Sri Lanka’s Economic Crisis: An Overview

Sri Lanka’s Economic Crisis: An Overview

Author Name : Sikandar Ansari

Introduction

When a country’s expenditure is more than its income, it has to borrow from world bank, IMF (International Monetary Fund), International market and other countries and when this debt exceeds 60% of the country’s GDP, then the economy turns into a recession. The situation in Sri Lanka’s has taken a dire turn in recent times. Because Sri Lanka’s debt has reached 113% of its annual GDP. A few days ago, some Sri Lankan's who had arrived from Sri Lanka were arrested by the Tamil coast guard. After inquiry it is known that they want to take reside in India to save from the Sri Lankan economic crisis. The situation in Sri Lanka can be understood by this.

Sri Lankan president Gotabaya Rajapakse declares a financial emergency in the country in January 2021. There is shortage of food, milk, petrol, diesel, gas cylinder, coal, paper, medicine, electricity in the country. People have to wait for a long time to buy petrol and the Sri Lankan army has been deployed at every petrol pump to prevent any kind of chaos. Millions of students are unable to take school exams due to paper shortage. Electricity is available only for 2 hours a day due to shortage of electricity, street lights are switched off, production of the country’s two largest newspaper industries has almost halved. Due to low production and high demand of goods, the price of goods has touched the sky. Example: 1 kg rice 200 (Sri Lankan Rupee- SR), milk powder 800 SR (400 ml 1p), gas cylinder 4200 SR (1p), sugar 200 SR (1kg), milk 1600 SR (1kg). Petrol prices have risen by 92% and diesel by 76% in the last three months since the declaration of financial emergency in Sri Lanka. Current Petrol and diesel price in Sri Lanka is 420 and 400 SR per litter.