On May Day 2026, the Yukthi Collective, reiterates the onslaught of neoliberal policies on the working class – the informal and daily waged, farmers, fishers, plantation labourers and self-employed women – who have been drawn into Sri Lanka’s neoliberal open economy since the late 1970s. Amid a debt crisis and austerity measures pushed by the capitalist system, the working class of Sri Lanka remains acutely exploited. 

Since the eruption of the debt crisis in 2022, Sri Lanka has been undergoing the International Monetary Fund’s (IMF) Structural Adjustment Programme (SAP). IMF-mandated reforms include increased Value-Added Tax rates during the peak of the economic crisis, tightened fiscal ceilings, and welfare spendings that are tied to restructuring foreign private sovereign debt. It is also part of a larger deregulation of the economy; land, labour, capital and trade, that removes protections for people’s rights, wellbeing and livelihoods. 

Sri Lanka has experienced an extreme climate disaster, Cyclone Ditwah, in December 2025, and now is buffeted by the US-Israel war on Iran. When global economic crises are driven by imperialist power, the working class in countries like Sri Lanka pay the cost of  supply chain shortages, higher prices for essential goods and services, loss of employment, livelihood and incomes created by the crisis.

The economies of the Global South are designed to ensure dependence on wealth of the Global North, and deliberately expose the working class to shocks. Sri Lanka has been grappling with the humanitarian consequences of Cyclone Ditwah with fiscal spending limits and increased pressure of non-concessionary IMF borrowing for the climate disaster. 

Although the  initial assumptions of IMF economic targets were disproven when the Ditwah Cyclone made landfall at the end of last year, such a climate disaster that affected  2.2 million people in Sri Lanka has incredibly not urged the National People’s Power government to  insist on suspension of debt servicing and renegotiation of conditions. The SAP conditions limit the government’s ability to respond effectively to this humanitarian emergency. Instead of climate reparations, the IMF extended another IMF loan of USD 206 million, increasing the debt burden. 

On top of the after-shock of ecological disaster is the latest breaking point– the global consequences of the US-Israel war on Iran. For import dependent and export oriented economies such as Sri Lanka, these overlapping realities have intensified vulnerability: inflated oil prices, accelerated inflation, further constraining already reduced foreign exchange reserves and space for price controls. These foreign exchange constraints impact the flow of essential goods and services, and livelihoods of local SMEs, small-scale farmers and fishers. Farmers and fishers’ reliance on crude oil for machinery and transport and chemical fertilizer for cultivation. Breakdown in supply chains of oil and fertilizer not only increases their cost of production straints incomes, but also reduces food production. Thus, very much like the burden of the SAP, the real cost of this crisis is to be borne by working people yet again, without any changes to debt repayment conditions. 

From crisis to crisis, elites, international and local, accumulate power and wealth; employers and capitalists are rewarded concessions. Workers’ and peasants rights are curtailed and livelihoods disrupted. Sadly, this government instead of ‘system change’ has opted for ‘system continuity’. This scenario prepares the way for a new IMF programme after the end of the 17th in March 2027, tightening the grip of bondholders and other International Financial Institutions (IFIs), prolonging the socio-economic and political hostage of Sri Lanka, denying us the right to build our own future.

The Yukthi Collective calls for an economy that produces, reproduces, and cares for our people and the earth.

End the austerity! Cancel the illegitimate debt! 

01 May 2026.