Sri Lanka, an island nation of 22 million inhabitants, is suffering its worst financial crisis since independence in 1948.
Crippling inflation is driving up the cost of basic goods. Foreign exchange reserves fell to record lows as dollars ran out to pay for essential imports, including food, medicine and fuel.
Government ministers resigned en masse and Sri Lankans take to the streets to protest as the crisis has turned their daily lives into an endless cycle of waiting in lines for basic goods, many of which are being rationed.
Despite previous government efforts to alleviate the crisis, such as the introduction of a four-day work week, then Prime Minister Wickremesinghe declared the country “bankrupt” last Tuesday.
In several major cities, including the capital Colombo, desperate residents continue to queue for food and medicine, with reports of civilians clashing with police and military as they wait in line.
In early July, Energy Minister Kanchana Wijesekera said the country had less than a day’s worth of fuel left.
Trains have decreased in frequency, forcing travelers to squeeze into compartments and even sit precariously on top of them as they commute to work.
Patients cannot travel to hospitals because of the fuel shortage and food prices are rising. Rice, a staple of the South Asian country, has disappeared from the shelves in many shops and supermarkets.
How we got here: The crisis has been in the works for years, experts said, pointing to a series of government decisions that exacerbated external shocks.
Over the past decade, the Sri Lankan government has borrowed huge sums of money from foreign lenders to fund public services, said Murtaza Jafferjee, president of the Colombo-based think tank Advocata Institute.
This borrowing has coincided with a series of hammer blows to Sri Lanka’s economy, from both natural disasters – such as severe monsoons – to man-made disasters, including a government ban on chemical fertilizers that decimated farmers’ crops.
Faced with a huge deficit, President Gotabaya Rajapaksa cut taxes in a doomed effort to stimulate the economy.
But the move failed, instead hitting government revenue. This prompted rating agencies to downgrade Sri Lanka to near-standard levels, causing the country to lose access to overseas markets.
Sri Lanka then had to fall back on its foreign exchange reserves to pay off the national debt, causing its reserves to dwindle. This affected imports of fuel and other supplies, causing prices to rise.
On top of that, in March, the government put forward the Sri Lankan rupee meaning the price was set based on the supply and demand of foreign exchange markets.
However, the decline of the rupee against the US dollar only made matters worse for ordinary Sri Lankans.
Public frustration and anger erupted on March 31, when protesters were rock-throwing and fires started outside the president’s private residence. On Saturday, protests boiled over as people stormed the residence and demanded his resignation. According to the latest developments, President Rajapaksa fled to the Maldives and Prime Minister Wickremesinghe was appointed acting president. Currently, Sri Lankans are still protesting in the streets and there is a lot of uncertainty about who is in charge and what the outcome of this unrest will be.