>> ukraine's government is urging aid for mariupol. the city has been under continuous bombardment leading people without food, water, or electricity. . fighting has intensified northwest of kyiv. a curfew remains in place until wednesday after russia destroyed a shopping center on monday killing eight people.

ukraine's second-largest city and surrounding areas have seen the heaviest bombardment. this picture shows the result of russian attacks. 20 apartments were destroyed. president vladimir zelenskyy says ukraine is on the brink of surviving the war. during a speech to italy's parliament he repeated his call for the west to impose more sanctions on moscow. against ukraine -- against europe. they want to have control on your lives. democracy, human rights, equality, freedom, the same values that we have. >> ukrainians are enduring a living hell. the conflict is going nowhere

fast. police urged russia to end what he called the absurd assault on ukraine. in other news a russian court has sentenced alexi navalny to a further nine years in maximum-security prison. he is accused of embezzling donations from his anticorruption foundation. he denies the charges saying they are politically motivated. a bus crash in western ghana has killed 14 people traveling from -- where it collided head-on with the truck. the truck driver and passenger are in critical condition. somalia is going through its worst drought in 40 years. crops and animals have died. this has left more than 300,000 children severely malnourished. more news in half an hour. inside story is next. do stay with us. >> as the war in ukraine grinds on, al jazeera correspondence bring you every angle. >> there is a humanitarian

crisis on multiple fronts. >> an entire street totally destroyed. >> kyiv central station has become evacuation central station. >> as russian forces move up by the hour. stay with al jazeera for the latest developments. collects long lines for scarce fuel, food shortages and power cuts. sri lanka is running out of dollars to buy essential goods. will an international bailout save its economy? is there a risk of defaulting on its debt? this is inside story. welcome to the program. i'm adrian finighan. sri lanka is facing its worst

economic crisis since independence. international ratings agencies are warning it is on the verge of defaulting on its debt. it's usable foreign currency reserves have plunged below -- limiting its ability to repay loans. traders cannot access dollars to buy imports, so what does this all mean for sri lankans? there is a shortage of everything from fuel to food supplies. we will get to our panel to discuss these issues in just a moment, but first a report from al jazeera's victoria. reporter: soldiers at hundreds of petrol pumps. the government has deployed troops after three elderly people died while queuing for hours to buy fuel in sweltering heat. sri lanka's foreign exchange reserves are dwindling and it is struggling to pay for food, fuel, and medicine from abroad. with currency plunging in value, life has become difficult for many. >> my income is down by half. when you look at the expenses,

we are in debt. reporter: the government says it is replying to complaints of stockpiling and poor distribution. >> the need arose to get the military to supervise distribution of fuel. the military has been deployed to help the public, not curtailed human rights. >> opposition parties and citizen groups have been holding protests around the country accusing the government of being responsible for the economic turmoil. the president last week asked for a bailout from the international monetary fund. he appealed to the nation to make temporary sacrifices. >> by limiting the use of fuel as much as possible, citizens can extend their support at this time. i hope you understand the responsibility lies with you. reporter: the imf says the government's foreign debt burden is unsustainable and it has a $1 billion sovereign bond that is due in july.

many investors doubt they will be able to repay without restructuring. adrian: let us examine what has turned sri lanka's foreign debt burden into an unprecedented economic crisis. the tourism sector a major foreign exchange was battered by the eastern attacks and the coronavirus pandemic. but now two countries that are vital to its tourist market are at war. russia and ukraine had been the first and third largest source of visitors this year. a failed drive to become one of the world's first 100% organic farming nations also hurt food supplies. sri lanka was forced to import rice. the tea crop, the nation's top export, was devastated. sri lanka wants china, a major lender, to restructure its debt and it has secured a $1 billion relief package from india.

let's bring in our guests for today's discussion. we are joined by nishan de mel, executive director and head of research at verite research. jabin jacob, associate professor at the department of international relations and governance studies at shiv nadar university. and bhavani foneseka, senior researcher and attorney along with the center for policy alternatives. can this current situation be traced to a single event or events or time? >> great to be on the show. it is important because i think the causality of the current crisis is attributed in many ways. i personally think there is a

single point that can be attributed for the crisis. it is the tax cuts that happened consequent to the presidential election in 2019. in fulfilling the promise of the presidential campaign manifesto, taxes were cut in a way that reduced government revenue by 25% and reduce the tax base of the country by about 33%. a few months later, that led to a critical ratings downgrade that effectively caused sri lanka to lose access to international financial markets. the blacklisting downgrade. after losing access to financial markets, sri lanka kept repaying its debt. reserves kept coming down and as reserves kept coming down, ratings kept going down. it was a downward slide which

