Documentary on Sri Lanka Sheds Light on Universal Struggles With Debt, Inequality, Corruption

The glimpses of Sri Lankan society the film offers show that their experiences are similar to many other countries. As a Bangladeshi by birth, living in the US, I see that the film also offers us a chance to learn lessons that could be useful not just to other Southasian countries, but also to other nations.

Inspired

I feel inspired by the things that Sri Lanka did right. For example, the country is incredibly progressive. For the past 80 years, it has had universal voting rights and free education all the way through high school. Interestingly, this universal literacy has had a big political impact by empowering the public to protest their conditions.

In 2020, thousands of young people joined the protests by farmers in Sri Lanka when prices soared for critical goods like fertilizer. In 2022, the protestors were successful in removing President Rajapaksa and his family, and cronies, from power.

A couple of years later, in 2024, the youth of Bangladesh similarly took to the streets in protests against the government and managed to oust the sitting Prime Minister.

The film brings up two important strands that Sri Lanka has in common with other countries, including Bangladesh. First, is the extreme inequalities of class and wealth. These lead to huge disparities between those who govern, who tend to be wealthy, and everyone else.

We know all too well the interests of the wealthy are not the same as the interests of the impoverished. The economic sufferings of the majority of people figured only as a cosmetic electoral concern in the US elections last November. Extraordinary amounts of money from the wealthy were used to sway public opinion. Voters were torn and had to choose between two parties that both catered to the interests of the 1%.

The second strand is rampant corruption in government because the rich tend to serve themselves and their class, by hook or by crook. This inequality and corruption are found in most countries I have lived in, whether in Asia or in the US.

Despite some efforts to deal with poverty, India has 200 billionaires, while the poorest families have children who scrounge in garbage dumps for things to sell so their families can survive. In Bangladesh, after the prime minister was ousted, it was clear that most of the Treasury had been looted by those in power.

The film made me wish to acquire a deeper understanding about why Sri Lanka, and so many other countries in the world, are in debt. Mainly what I learned from my little bit of research is that the whole issue is kind of murky.

The Rajapaksa government took a series of fiscal steps that hooked them on the neo-liberal path, opening their markets and privatizing their services. As we see in the film, there was a spate of building and construction, making Colombo unrecognizable. The government fell into a cycle of spending more money than they had – that is, there were more expenditures than money to pay for them. To fix this imbalance, they started taking loans, some from other countries like Japan and China, and some from foreign hedge funds like BlackRock.

But inevitably, they began to have problems paying back the loans, leading to deficits. When there are a series of deficits, the borrower is seen as a poor risk and is considered a country in debt, with lenders wanting their money back. Sri Lanka was now seen as a nation that could not pay its debt.

On top of these problems faced by Sri Lanka, in 2019 President Rajapaksa initiated severe tax cuts. So suddenly there was a decrease in tax money, which means even less money to run the country. The government’s way of handling this problem was to begin a process called Debt Monetization, which literally means printing paper money.

Currency crisis

Rather than being a solution, this process triggered a currency crisis that led to inflation. By inflation we calculate how much more expensive a relevant set of goods or services have become over a year. In other words, inflation means we need more money to buy the same amount of goods. This is usually a direct result of printing excess money.

What we must understand is this: If the increase in the money supply is not backed by an increase in economic output, we get inflation. To put it simply, if there is more money chasing roughly the same amount of goods, prices will increase.

That is about when the International Monetary Fund tends to become involved in countries in debt. They were called in to bail out Sri Lanka. The IMF works on behalf of the lenders – the institutions and countries who have loaned money to the nation – and initiates measures that will help them to repay their debts. We hear about “austerity measures” which are usually cuts in social spending that affect the poor the hardest.

The bailout funds from the IMF of about $3 Billion over 48 months was “peanuts,” as sociologist Prof. Ahilan Kadirgamar of the University of Jaffna says in the film. The Sri Lankans dug themselves out with their own foreign earnings which were 30 times more than the IMF’s $3 billion over 48 months.

For me, Sri Lanka’s fiscal ill-health, and that of some of our countries in Asia, can be compared to the USA, with one critical difference. The USA has the advantage of owning the dollar, so it does not face the added problem of other countries, whose currency’s worth is measured against the dollar. But, like other countries, the US is in a constant state of deficit – i.e. we are spending more than we are earning. This deficit is growing each year.

The way the US has chosen to get out of the deficit, our national debt, is to borrow money. At this point, we have a $33 Trillion Debt, which is a risk to the future of every American. It is interesting to note who the US owes the $33 Trillion to: most to Japan, next to China, and then the UK, Luxembourg and Canada.

In the last couple of decades in the US, there has also been unconscionable influence from rich corporations and wealthy individuals to push for tax cuts — which every US administration has succumbed to. But, as with Sri Lanka, if there are less taxes, there is less revenue to run the government, leading to continued borrowing from other countries.

For every country that owes money to another country, the reliance on foreign funding creates dependency and unsustainability. The sad thing is that the US deficit is not the result of a crisis, a war, or other chaos, it is baked into the structure of our US economy now. We have to continue to borrow money, and to pay higher and higher interest rates — with no recourse.

Today, tax cuts for the rich appear to be non-negotiable. And, yes, we too just print ourselves some money when we are short.

Overall, this film is a great achievement and is an important documentary that touches on the nuances and economic realities of our times. I enjoyed it as much as the research that it prompted me to do.

This article first appeared on Sapan News Service.