Sri Lanka Imposes a curfew after the president declares a state of emergency due to a shortage of fuel and food items. The Sri Lankan citizen now protesting against Rajapaksa’s government’s unable to pay for essential imports, including fuel, leading to debilitating power cuts lasting up to 20 hours. Reasons behind Sri Lanka economic crisis may be many, we need to discuss.
Sri Lanka’s Foreign currency reserves decreased 70 percent since January 2020 to just $2.3 billion by February, which is a fall of $779 million from December 2021. Sri Lanka just has the foreign currency reserves for importing just one month of essentials with a debt of $4 billion.
Reasons Behind the Crisis:-
1) The country which broke the record of Foreign visitors of 2.3 million in 2018 has tourism as 12-13 percent of their country GD but in 2019 Multiple bomb blasts have been done named Easter bombings where 3 churches and 3 Hotels have been targeted where 269 people were killed and 45 international tourists were also killed in these bombings after this Communal Violence has been spread in the Country which reduces it Tourism Sector Engagement. Then March 2020 came the pandemic year which just stopped the tourism factor. Reasons behind Sri Lanka economic crisis – its compounding mismanagement of funds.
2) Debt Factor:- In 2017 Sri Lanka’s total debt was $64 bn. Sri Lanka has to put a ban on foreign goods to pay $51 bn. In 2019 debt was 94 percent of Government Income but in 2021 it went up to 119 percent of the GDP of the Country Which makes the Country’s Foreign Funds just decrease. China is doing Debt trap Diplomacy so that if that country will not be able to repay the debt they take that infrastructure.
3) Bold decisions by the government which make Sri Lanka bald like Banning pesticides and going to organic farming because of this Sri Lanka which exports tea has to import it from other countries because the organic farming decision was not planned well because in the beginning of Organic farming it decreases the crop growth by 20-30 Percent.
4) Inflation:- The Prices of basic essentials like rice and sugar have gone to 300 LKR(1 rupee = 3.94LKR) . One Sri Lankan Activist expressed his feeling on Twitter that “Will they eat money” because after having money also they are not able to buy essential items. Now gas pipeline service is working one day a week. The situation is so bad that cylinder prices are gone at 4200 LKR.
Sri Lanka has defaulted on its $51 billion foreign debt today as the island nation grapples with the worst economic crisis in memory and widespread protests swell demanding the government's resignation ~ AFP pic.twitter.com/pyJo7kBUdG
— Newsroom (@MaudhuiHouse) April 12, 2022
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