sri lanka did not find a way to stop. the current situation is the combination of that process into virtually zero reserves. i think if the rating downgrade had not happened, sri lanka would have continued the normal equilibrium of borrowing to repay its debt. and if the tax cuts had not happened, which then caused the revenue to fall so much, the interest cost on revenue roles to 70%, which is perhaps the highest in the world. lebanon had that in 2019 before it fell into default. that explained the rating downgrade. adrian: what are the dangers of sri lanka defaulting? >> i use the word default to describe restructuring as well. but if i make a distinction between orderly default which comes through a negotiated

process of restructure and a disorderly default where you don't pay because you cannot pay and you have not negotiated an alternative, i think the danger is of sri lanka getting into disorderly default. it is very close to that process. the only way to avoid a disorderly default now is to cause a great deal of pain to the local economy by withholding the dollars that come in through imports, exports, and other means, from paying for essential supplies of gas and medication. so i think sri lanka can avoid the disorderly default yet for a few more months, but only at great cost and pain to the local economy. but come july when there is a one million-dollar dollar repayment do, i think that becomes a pivoting point.

sri lanka may need to engage quite quickly and proactively to start a negotiating process to restructure its debt before the july international sovereign bond payment becomes due. adrian: i know you agree with much of what we just heard. let's talk politics up. to what extent do you think sri lanka's problems are simply bad luck or down to economic management? we heard about tax cuts and the problems they have caused. what responsible government would do that knowing it is going to severely impact its ability to pay its way? >> thank you for having me, and a timely discussion given the situation. you talk about the political context and the realities. we need to recognize that sri lanka is at a breaking point. people on the streets protesting, essential goods not available.

now we have three deaths of people who stayed in line for oil. this all comes back to the lack of political leadership in the government. we had tax cuts in 20 but we also had a lot of policies or lack of planning. u-turns in policies for example. we will talk about the event that happened. without really a plan in place to discuss the hardships faced by the people. so it is really coming to a lack of plan by the political leadership. contrast this to the political rhetoric in 2019, in 2020, when this government promised prosperity, stable economic growth.

all of that was promised to the electorate and they got a majority in 2019 and 2020 of the elections. what has transpired after that is a complete opposite. even now, when there is -- when we don't know when the power cuts will happen, we do not know if we would have petrol or diesel tomorrow because the cues are so long, there is lack of information coming from this government. really it is a government that promised so much but is unable to deliver and does not seem to be able to communicate. adrian: to what extent does the family have to shoulder some of the blame? is it wise to have major government portfolios spread among members of one political dynasty? >> this is the big worry. we had the president being elected very soon.

he appointed his brother the prime minister. now we have two other brothers in cabinet. we have several others in government, in cabinet as well as other positions in government. the question is, when you have such a lot of power centered in one family, and remember this, it is not just a family, but they have really concentrated through constitutional means as well, so a constitutional mm it was passed -- amendment was passed which divided greater power to the executive presidents. we have the most powerful executive presidency in the history of sri lanka and we also have family rule. so very limited checks and balances, but it is also one family that seems to be making the decisions, but leaving aside experts who should be concerted or should be part of the process.

a lot of issues and i would say it is the government, but also it is the family that needs to be paying for this. adrian: sri lanka has secured a one million-dollar relief package from india. is india going to ride to sri lanka's rescue? >> sri lanka is our neighbor. i do not think india has much of a choice. india will do what it can as best as it can. sri lanka has a very specific set of demands, requests from india. i think there are some positive signs. it has just been announced indian tourism to sri lanka is picking up. in light of what the report just said about tourists from russia and ukraine no longer being able to travel, the presence of indian tourists would be a big

plus for the sri lankan economy. but i think also another matter -- on other matters, ongoing infrastructure projects, indian credit lines, all of this, the indian government will be paying attention to supporting sri lanka whatever way it can. adrian: back with you in just a moment. to what extent has chinese debt played a huge role in sri lanka's current predicament? i remember at the time that chinese involvement was first announced, there were dire warnings over the country becoming indebted to china. have those warnings ultimately proven to be correct? nishan: i think chinese debt is not the largest foreign debt sri lanka has to repay.

it also is not in the form of international sovereign bonds were capital payments come as bullet payments. so consisting of 23% of foreign debt versus 40% of the debt being with international sovereign bonds, i would say chinese debt cannot be considered the crux of the problem. sri lanka may have a separate problem that the money they borrowed from china and other places, india included, were invested in problems -- in projects that did not have adequate return and that compounded step problem. -- compounded its debt problem. it is the sovereign bonds that have been borrowed without much concern for how well they have been invested either that or turning out to be critical for sri lanka in terms of its debt sustainability at the moment. adrian: let me go back because i

want to clear some thing up about china's role in sri lanka's economy. to establish what is in it for india. i think from what nishan was saying, it is not financial incentives. we are talking more about political -- geopolitical influence. india concerned about china's influence throughout the region. to what extent is sri lanka's current crisis going to mean that it will become a pawn in regional politics? jabin: first of all we need to get a couple things clear. the crux of the problem might not be chinese loans, but i think there is a certain tendency to reckless economic policies, reckless political behavior that china encourages.

