The Sri Lanka crisis shows how the global southern debts are devoured religion

Sri Lanka is one of the most complex economic recovery processes in its history. The country’s financial collapse in 2022 was deposited by a toxic mixture of incomprehensible borrowing, mismanagement of financial and external shocks.

The mass protests erupted under the slogan of Araagalaya, a broad citizens’ movement that requires accountability, economic justice and the end of political corruption.

Ultimately, the uprising forced the resignation of the President sitting, Gotabaya Rajapaxa. However, after his resignation, the Ranil Wickremesinghe administration regained power.

Delaying invitations to new elections, in 2023 the Wickremesinghe administration negotiated $ 3 billion in support from the International Monetary Fund (IMF) under the arrangement of the new fund facility (EFF). Later that year, to cancel the second batch lock of this rescue package, Sri Lanka also reached a debt restructuring agreement with a group of creditors including China, India and Japan.

Nevertheless, by September 2024, the Sri Lankan people have elected a progressive government led by President Anura Kumara Desianaki, with a historical mandate, since the new administration has been detained within the restrictions imposed by the International Monetary Fund and the former political establishment.

The new neoliberal narration hastened to highlighting the International Monetary Fund, known as the seventeenth International Monetary Fund, as a sign of stability, praising the debt restructuring agreement and compliance with the conditions of the International Monetary Fund.

But what about the human cost of this “recovery”?

The punitive structural adaptation process includes the privatization of state -owned companies, the central bank separating the state control, limiting the state’s ability to borrow, and storing national development aspirations for the interests of creditors. The burden of improving local debt has placed on retirement savings for workers, specifically the employee box and revenue (EPF), which raises concerns among workers who have provided salaries whose real income has already been reduced through high inflation and higher taxes.

Employment in the public sector has been frozen, and the main rural infrastructure projects have been delayed or canceled, and health and education financing has sticked even with high costs. The reforms made to achieve macroeconomic stability, including high interest rates, tax adjustments, removal of subsidies, increase energy pricing, and workers ’corrosion, demanded many citizens.

The International Monetary Fund program has also entered into new liberal legal reforms that erode the general accountability of the central bank, limits the financial capabilities of the government, and encourages the privatization of land, water and seeds through agricultural works.

To achieve the goals of the International Monetary Fund – the most prominent of which is that the goal of achieving a surplus in the initial budget by 2.3 percent by 2025 – the Sri Lankan government provided sweeping austerity measures. What another place will this surplus come if not the utensils of money from the poor? Bankers may welcome this austerity, but for those who live and work in rural areas and coastal villages, it explains hardship and fear. The imbalances in the debt restructuring program determine the investor’s profits priority on the public interest, which reduces the financial space needed to rebuild basic services.

Civil society groups estimate that 6.3 million people are now overcoming meals, and at least 6,600 is suffering from a severe food shortage.

In a noteing move, newly -elected president Anura Desianuki issued the treasury instructions to restore support for the agricultural and fishing sectors. While welcome, this may not be enough. The fishermen states that fuel costs are still very slope, eating in their income.

Farmers, who have been imprisoned in intense chemical production of inputs, are struggling with high costs, climate disasters, and reduce state support.

The allocation of public health for 2025 in Sri Lanka is only 1.5 percent of its GDP – the youngest five times the amount allocated for interest service interest. This blatant contrast highlights the financial restrictions placed on basic social spending.

But this is not just a Sri Lankan story.

It is part of the global circles wider in emergency situations that drain public financial affairs in the global south. A large number of countries in Africa, Asia, Latin America, the Caribbean Sea region, the Pacific and Central Europe have been forced to waive the independence of national policies of international financial institutions such as the International Monetary Fund, the World Bank and the Asian Development Bank (ADB).

The recent United Nations Conference on Trade and Development (UNCTAD) reveals that half of the world’s population – about 3.3 billion people – now live in countries that are spending on benefits more than health or education. In 2024 alone, developing countries paid an amazing $ 921 billion in interest, with African countries among the most difficult blow.

UNCTAD warns of the high global interest rates and unfair financial engineering mainly, consolidating a course of dependency and backwardness.

Rotally developing countries pay interest rates on several times than those imposed on the wealthy countries, yet the mechanisms of drainage of current debt remain insufficient – custom, fragmented, and bored by an overwhelming majority for creditors. The demand for a permanent and transparent resolution mechanism – which focuses on justice, development and national sovereignty – acquires momentum between the global southern governments.

This issue is also attracting serious attention from the global popular movements.

In September this year, more than 500 delegates from all over the world will meet in Candy, Sri Lanka, for the third global Nyleni Forum for Food Sovereign. This gathering will combine small food producers, indigenous peoples, unions, researchers and tanks of progressive political thought. One of the main topics is the global debt crisis and how basic rights in food, education, health and land are undermined.

The forum is expected to be a space for drawing alternatives. Instead of relying only on the negotiations led by the state or technocratic financial institutions, the movements will make a strategy to build popular power.

It aims to link local struggles – such as farmers who resist the seizure of lands or workers who regulate live wages – with global campaigns that require debt cancellation, allow climate regret, and the transformation of the international financial system.

It is clear to those of us in the global south that a fair recovery cannot be built on financial goals and the verification lists of compliance alone. We ask to restore the general area of ​​investment in social commodities, give the democratic character to debt governance, and determine the priorities of the dignity of people above the margins of the creditors.

For Sri Lanka – for countless countries throughout Africa, Asia and Latin America – this may be the most urgent and necessary restructuring for all.

The opinions expressed in this article are the authors ’king and do not necessarily reflect the position of the editorial island.