The interview with Melani Gunathilaka was conducted by Malina Stutz, Policy Advisor at erlassjahr.de, and Benjamin Bergmann.
Sri Lanka has recently restructured its debt. What is the current situation in the country?
Sri Lanka is still facing a severe debt and economic crisis that openly erupted in 2022 and continues to this day. Its root causes go far back into colonial history, as well as into the structural reforms the country has been required to implement since political independence under 17 IMF programs. The current measures under the ongoing IMF program are again leading to significant economic and social hardship. In addition, the country is facing the consequences of severe climate-related disasters, including the destruction caused by Cyclone Ditwah in late 2025, as well as the economic impacts of the war in the Middle East.
How is this affecting people in Sri Lanka?
One of the most pressing issues is the rising costs of living. Further, the crises manifest to different people at different levels and in different ways. If you speak to farmers, they would say the most pressing issue is the fertilizer price that they cannot afford. But if you speak to apparel sector workers, they struggle with factory closures and wage issues. And if you speak to people from the Tamil communities they have just been hit by Cyclone Ditwah, which was one of the worst environmental disasters that happened over the last decade. Many of the affected plantation communities had a long-lasting struggle asking for the right to land. Now, a lot of the areas where their housing was located were impacted by the cyclone and landslides. Most of this land is deemed uninhabitable now and needs to be preserved in order to prevent future crises. As a result, the land rights demands of these people are no longer prominent or even looked at in practical. And each of these struggles is very much linked to both the debt and climate crisis.
Could you elaborate on these interconnections in more detail?
Let me explain this using the example of women farmers, as they are among the most affected groups in society. First, they are directly affected by the climate crisis. This is currently still the case in the aftermath of the cyclone, but also more generally due to increasingly frequent droughts and floods. This vulnerability is also partly due to past conditionalities by the IMF and the World Bank.
The World Bank has repeatedly said that the land in Sri Lanka is underutilized, pointing to the fact that the country officially still has close to 30 percent forest cover. It has also argued that our agricultural methods should change and that we should grow more export crops. But that’s not what works for the country. The shift towards more extractivist forms of agriculture has degraded our soil and made it less adaptable to extreme weather events. The Green Revolution introduced in Sri Lanka in the 1960s fundamentally transformed our agricultural practices and made us structurally dependent on imported fertilizers. So, when we talk about today’s fertilizer crisis amid global price shocks, we are talking about a dependency that has been built over decades.
And finally, the ever-increasing expansion of agricultural and industrial land leads to severe human-wildlife conflicts. We have one of the worst human-elephant conflicts in the world, the highest elephant death toll globally, and among the highest human death tolls.
How does the debt crisis factor into this?
First, debt and IMF conditionalities are one of the major tools to push for these agriculture changes. Further, when we’re talking about the sovereign debt crisis, we also need to talk about private debt crises, as in Sri Lanka, there’s a strong link between the two: The IMF conditionalities have led, among other things, to a further reduction in public subsidies, e.g. for fertilizer. Many women farmers are no longer able to sustain their livelihoods. As a result, the microcredit market is booming and pushing many women into over-indebtedness. In recent years, several hundred women, including many mothers, have taken their own lives because they were unable to repay their loans. Thus, the unresolved public debt crisis, insufficient debt relief from international creditors, and the required adjustment measures by the IMF are currently leading to a deadly cycle of private indebtedness in Sri Lanka.
Could you provide more detail on the microcredit sector?
The microcredit debt cycle works in such a way where the women are initially told by these finance companies that these loans are very easy to access, you don’t have to fill out a lot of forms and they’re not explained the conditions that come with it. Most of the time these forms are in English and people do not read or write English either. So, they just place a signature. We also hear a lot from the farmer communities that men are usually reluctant to sign these papers so they get women to sign. So, they take the loan and the main idea is to buy either fertiliser or the seeds to do the farming. However, if there is either a flood or a drought and that would destroy the crop, they are unable to repay the loan so they would end up taking another microfinance loan from another company to repair the debt they took before. It has become a cycle where people’s lives are now heavily reliant on debt. After every harvest, the first thing would be to repay the debt. So, they don’t have enough money to spend on children’s education. They don’t have enough money to spend on health. Almost nothing goes into things like mental health.
Thus, what is happening at the state level is now also being mirrored in the private sphere?
Yes, while the government spends a majority of its income on debt repayments, the same thing is happening within private households as well. This connection is not accidental. When Sri Lanka recently went through debt restructuring, external creditors refused to restructure until we restructured domestically first. What that meant in practice was that the returns on workers’ provident funds, the EPF, were cut, while the commercial banks were effectively bailed out. And once lending to salaried employees had been exhausted, financial institutions moved into rural communities, expanding microfinance into farming communities.
Who is most affected by this?
We hear a lot from the farmer communities that men are usually reluctant to sign these contracts so they get women to sign. Further, women face different types of violence because of this. When the credit companies come to collect the loans, there have been instances where asking for sexual bribery was reported. A common method is also tarnishing the women’s reputations – going around the neighbourhood saying that these women have taken loans and are not paying them back. These methods impact women more than men because of the social structures we live in.
