Sri Lanka Economic Crisis

Sri Lanka Economic Crisis, A state of emergency was declared after President Gotabaya Rajapaksa fled the country,after months of mass protests over the island’s economic crisis and countries financial disaster.

Recent Happening’s in Sri Lanka

  • Protests started in the capital, Colombo, in April and spread across the country after citizen shown anger .
  • People have been struggling with daily power cuts and shortages of basics such as fuel, food and medicines at large
  • Inflation is sky rocketing and running at more than 50% and getting worse day by day.

The country doesn’t have enough fuel for essential services like buses, trains and medical vehicles, and officials say it doesn’t have enough foreign currency to import more and likewise the current production’s of food and other daily used items are not ample to meet the daily needs of all citizens.

Due to lack of fuel availability petrol and diesel prices have increased massively

In June  the government banned the sale of petrol and diesel for non-essential vehicles for two weeks. Sales of fuel remain severely restricted.

Schools have closed, and people have been asked to work from home to help conserve supplies till some economic stability is in place.

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Reason behind Sri Lanka Economy crisis

Mismanagement of country different affairs by the Governments   during the past years and exchange crisis are the two main reason’s along with Covid Pandemic because no one was starting to the island soap and it is also one of the reason behind current economic crisis of Sri Lanka .

Also if we  we  remember last in 2021 in which  Government has banned the use of all chemical fertilizers pesticides it was removed by the government to push the Agricultural sector towards organic farming in fact that decision turn out to be a disaster and production of Sri Lanka started declining.

As more the price of food venture because the food Mafia people started holding essential food items like rice sugar purses for making money so even this Government policy is also one of the reason behind current economic crisis of Sri Lanka .

So if we have to analyze few  reasons that led to the decline of sealant and economy they are message external debt then rapidly depleting Foreign Exchange Reserves because of heavy imports the decline in tourism due to the branded make after that high level corruption in the government and banning of chemical fertilizers which have had agricultural production .

How Sri Lanka can get out of Current Financial Crisis situation

Sri Lanka Republic that is around 110% of the GDP they are in a situation when they had no other option but to borrow money from countries and International Financial organizations.

Before doing that any country or Financial Organization  which step forward to provide  Sri Lanka  with any borrowed amount will have to asses financial risk at there end.

Sri Lanka need huge  money to keep its economy from collapsing and on the other hand even if they manage to get the money they will not be able to pay it back anytime soon tips to get the current situation is like their industry Lanka equity fund table show default meaning they will not be in a position to repay the loan anytime soon.

Under discussion Financial Assistance Packages

The country owes more than $51bn (£39bn) to foreign lenders, including $6.5bn to China, which has begun discussions about restructuring its loans.

The G7 group of countries – Canada, France, Germany, Italy, Japan, UK and the US – had said it supports Sri Lanka’s attempts to reduce its debt repayments.

The World Bank has agreed to lend Sri Lanka $600m, and India has offered at least $1.9bn.

The International Monetary Fund (IMF) is also discussing a possible $3bn (£2.5bn) loan.

But it would require a stable government in place so that it could raise interest rates and taxes to help fund the deal, so any bailout plan not likely to be announced soon until  a new solid  administration is in place.



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