Colombo port workers protest privatization in August 2020 (Photo: WSWS Media)

On Monday, the Sri Lankan cabinet withdrew a September 2 government gazette notice imposing price controls on rice, the country’s staple food. The decision paved the way for large rice millers to announce an increase of 115 rupees per kilogram (US $ 0.5), or 17 percent for substandard nadu rice, and 145 rupees, or an increase of 37 for hundred per kilogram for samba. rice.

These increases, along with the higher costs of other basic and essential foods, will increase Sri Lanka’s already exorbitant cost of living and have a huge impact on the working people and the poor, who are struggling to cope. the ongoing coronavirus pandemic. Even though testing rates are dropping in Sri Lanka, COVID-19 has infected more than half a million people and killed nearly 13,000.

Importers of dairy products and cooking gas are now pressuring the government to grant steep price increases to their products. They want to increase the cost of a 12.5 kilogram cooking gas cylinder by 800 rupees, or 54%, and a kilogram of powdered milk by 350 rupees, or 37%. Fearing the eruption of protests, Cabinet has postponed full decision making on these price hikes, which will trigger shortages and increase black market trade.

The price of essential foods, such as lentils, yellow gram, chili peppers, canned fish, onions, green gram and sprats, has steadily increased over the past 12 months, with increases. of these items ranging from 25 to 150%.

Colombo’s decision to withdraw price controls makes it clear that President Gotabhaya Rajapakse’s declaration of a state of emergency on August 30 had nothing to do with ending the shortages and price increases in rice, sugar and other basic necessities.

The Socialist Equality Party warned on September 11: “The real target of the emergency laws is the working class and the rural masses, who are facing enormous difficulties because of the burden of the country’s economic crisis. is directly imposed.

The government’s actions expose it as a device to protect big business and their sky-high profits, not the lives of the working class, farmers and other oppressed people.

Currently, 800 containers of essential food items, such as lentils, sugar, garlic, sprats, canned fish and powdered milk, are stranded in the port, due to the scarcity of foreign currency. The Central Bank, under pressure from the government, has just announced that it will provide the US dollars needed to release these goods.

Even though the official year-on-year food inflation rate was around 11 percent in August, the real rate is above 30 percent, according to independent economic estimates. The latest increases in the prices of rice, dairy products and cooking gas will further erode the real value of workers’ wages and lead to a further escalation of strikes and other social struggles of workers and the rural poor.

Up to 250,000 teachers are continuing their three-month strike for online learning, demanding higher salaries. On Monday, 90,000 public sector health workers went on strike to protest cuts to a special allowance linked to the pandemic and several other demands. Plantation workers have also been implicated in protests against the grueling production demands of big business, following a gruesome daily wage increase of around Rs 250.

Hundreds of thousands of low-wage production workers in free zones, mainly in the clothing, rubber and electronics industries, have also suffered wage cuts, layoffs and increased workload. working since the start of the pandemic. About half a million workers in the tourism sector have been made redundant, due to the dramatic drop in tourist arrivals. Thousands of workers in the import sector are also unemployed, after the government banned the import of automobiles and other foreign-made goods in an attempt to prevent further declines in foreign exchange reserves .

While the Sri Lankan economy already had a widening budget deficit and crippling debt repayments, the coronavirus pandemic has dramatically worsened this crisis. According to a Moody’s report from September 16, Sri Lanka will have to pay between $ 4 billion and $ 5 billion in annual debt repayment until 2025. With its foreign exchange reserves of just $ 3 billion at the end of August, the government’s priority was to avoid international default. .

The rupee has effectively been devalued by 27 percent since the start of last year, while the printed money supply has increased by 35 percent to reach 2.8 trillion rupees ($ 14 billion). The current budget deficit is said to be around 12% of GDP and continues to increase.

As the working people and the poor suffer from these ongoing social attacks, various friends of government and big business are reaping windfall profits. After coming to power, President Gotabhaya Rajapakse sharply reduced most corporate taxes from 15% to 24%. In the last quarter of operations, from April to June 2021, nine large companies racked up 364 billion rupees ($ 1.82 billion) in profit, collectively pocketing 21 billion rupees ($ 105 million) in profit. net.

Sri Lanka’s newly appointed Finance Minister Basil Rajapakse, the younger brother of President Gotabhaya Rajapakse and Prime Minister Mahinda Rajapakse, has called on government ministries to end “unnecessary allowances” to state employees and “d ‘to save money “.

The government is stepping up efforts to privatize public institutions, such as the Port of Colombo, the Ceylon Petroleum Corporation (CPC) and the Ceylon Electricity Board (CEB). On September 17, it signed an agreement with the American company New Fortress Energy, which will buy 40% of the shares of the Yugadanavi power plant in Kerawalapitiya, near Colombo. The west pier of Colombo port is to be privatized and 13 acres of land sold to a Chinese company.

Legislation covering the supply and distribution of oil in Sri Lanka is being amended to privatize CPC, while negotiations are underway for a $ 500 million credit for oil imports from India and United Arab Emirates facilities. The government is also in the process of selling key real estate in the city of Colombo.

At the same time, President Rajapakse militarizes his administration and rapidly evolves into a presidential dictatorship, based on Sinhalo-Buddhist military and chauvinist forces. A draconian essential services law, banning strikes in most of the public sector, was imposed and a state of emergency was declared, with military generals placed in key government ministries and the military being put in charge. waiting in every district of the island.

These measures, directed against the working class, are supported by all opposition parties, including the pro-American United National Party (UNP) and its separatist group Samagi Jana Balavegaya (SJB), the Janatha Vimukthi Peramuna (JVP), the Tamil National Alliance and the pseudo-left Frontline Socialist Party (FSP).

The SJB and the UNP urged the government to appeal to the government for help from the International Monetary Fund (IMF). The previous UNP government, led by Prime Minister Ranil Wickremesinghe and President Maithripala Sirisena, was defeated in the presidential and general elections of 2019 and 2020, after ruthlessly imposing the austerity measures prescribed by the IMF. The JVP and its splinter group, the FSP, argue that capitalism can be reformed by reducing corruption.

The Socialist Equality Party (SEP) is the only political organization that explains that capitalism cannot be reformed, nor the crisis overcome, by fighting corruption. The only advance for the working class and the poor is on the basis of a socialist and internationalist program.

The SEP statement of September 10 said: “The actions of the Rajapakse government are completely linked to the global crisis of capitalism, and can only be defeated by fighting for socialist policies, to expropriate the capitalist class. Large estates, large corporations and banks must be nationalized, under the democratic control of the working class, and foreign borrowing must be repudiated. A workers ‘and peasants’ government must be brought to power to implement these policies.