Sri Lanka Declares Public Emergency, Imposes Curfew

(Bloomberg) -- President Gotabaya Rajapaksa declared a public emergency late on Friday after citizens protesting spiraling inflation and widespread power cuts clashed with police outside the Sri Lankan leader's private residence.

The declaration gives Rajapaksa sweeping powers to suspend laws, detain people and seize property. The step was essential for the protection of public order and maintenance of supplies and services, he said in an extraordinary gazette. A curfew was announced on Saturday, beginning at 6 p.m. on the day through 6 a.m. Monday.

The island nation is undergoing a severe shortage of food and fuel as it runs out of dollars to pay for imports. Police fired tear gas and water cannons at hundreds of protesters who surged past barricades screaming “Go home Gota” near Rajapaksa's home on Thursday, after data showed inflation accelerated to almost 19%, the highest in Asia.

Sri Lankans have taken to social media to call people to gather in Colombo and surrounding areas on Sunday afternoon to peacefully protest against the economic crisis. The curfew prevents such demonstrations from taking place.

The declaration of an “emergency changes a lot of things,” said Bhavani Fonseka, a senior researcher at the Center for Policy Alternatives in Colombo. “It raises the question of the stability of the government and their ability to govern.”

In a post on Twitter, the U.S. ambassador to the island said Sri Lankans have the “right to protest peacefully” and advised restraint from all sides.

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Rajapaksa's elder brother Mahinda serves as prime minister while Basil, the youngest, holds the finance portfolio. The eldest Rajapaksa brother Chamal controls the agriculture ministry while nephew Namal is the sports minister. These family members enjoy two-thirds majority support in parliament while the opposition remains divided. National elections will be held in 2023 at the earliest.

Sri Lanka, whose trade deficit doubled to $1.1 billion in December, had about $2.3 billion of foreign-exchange reserves in February and faces a $1 billion dollar bond repayment in July.

Rajapaksa's administration in recent weeks has devalued the rupee, raised interest rates, placed curbs on non-essential imports, and reduced stock-trading hours to preserve electricity and foreign currency. He has also dropped resistance to seeking a bailout from the International Monetary Fund and is simultaneously in talks with nations including India and China for bilateral aid.

The IMF last month said Sri Lanka faces a “clear solvency problem” due to unsustainable debt levels, as well as persistent fiscal and balance-of-payments shortages.