Economic promise to be scattered by 10 points

Sri Lanka Crisis: 10-point economic promise of destruction

Sri Lanka’s external debt is about ৫০ 50 billion

New Delhi:
Sri Lanka’s economic crisis continues to worsen. On Monday, Prime Minister Ranil Wickremesinghe warned that “the next few months will be the most difficult”. But the ongoing crisis has been building for years.

Here is the 10-point loaddown of Sri Lanka’s economic crisis:

  1. On Monday, Prime Minister Vikram Singh tweeted a long thread with “unpleasant” information about the economic situation in Sri Lanka. He said the government’s revenue stood at around Rs 1.6 trillion (SLR), where the expenditure is currently SLR 4 trillion. This means that the budget deficit is SLR 2.4 trillion, which is 13% of GDP.

  2. Foreign exchange reserves, which help a country pay for imports, are almost zero. “Finding িয়ন 1 million is a challenge,” the prime minister tweeted. Interestingly, he mentioned that the country had িক 7.5 billion in foreign reserves in November 2019.

  3. Bikram Singh added that Sri Lanka needs 75 75 million for fuel. For now, India has extended the credit line for diesel shipments. “We are working to get dollars in the open market to pay for shipments,” he tweeted.

  4. Sri Lanka is also facing shortage of medicines and medical equipment. However, it has already defaulted on its payment. Without going into the details of a possible solution, Vikram Singh said that Sri Lanka would have to pay 34 billion SLR for four months of medical treatment.

  5. Sri Lanka’s external debt amounts to about $ 50 billion, while China’s share amount is about $ 8 billion. China’s “hidden debt trap” has been blamed for the growing debt crisis as the country embarks on a series of Chinese-funded projects that have failed. On 12 April, the Central Bank of Sri Lanka unilaterally stopped repaying external loans.

  6. After the end of the 25-year-long civil war against the LTTE, Sri Lanka showed a lot of commitment. “Recent trends such as low inflation, low and stable interest rates, strong external reserves, stable exchange rates, improvement in the financial outlook are strong indications that the economy is returning to normal,” the central bank noted in 2010.

  7. Sri Lanka’s economy grew by 8.6% in the last quarter of 2010 and by 9.1% in 2012. This was mainly due to the huge pressure on public infrastructure projects and the revival of tourism.

  8. Tourism, which contributed at least 12% to GDP in 2019, has become a major source of revenue. In 2018, the island welcomed 2.3 million tourists, the highest ever.

  9. However, the Easter bombing in 2019 and the Kovid epidemic a year later devastated the tourism sector. In 2021, Sri Lanka welcomed only 1.9 million tourists and earned a meager $ 500 million in revenue.

  10. The ongoing Kovid epidemic has exacerbated the forex situation, with forex reserves falling by more than 70% in two years. The decision to support organic farming – critics claim it was due to a shortage of foreign exchange – has led to poor agricultural yields. As a result, agriculture accounted for 2.4% of GDP in 2020.

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