This is even more structurally rooted. The current economic system keeps treating women’s unpaid care labour and environmental externalities the same way. They are treated as shock absorbers or buffers which the current economic system relies on and is built on without any compensation or even consideration of the impact it creates. This economic system is not sustainable. It is killing the planet and it’s also killing people.
In this context, how are you personally engaged? You are part of the Yukthi Collective, what does your work there involve?
Yes, I am. I believe it is crucial to support organising of women and farmers and bringing the plantation communities, especially the Malaiyaha female communities, to the forefront of this battle. Justice can’t happen in a rush; justice needs time, it needs truth, it means accountability, and these things need intense relationship building.
When it comes to global policy, what is required is training people to look at these things critically. The popular understanding does not look at global accountability; the popular understanding is that we are in debt only because our leaders took more debt than we can pay back. While that’s true the roots of this go deeper: Many people look at debt as something that suddenly appeared in 2022, or started in 2015 or 2017. But the development debt started soon after colonization. When it comes to climate change, our understanding is that the planet is burning because we pollute through actions like throwing plastic away and other individual behaviours. However, the underlying structural reasons are not taken into account. I think this also has a lot to do with corporate communication about the environment and climate that is always directed at individuals and not towards the system. So, when it comes to understanding these systems, I think many people do not recognize the structural failures – not because it’s their fault, but because they are simply not visible or addressable to them.
What challenges are you facing in this work?
Even when people understand the global level of decision making, it is often seen as something that we do not have any say in or there’s nothing we can do, other than just do what we are told. This is the same with the IMF. The current program is the 17th program that Sri Lanka has gone through. We have done exactly what they’ve told us to do but that hasn’t worked. But at the same time, people are not presented with any other solutions than to go ahead with it. There’s also an understanding that we must go where the world is going. Otherwise, we won’t survive.
To give you an example: we are currently in the process of privatizing more state-owned enterprises. If you spoke to people about privatization like 10 or 15 years ago, people would not have liked it. But there have been lots of campaigns over the last couple of years, and now a lot of people do believe privatization is a good thing. From teledramas to street dramas, muppet shows and social media, there were very intense campaigns happening, pushing IMF policies in Sri Lanka. More general, there’s this gap in terms of what is seen as superior knowledge – there is a continuous colonization of our minds and thereby the manufacturing of consent. So, economics is treated as superior knowledge that only economists are supposed to speak and understand or even have an opinion on.
Would you say your approach primarily focuses on bottom-up strategies?
I think, organizing and mobilizing people around these issues would be the best way forward but I also do not believe in bottom-up solutions alone. Given that we are very much connected to global trade and that the global financial architecture dictates a lot of the terms of how our everyday lives are shaped, change needs to happen at the top as well. This is why, besides my work within the Yukthi Collective, I work with another local organization as a researcher mainly focused on debt justice, and I try to incorporate climate justice into my work because that’s my background. And I currently work with an international campaign organisation on climate accountability too. I try to manage both because for the two issues that I work on, climate and debt, we have local accountability and local changes that need to happen and also global accountability and global policy changes that are required. So, I’m trying to work strategically with both of these organizations. I am also a member of the Debt for Climate Global movement advocating for abolishing Global South debt.
What do you ask of governments in the Global North?
It’s a very weird time to answer this question. Maybe acting a little sensible would be good for a start. I think understanding how their colonial decision-making has shaped our realities today and respecting the autonomy and sovereignty of other nations is important. I think Global North governments also have a responsibility to hold other Global North leaders accountable when they violate international law, when they do not respect other countries. Affluent countries are better equipped to challenge and hold these governments accountable. Further, when it comes to top-down approaches, changing the economic system to one that is sustainable, one that prioritizes the well-being of the people on the planet instead of profit. This is, of course, a vast undertaking, but it is essential for the survival of both the people and the planet.
What would you like to see from civil society in the Global North?
First and foremost, we would like to see you holding your own governments accountable, as I just described. Then there also needs to be some sensitivity in working together with groups in the Global South. We are continuously seeing international NGOs engaging with local communities in ways that reproduce colonial dynamics. I’ve engaged with groups working on movement building, but the movement should be defined by how they see it, rather than by external deliverables. What needs to be ticked cannot be decided by an outsider, Global North actors. And I think all these movements do not last in the end, because they do not happen from the ground up. Also, these structures sometimes do not really fit the local context. And then it gets incorporated into this NGO industrial complex, and it becomes sort of a way of sustaining your organization and within the work you do, rather than actually trying to win the battle that you initially set out to fight. So, I think that that’s what I would say about a lot of civil society organizations which engage with good intentions. If you fail to understand the community that you work with, and if you try to understand success or progress only within the Global North narrative or that perspective, what you’re really doing in Global South countries is not going to be sustainable in the long run.
To learn more about the work of Melani Gunathilaka and the Yukthi Collective, visit their website and follow Melani on social media — for example here on LinkedIn and here on Instagram.
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This publication was co-funded by the European Union. Its contents are the sole responsibility of erlassjahr.de and do not necessarily reflect the views of the European Union.
