The Burning Island: Sri Lanka
State of emergency has been declared in Sri Lanka. Social media websites have
been banned and a curfew has been declared across the island. Before this
thousands of people were out on the street protesting. There is a scarcity of
fuel and food in the country. People are enraged and Sri Lanka is going through
a major economic crisis. Many consider it a mere political and economic crisis
but it's a lot more than that…….
Sri Lanka, a beautiful country named as the pearl of Indian ocean famous for its
tea, gemstone, and tourist destinations. A country doing great in every possible
index in all sectors is going through a rough patch due to some of its unplanned
and untimely policies
Current situation of Sri Lanka
In February 2022, Sri Lanka foreign currency reserves were only $2.3bn which is
a fall of $779m from December 2021. If a country has a low foreign reserves it
is difficult for it to import goods with the present currency reserve in Sri
Lanka it can import good to meet only one months needs only
Apart from this there is a debt payment of $4m due from Sri Lanka. Interesting
fact is that the Sri Lankan economy relies on imports for the basic items like
sugar, cereal, pharmaceuticals.
Because of low foreign reserves it is getting difficult to import goods which is
leading to rapid inflation in the prices of these basic commodities. Inflation
has grown up to 25% in the last one month.
Expenses have increased. There is a huge problem of electricity as well because
fuel is imported from other countries which they are unable to import because of
the law level of foreign reserves. As per the information gathered from natives,
it is observed that the electricity is available only for hours a day. It has
affected the newspaper and printing industries too.
People started fleeing from the country as it is being difficult for them to
sustain in such an unhealthy environment in which they are unable to get even
the basic amenities. India has given an additional 1 billion dollars credit line
to Sri Lanka. It also swapped $400 million currency. With that Sri Lanka has
sought help from China as well to restructure the debt repayment agreements. The
Lankan president also went to world bank and IMF for credit support
Reasons behind the worst situation of Sri Lanka nowadaysIn 2018, Sri Lanka was a top tourist destination around the world. Even 2018 is
considered as the record breaking year for the tourist industry of Sri Lanka. In
April 2019, some bombings took place in Sri Lanka, known as Easter day Bombings.
Three hotels and churches were burned at different places and approximately 270
people died with 45 foreign Nationals. According to the evidences, the bombings
were done by 8 suicide bombers which were from a large anti-national Islamic
With this incident Muslims started getting vandalized by the people of other
communities. Religious tensions were increased which ultimately caused a
negative effect on the tourist industry of Sri Lanka. A large part of Sri Lankan
economy being dependent upon tourism got affected.
There were some political mistakes as well. In the 2019 election when Gotabaya
Rajapaksha became the President of Sri Lanka, he promised mainly two things,
that are rapid economic growth and reduction in the value added tax(VAT) to
half. The ground where he lacked was timing and planning. On 1st December 2019,
when the tax was reduced, the Sri Lanka economy started facing a high revenue
loss. Public Debt rose from 95% of GDP in 2020 to 119% of GDP in 2021.
Gotabaya Rajapaksha threw a masterstroke and declared a complete ban on
synthetic fertilizers and pesticides overnight. He tried to make Sri Lankans
agriculture 100% organic.
Taking such a bold decision with adequate planning can not in any way give the
desired fruitful results.
As far as the problem of foreign debt is concerned, it is not a recent
phenomenon for Sri Lanka. It has a historical background, in 2017 itself the
island's total debt stands at $64 billion in which 95% of the government's
revenue was spent as a repayment. In March 2020, the debt was $51 billion and
was also under a lot of debt from China.
If we look at the evidence, Hambantota International Port comes into play. In
November 2010, this port was built at a cost of $1.3 billion. After a year, Sri
Lanka found it very difficult to repay this debt which he took from China and
decided to privatize the port up to 80%.
Moreover the value of Sri Lankan rupees has fallen a lot. In March itself the
value of Sri Lankan rupees in terms of $1 was 200LKR and now it has fallen up to
300 LKR, which means that the imports have become expensive for the country.
Talking about the political situation, there has been a dynasty rule over the
Government of Sri Lanka and this is a huge problem for the country as no other
has got the chance to come into power and change the pre existing ideologies.
There has also been a ethic conflict among the citizens of Sri Lanka. The
Sinhala community which constitutes 74% of the total population of Sri Lanka
wants Sinhalese language to be declared as the official language of the country
and wants to rule the country. Due to this demand, many atrocities have taken
place which lead to a lot of tension among the people and eventually traders and
merchants from outside the country fear in setting up industry in the country.
In the nutshell, what the people as well as the economy needs is a new system of
planning and a new form of government which can work for the best of its native.
The duty of the state is to provide basic amenities and a sustainable living
condition to its citizens and unfortunately the current government is unable to
provide it, a change is must.
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