil and Chamal Rajapaksa, who held key positions in government, resigned last month as the crisis in the country worsened.
And Namal, one of Mahinda Rajapaksa's sons, did the same, quitting his government post.
Why is there an economic crisis in Sri Lanka?
Sri Lanka's problems come down to the fact that its foreign currency reserves have virtually run dry. The country is heavily reliant on imports, but can no longer afford to pay for staple foods and fuel.
The government blames the Covid pandemic, which all but killed off Sri Lanka's tourist trade - one of its biggest foreign currency earners.
It also says tourists were frightened off by a series of deadly bomb attacks on churches three years ago.
However, many experts say economic mismanagement is to blame.However, many experts say economic mismanagement is to blame.
The cost of living has skyrocketed in Sri Lanka, with food costing up to 30% more than a year earlier How Sri Lanka's war heroes became villains
Much of the popular anger has been directed at the Rajapaksa family, who have held key government positions for several decades.
At the end of its civil war in 2009, Sri Lanka chose to focus more on its domestic markets instead of selling to foreign ones. So income from exports remained low, while the bill for imports kept growing.At the end of its civil war in 2009, Sri Lanka chose to focus more on its domestic markets instead of selling to foreign ones. So income from exports remained low, while the bill for imports kept growing.
Nowadays, Sri Lanka imports $3bn (£2.3bn) more than it exports every year. Sri Lanka now imports $3bn (£2.3bn) more than it exports every year.
The cost of living has skyrocketed in Sri Lanka, with food costing up to 30% more than a year earlier
The government also racked up huge debts with countries including China, to fund what critics have called unnecessary infrastructure projects.The government also racked up huge debts with countries including China, to fund what critics have called unnecessary infrastructure projects.
At the end of 2019, Sri Lanka had $7.6bn (£5.8bn) in foreign currency reserves.At the end of 2019, Sri Lanka had $7.6bn (£5.8bn) in foreign currency reserves.
However, by March 2020 its reserves had dwindled to only $1.93bn (£1.5bn). Finance Minister Ali Sabry recently said the bulk of these reserves were not useable, leaving just $50m (£40.5m) at the country's disposal. However, by March 2020 its reserves had dwindled to only $1.93bn (£1.5bn). and recently the government said there was just $50m (£40.5m) at the country's disposal.
This video can not be playedThis video can not be played
To play this video you need to enable JavaScript in your browser.To play this video you need to enable JavaScript in your browser.
WATCH: Police in Sri Lanka fire tear gas and water cannon at protesters in KandyWATCH: Police in Sri Lanka fire tear gas and water cannon at protesters in Kandy
Several populist policies have also been blamed for worsening the situation.Several populist policies have also been blamed for worsening the situation.
When he came to power in 2019, President Rajapaksa decided to offer big tax cuts. This means the government now has less money to buy foreign currency. When he came to power in 2019, President Gotabaya Rajapaksa decided to offer big tax cuts, leaving less money to buy foreign currency.
Mr Rajapaksa now admits the tax cuts were a "mistake," and Finance Minister Ali Sabry has said they resulted in an estimated loss of more than $1.4bn (£1.13bn) in government revenue. Mr Rajapaksa now admits the tax cuts were a "mistake," and Finance Minister Sabry has said they resulted in an estimated loss of more than $1.4bn (£1.13bn) in revenue.
When Sri Lanka's currency shortages became a really big problem in early 2021, the government tried to stop the outflow of foreign currency by banning all imports of chemical fertiliser, telling farmers to use organic fertilisers instead. When Sri Lanka's currency shortages became a real issue in early 2021, the government tried to stop the outflow of foreign currency by banning imports of chemical fertiliser, telling farmers to use organic fertilisers.
This led to widespread crop failures. Sri Lanka had to supplement its food stocks from abroad, which made its foreign currency shortage even worse.This led to widespread crop failures. Sri Lanka had to supplement its food stocks from abroad, which made its foreign currency shortage even worse.
An IMF report in March this year said the fertiliser ban (reversed in November 2021) had also hurt tea and rubber production, leading to "potentially substantial" export losses. An IMF report in March this year said the fertiliser ban (reversed in November 2021) had also hurt tea and rubber exports, leading to "potentially substantial" losses.
The switch from chemical to organic fertiliser resulted in widespread crop failure, exacerbating foreign currency shortages The switch to organic fertilisers resulted in widespread crop failure, exacerbating foreign currency shortages
Since then, the government has banned the import of a wide range of "non-essential" items - from cars to certain types of food and even shoes.Since then, the government has banned the import of a wide range of "non-essential" items - from cars to certain types of food and even shoes.
The government also refused to let the Sri Lankan rupee fall against other currencies, in order to boost exports. It finally did so in March 2022, and the rupee fell more than 30% against the dollar. The government also refused to let the Sri Lankan rupee fall against other currencies. It finally did so in March 2022, and the rupee fell more than 30% against the dollar.
Ranil Wickremesinghe, the new prime minister, has announced the government will have to print money in order pay salaries, which he says will lead to further depreciation of the rupee.
He's also drawn up a plan to sell off the national airline in order to raise money.
How much foreign debt must Sri Lanka repay?How much foreign debt must Sri Lanka repay?
Sri Lanka's government has racked up $51bn (£39bn) in foreign debt.Sri Lanka's government has racked up $51bn (£39bn) in foreign debt.
This year, it will be required to pay $7bn (£5.4bn) to service these debts, with similar amounts for years to come.This year, it will be required to pay $7bn (£5.4bn) to service these debts, with similar amounts for years to come.
In April, the Sri Lankan government failed to make repayments totalling $78m. Credit rating agency S&P called this a "selective default". In April, the Sri Lankan government failed to make repayments totalling $78m. It was the first time Sri Lanka had defaulted on its foreign debts since independence.
How soaring cost of living is hitting Sri Lanka hard
Why are there food queues in this Indian Ocean island?
It was the first time Sri Lanka had defaulted on its foreign debts since independence.
What help can Sri Lanka get from abroad?
Sri Lanka is seeking emergency loans of $3bn to pay for essential imports such as fuel.Sri Lanka is seeking emergency loans of $3bn to pay for essential imports such as fuel.
The World Bank has agreed to lend it $600m. India has committed $1.9bn and may lend it an additional $1.5bn for imports. The World Bank has agreed to lend it $600m.
The government is also seeking a bail-out from the International Monetary Fund (IMF), and talks on this are continuing. India has committed $1.9bn and may lend an additional $1.5bn for imports. It has also sent 65,000 tonnes of fertiliser and 400,000 tonnes of fuel, with more fuel shipments expected later in May.
The IMF has said the government must raise interest rates and taxes as a condition for a loan, which would make the country's cost of living crisis worse. The government is in talks about a bail-out from the International Monetary Fund (IMF). The IMF has said the government must raise interest rates and taxes as a condition for a loan, which would make the country's cost of living crisis worse.
Sri Lanka owes $6.5bn to China and the two are in talks on how to restructure the debt.Sri Lanka owes $6.5bn to China and the two are in talks on how to restructure the debt.
China earlier agreed to bolster Sri Lanka's foreign currency reserves by swapping the Lankan rupee for its currency, the renminbi. Since then, it has signalled its displeasure over Colombo approaching the IMF for help.China earlier agreed to bolster Sri Lanka's foreign currency reserves by swapping the Lankan rupee for its currency, the renminbi. Since then, it has signalled its displeasure over Colombo approaching the IMF for help.