The Sri Lanka economic crisis is an ongoing crisis in Sri Lanka that started in 2019. Now, this crisis has become the worst.
Sri Lanka’s government has failed to pay 78million dollars in debt interest payments. People started protesting out on the streets.
According to the government, it is a crisis of foreign currency shortages started in 2019 and become a serious problem in 2021.
In Sri Lanka, 22 million are facing an economic and political crisis. Shops have been closed because shopkeepers can’t run fridges. There is no gas at gas stations.
The cost of bread has more than doubled, and people are frustrated, fearing they could run out of essentials like medicines or gas. How will they feed their families? Currently, external reserves are depleted.
The government cannot pay the loan installments for the first time since 1948, the government is approaching the IMF.
In April 2022, the government declared bankruptcy which was about 51 billion American dollars.
The Sri Lankan currency has depreciated 50% against the US dollar in the past five months. More than 30% food inflation was recorded in March.
According to the survey, by April 6, the dollar had reached a record high of 300 Sri Lankan rupees. Examinations had to be postponed due to a shortage of paper sheets in schools.
How did Sri Lanka go bankrupt?
The people are blaming the government and the wrong policies for the entire situation.
The people are currently angry with the Raja Paksa family which has been in power for 12 years.
The whole nation became beggars. Taxes were reduced before 2020 and fertilizer imports were stopped so that money would not flow out of the country destroying crops.
The money was spent on food imports which was a mistake.
During the economic crisis, the government kept printing currency which led to the worst inflation in the history of the country, and a loss of one billion dollars is seen in agriculture.
Sri Lanka’s tourism industry generates 10% of the GDP of the country.
In 2019, the tourism industry in Sri Lanka became very slow due to terrorism and bombardment, and compared to 2018, the tourism industry decreased by 80%.
In 2019, the foreign reserves were 7.5 billion US dollars.
A country is declared bankrupt if it fails to pay its external debts and interest installments.
Sri Lanka’s external debt is currently over 51 billion dollars.
It will take time for Sri Lanka’s economy to recover demand for political change including diminishing the power of the executive presidency.