i think that really is a problem that not just sri lanka, pakistan, a whole bunch of other countries around the world have faced as a result of chinese assistance and someone. -- and so on. india's warning has always been on this front, that there is a lack of accountability, a lack of transparency. labor-management and so on that comes with chinese assistance, chinese investments. these are the aspects we need to be very clear. in terms of india's concerns from a geopolitical perspective, india is worried about the state of affairs and the effect on sri lankan people right now. the foreign reserves are depleted.

the sri lankan rupee has crashed. economic stability is not good for india either. what one of the panelists said about the family, the rajapaksa family taking control in politics, this is a matter of concern also from a political point of view. this is what the chinese government ends up exploiting and i think that really is a big concern. it is not just the economic aspect. it is certain political behavior of a certain kind of politics -- support from china encourages i think that should be our concern . adrian: what are the dangers for sri lanka becoming further

indebted to india? bhavani: i think there are lots of dangers at the present moment one needs to be looking at. we are also at a very unprecedented time so we will have to see how things play out. the reason the negotiation -- raises a lot of questions. what was negotiated. we have not yet seen in the public domain with the criteria are and whether this is -- there is a concern whether assets have been sold off. this is not a new thing. this has been there for a while in terms of any international negotiation line of credit. these concerns are going to be taken on board. there is also one dimension with the indian angle that needs to

be addressed. a political solution. india has been a friend of sri lanka. has very much been supporting in the past times of a political solution. so with these issues also get raised in terms of the present conversations? we are yet to see. india has a special place, has always had a special place. but we are in another situation -- a very novel situation. we have to see what was negotiated before we can comment on this. adrian: do you agree? what influence can india bring to bear politically in sri lanka to ensure better economic management? >> we have learned our lesson from too much political intervention. our primary concern at the moment is the economic situation in sri lanka.

and frankly, i think the sri lankans are able to manage politics, balancing india and china, pretty well. they are savvy at it. the question is a question of economic management and incompetence. that is a solution sri lankans will have to find. you know, it is not something the chinese or the indians or the imf can help with by giving loans. it is a domestic issue. there are issues to what india can do in sri lanka. in terms of lines of credit, in terms of asset management, there should be transparency. sri lanka is right to ask for transparency on these, whether from india or from china. it cannot be selective. adrian: the lender of last resort.

nishan: i would like to come in on this. there is an important role for the imf, but let us discuss the india and china dynamic. it is difficult to suspend the view that there has not been some element of bilateral opportunism exercised by both china and india. in sri lanka's time of difficulty. china was able to negotiate sweeping concessions and tax holidays of unprecedented proportions. india was able to in an extremely short time managed to get sri lanka to lease out a valuable asset in terms of the port.

these happened as sri lanka's difficulties started to emerge and there was hope that china or india would help bail sri lanka out of the difficulty with regard to its debt. we must understand india could also publish these transactions. we are talking about why they are not transparent and sri lankans are very worried. i do not think it should be only up to the sri lankan government to be transparent about these transactions. india could be transparent and show good faith in what is being done. we may need to keep in mind about that. we are not critiquing any country. we understand countries act in self-interest. but it would probably be important to understand that there is a limit of that that is going on at the same time as sri lanka is being assisted.

adrian: very quickly because we are running out of time. nishan: i think when india initially gave credit to sri lanka and said if you want us to roll over this credit, we would like to get into a program with the imf. tying a system to improvement in behavior. what we see now is that india is offering credit lines without tying it to good behavior. that is something in the way it approaches sri lanka. adrian: 30 seconds left. is there any sort of light at the end of the tunnel for the people of sri lanka at the moment? the hardships they are currently enduring. bhavani: i can say one thing. we have a very resilient community. we have gone through decades of war, tsunami, many other

challenges. i think there is hope we can get through this, but we need political leadership. we need a plan. we need communication. also i think at this very base -- this fundamental point, people just need to know what is going to happen tomorrow and the next week. it is just complete darkness. i am saying that because we have complete blackout. we need information and plan, but i think people will come together. but we need leadership as well. adrian: thank you so much. we are out of time. many thanks to you all. as always, thank you for watching. you can see this program again any time by visiting our website. for further discussion, join us at our facebook page.

and you can join the conversation on twitter. from the whole team in doha, thanks for watching. bye for now. tñ■aañ■ñ■ñ%çwçwçwçwçwçwçwçwçwçwe

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