The Daily How Sri Lanka’s Economy Collapsed
Jul 14, 2022
Emily Schmall, South Asia correspondent for The New York Times, dives into the crisis engulfing Sri Lanka, where protests have led to the president fleeing and citizens overtaking his palace. She discusses the rise and fall of the Rajapaksa family’s economic strategies that initially transformed Sri Lanka into a success story. Schmall sheds light on the impact of excessive debt, mismanagement, and global challenges like COVID-19 and the Ukraine war. The conversation paints a vivid picture of a nation in turmoil and its lessons for other developing countries.
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A Family's Rise
- Surnima's son bought an auto rickshaw to transport tourists, symbolizing rising incomes.
- Surnima opened a salon and sent her children to private school, showcasing a typical middle-class trajectory.
Debt Trap
- Sri Lanka's government accumulated substantial debt through pricey short-term loans, especially from Chinese lenders.
- They struggled to repay, mirroring a maxed-out credit card scenario, taking on more debt to cover interest.
Vanity Projects
- Amidst economic growth, the Rajapaksa family used loans for projects in their home district, including a stadium and an airport.
- These vanity projects yielded no returns, raising concerns about mismanagement and corruption.