Sri Lanka, which is located in India’s neighborhood, became independent from the British in 1948 and was growing rapidly in the last nearly one and a half decades. But today she is growing rapidly, she is burning in the fire of misery in Lanka. People are protesting against the government by taking to the streets and there is a shortage of essentials. Essential things are not getting even at arbitrary prices and the government is seen in deep trouble. Although this crisis was going on in Sri Lanka for many years, but Corona has deepened it further. Let us know, after all, what is the inside story of being trapped in this deep swamp of Sri Lanka…
Sri Lanka may have got independence in 1948 itself, but it could not grow as compared to neighboring countries like India and China. One reason for this has been the prolonged Tamil conflict. The civil war in Sinhalese-majority Sri Lanka lasted for 26 years, which ended in 2006. The country suffered great losses in this war, but after its liberation, the governments of Sri Lanka made rapid growth efforts. For this, he attracted foreign investment and its effect was also visible in the short term. The economy began to boom and per-capita GDP grew rapidly to $3,819 in 2014, down from $1,436 in 2006. In this regard, Sri Lanka has overtaken countries like Philippines, Indonesia and Ukraine.
Bad debt development for Sri Lanka
Due to this, 1.6 million people in Sri Lanka were lifted out of poverty, which was 8.5 percent of the population there. This created a large middle class population in the country. In 2019, Sri Lanka joined the list of upper middle-income countries in the ranking of the World Bank. However, this crown remained with him for only one year as this growth was achieved at the cost of debt. Sri Lanka’s debt tripled to 119 per cent of GDP between 2006 and 2012. These policies were put in place in 2015. This may have shown stability in the economy on the surface, but the debt continued to increase. The reason for this was that Sri Lanka had largely relied on high interest rate loans for infrastructure projects.
Corona has done the right thing
For Sri Lanka, the crisis of Corona proved to be like a scab in leprosy. Sri Lanka, which was facing slow growth and rapidly increasing debt, used to get big help through tourism, which came to a standstill after the arrival of Corona. Sri Lanka’s trade deficit stood at $10 billion in 2018, while tourism generated $5.6 billion in revenue. It was clear that due to tourism, he was compensating for more than half of his loss, which suddenly disappeared due to Corona. This dealt a big blow to the Sri Lankan government. Apart from this, on the other hand the interest on the loan kept on increasing. In such a situation, the Sri Lankan government printed more notes to deal with the crisis and due to this inflation increased rapidly. During this period, Sri Lanka had only one recourse, the amount of $ 7 billion annually that its citizens sent from abroad.
Ukraine war put fuel in the fire of crisis, China’s debt also became difficult
To deal with this crisis, the Sri Lankan government was advised by economists to get international aid, but instead of doing so, it took loans from neighboring countries like China. On the other hand, the central bank depreciated the rupee and banned imports. Due to this Sri Lanka got stuck in such a swamp, which made it difficult for him to get out. Somehow difficult days were passing in Sri Lanka that in the last week of February Russia attacked Ukraine. Due to this the tourism of Sri Lanka was also affected. The reason for this was that a large number of travelers came from Ukraine and Russia. Not only this, the prices of oil, wheat and other essential items also caught fire.