Sri Lankans jump ship as a bankrupt nation struggles

The snaking queues for food and fuel that crisscrossed Sri Lanka last year have given way to a different kind of line -- people scrambling for travel documents to flee their bankrupt island.

"What we see as normalcy is a mirage," customer care executive Gayan Jayewardena, 43, told AFP while queueing at a government office for a passport for his baby daughter.

"The situation is not getting better," said Jayewardena, whose wife and two older daughters already have their papers.

"When we consider it from the point of our children, it is better to leave. We want to migrate to a country like New Zealand."

The South Asian nation's 22 million people suffered desperate shortages of essentials in 2022 after the government ran out of dollars to finance imports, including life-saving medicines.

Months of protests led to the storming of then-president Gotabaya Rajapaksa's palace on July 9 last year.

His successor Ranil Wickremesinghe doubled taxes and cut subsidies, two highly unpopular moves.

The new government may have restored supplies, but at sometimes three times the previous price.

Wickremesinghe secured a $2.9 billion bailout from the International Monetary Fund in March and expects a recovery next year, but many in the country are not so optimistic.

- 'Trying to leave' -

Software engineer Maduranga, 38, who uses one name, said the high living costs and taxes prompted him to consider migrating to Australia.

"The cost is going high, every day it is going higher, but the salary amount is the same", Maduranga said. "Companies are not increasing the salaries, so that's why we are trying to leave."

At the foreign employment bureau, where Sri Lankans must register before taking up jobs abroad, numbers surged from 122,000 in 2021 to a record 311,000 last year.

For the first five months of this year, the bureau recorded around 122,000 people leaving -- the same as in all of 2021 -- but officials believe many others also left on tourist visas to seek work in the Middle East and elsewhere in Asia.

Last year, the number of people applying for passports more than doubled -- from over 382,500 in 2021, when the economy grew by 3.3 percent, to a record 911,689 passports in 2022, when the economy contracted 7.8 percent.

The trend has continued.

This year through May, 433,000 overseas travel documents have been issued, according to the Immigration and Emigration Department.

An online system was launched in June to cope with the swelling demand, but those urgently seeking passports must apply in person.

"My number was 976 and I think after me there would have been about 500 people," said Damitha Hitihamu, 51, after handing in his papers to renew his passport in a day.

"I never expected to see such a crowd for the one-day service."

- Brain drain -

Sri Lanka has been a labour exporter for decades, providing both skilled and unskilled workers, especially to Gulf states.

But the impact of the brain drain is increasingly being felt.

Newspapers are awash with reports of shortages of doctors, nurses, engineers and other skilled workers because so many have left.

Sri Lanka's construction industry, one of the biggest employers, is reporting losing skilled workers and professionals at an alarming rate.

"There is large-scale migration of construction workers," said Nissanka Wijeratne, secretary-general of the Chamber of Construction Industry.

Wijeratne said losses were "at all levels" but that it was "worse in the professional categories".

Around 200,000 jobs were cut in construction during the recession coupled with hyperinflation last year -- and many of those still working are looking to leave.

"When I checked with one consultancy company, they used to have 70 professionals in that office," Wijeratne said. "Now it has reduced to 15."

Insurance professional Lalantha Perera, 43, said his salary was not enough to support his wife and two children.

"After the protest campaign last year, we got some relief," he said. "But that is not enough and I am planning to go to a European country."

The economic think tank Advocata Institute says middle-class workers are seeking employment abroad to escape poverty at home.

"Amongst the poorest people, they have cut down their meals," said Advocata head Dhananath Fernando.

"The middle classes -- those who can afford -- are attempting to migrate."

'No second chance' to save Sri Lanka

The man charged with clawing Sri Lanka out of bankruptcy says he had warned about economic calamity years before it hit -- and was pressed into retirement for his troubles.

Central bank chief Nandalal Weerasinghe was asked to return to the island nation last year to help steer it through a financial collapse that triggered months of food shortages, petrol queues and nightly blackouts.

The 63-year-old says his mandate coincides with Sri Lanka's one final opportunity to rescue itself from a cycle of economic shocks that stretches back decades.

"There's no excuse this time, no second chance, we have to get it right this time," he told AFP at his Colombo office this week.

"This is where I think crisis is an opportunity."

Weerasinghe was the Central Bank of Sri Lanka's number two when Gotabaya Rajapaksa was elected president in 2019 on populist promises of generous tax cuts.

Government debt soared as Rajapaksa pursued an unorthodox policy of printing exorbitant amounts of money while holding down exchange and interest rates to spur growth.

"As the senior deputy governor, I always raised concerns," Weerasinghe said.

But with Rajapaksa's administration steamrolling objections from him and other senior central bankers, Weerasinghe said he felt he had no option but to take early retirement.

"Obviously I saw if those policies continued in that way... we'll end up in a situation that I said at that time was exactly what happened," he added.

Weerasinghe had decamped for a quiet life in Australia, spending time with his children and hitting the golf course five days a week, when Rajapaksa asked him to come back and helm the central bank.

He returned to a country in chaos, its currency in freefall and the government days from defaulting on its $46 billion foreign debt.

The Covid-19 pandemic had dealt a hammer blow to already precarious public finances, as the island's lucrative tourism industry shuttered and remittances from Sri Lankans working abroad dried up.

Foreign exchange reserves had almost been exhausted, leaving importers unable to buy goods necessary to keep the economy functioning.

Supermarket shelves were empty, long lines snaked from fuel stations, and thermal power stations were forced to ration electricity for 13 hours each day.

By July, Rajapaksa had fled the country after months of protests demanding his resignation for mismanaging the crisis.

- 'China on board' -

Rajapaksa's successor, Ranil Wickremesinghe, has sought to repair the nation's finances through a $2.9 billion International Monetary Fund bailout.

The rescue package commits Sri Lanka to an austerity regime of steep tax hikes and an end to generous consumer utility subsidies, both of which have proven deeply unpopular.

Its passage was reportedly held up for months when China -- Sri Lanka's largest bilateral creditor -- resisted agreeing to a haircut on its loans.

Chinese debt has been controversial politically, with Rajapaksa and his elder brother Mahinda -- himself a former president -- accused of taking Beijing's money to finance costly vanity projects.

Weerasinghe said the delays to the IMF package were understandable because Beijing was a relatively "new player" to bilateral lending.

"China is fully on board, and agreed to support Sri Lanka and help Sri Lanka to come out of this crisis," he said.

- 'End of the story' -

Last year brought Sri Lanka's worst economic downturn in its 75-year history as an independent nation, with GDP contracting 7.8 percent and inflation hitting 70 percent at its peak.

But the island's tea- and tourism-dependent economy is no stranger to shocks, with foreign exchange shortages triggering recessions and government rationing of consumer goods numerous times in prior decades.

Sri Lanka had already gone to the IMF cap in hand 16 times before last year, but failed to stick with agreed-upon reforms, giving it a serious credibility gap.

Weerasinghe said the country had two choices this time around: if it sticks to its current IMF programme, its economy would return to normal within "two to four years".

If it did not, Sri Lanka would no longer be indulged if it fell off the wagon and returned to its spendthrift ways at the first sign of stability, he warned.

"This time, the 17th time with the IMF, is different," he said.

"If you are trying to go back to another programme, that will be most difficult, and I think that will be the end of the story."