Won the battle, yet to win the war

The ninth will forever be preserved as an auspicious date on the Sri Lankan calendar. From Mahinda and Basil Rajapaksa’s step down, to the May turmoil that unfolded, the Aragalaya has for the most part been successful on the 9th. Its latest victory was the resignation of President Gotabaya Rajapaksa. However political and civil leaders of Sri Lanka have to now discuss the way forward for the country following the announced resignation of the helm amid the worst economic crisis. Chinese observers have called on global financial organisations to coordinate creditors to speed up debt restructuring, disregard party politics first and establish an emergency response mechanism to prevent more sovereign debt defaults such as Zimbabwe and Argentina that led to further economic crises. 

Thus, the ongoing Sri Lanka crisis reflects a common challenge faced by many developing economies, especially those which have a single economic structure and are deeply affected by the Russia-Ukraine conflict and other South Asian countries like Nepal and Maldives should be on the alert, observers noted. They also warned that globally, African countries like Zimbabwe and Latin American countries like Argentina and Brazil are all at risk of following Sri Lanka into a major economic crisis.

Ranil Wickremesinghe called for an urgent meeting with his cabinet on Monday and will also meet leaders of all political parties to discuss the way forward. Wickremesinghe has also agreed to resign. The leadership responsible for the default being out of the chair, is likely to be regarded as a positive development, although discussion of some terms may now be on the table, that were previously not for discussion.

Chinese observers said professional finance organisations, such as the International Monetary Fund (IMF) and World Bank, should be largely responsible for addressing the crisis based on effective coordination with all creditors, as commercial creditors and multilateral financial institutions are the major lenders behind Sri Lanka's foreign debt.  

The US dominated current global financial safety net, should conduct financial assistance more in its own interests than in the interests of the world. Some US-led small groups have constrained the effectiveness of global governance and the functioning of international organisations, which has exacerbated the Sri Lanka crisis, observers said. 

Some major powers, in pursuit of their own interests, have formed small groups based on the so-called common values, used global governance as a tool for geopolitical games, and downplayed the real value of global governance according to some spokesmen. Major countries and international organisations establish an emergency response mechanism to prevent more countries from facing a catastrophic debt crisis like Sri Lanka.

While for Sri Lanka, external assistance can only provide temporary help, and the South Asian nation must follow through on radical reforms if it wants to really get out of the crisis, experts point out. Sri Lanka's crisis reflects the mismatch between the country's development strategy and actual economic capacity, and between its long-term goals and the reality on the ground.

It is necessary for Sri Lanka to formulate a development strategy suitable for its national conditions based on its own situation rather than copying Western modes. Close neighbour of Sri Lanka, India has beefed up surveillance along the Sri Lankan maritime borders by deploying additional hovercrafts and patrol boats to prevent an influx of illegal immigrants, reported on Sunday.

In comparison, the BRI projects such as Hambantota Port has developed into an important comprehensive port for the region and it is China's loans and participation that have helped Sri Lanka revitalise its important assets, providing a key driving force for the sustainable development of Sri Lanka, analysts said.

Sri Lanka's debt burden was a result of BRI projects like Hambantota Port. In fact, in partnership with BRI, Sri Lanka commenced a series of developmental projects, leading to a huge overhaul of Sri Lankan infrastructure which had been lagging behind for generations. 

However, political and economic turmoil in Sri Lanka will definitely have an impact on the progress of some large-scale BRI projects such as Hambantota Port and Colombo City, but the impact is short-term. In the long run, these projects could be revenue generating and contribute to the economic construction of Sri Lanka.