Serious crisis
Last month, the Lankan Prime Minister publicly admitted that the country’s economy had collapsed. The country is in debt with no money for food and fuel. No one is willing to import to Lanka because of the huge debt owed on imports. In this situation, they have sought the help of neighboring countries like India, China and the International Monetary Fund. The Prime Minister and the President had to agree to resign amid the country’s burning protests.
How serious is the current crisis?
Sri Lanka’s economy was showing growth until the recent crisis. Currently, the debt is 51 billion US dollars. Since then, the country has been reeling without the ability to repay even the interest. A major cause of the crisis was the setback to tourism, the mainstay of the Lankan economy. The covid pandemic and the terror attacks in the country in 2019 have also affected tourists.
The Lankan currency has depreciated by more than 80 percent, making imports more expensive. Already spiraling inflation complicated matters. Following this, the price of food items increased by more than 57 percent.
During this kind of crisis, things have come to a point where there is no money to import anything like gasoline, milk, cooking gas etc.
Political corruption
Corruption at the political level is one of the reasons for today’s crisis. This results in draining the nation’s wealth and delaying the resolution of the problem. Even if the International Monetary Fund gets help, it will come with a number of strict conditions.
How does the crisis affect the common people?
The serious situation is that there is no food to eat in the country. According to a report by the UN World Food Programme, nine out of ten households skip meals. Three million people are in urgent need of assistance.
Medical supplies are also facing acute shortages. Many are trying to work in other countries. In short, people are almost hopeless.
What caused the crisis?
The reasons are local. That is, the root causes are age-old corruption and inefficiency in governance. The acquisition of huge foreign debt without adequate calculations to increase the country’s infrastructure, along with the reduction in taxes, are considered unwise measures. Even though the tax rate was increased recently, things had already gotten out of hand. In 2019, the government banned the import of chemical fertilizers, which caused prices to skyrocket. The ban on the import of luxury goods to stop the foreign exchange also backfired. With the addition of the Russia-Ukraine war, the collapse was complete.
