The economic crisis in Sri Lanka will extend for at least another two years: Govt 

According to the country’s finance minister, Sri Lanka’s significant economic troubles will last at least two more years, who also warned of an impending cash constraint. 

Across the South Asian island country, months of outages and severe shortages of food, gasoline, and medications have caused widespread hardship 

Protests have raged on for months, demanding that the government quit for mishandling the country’s most significant economic crisis since independence in 1948. 

“Everybody should know the truth. I’m not sure whether people realize how serious the situation is, “Ali Sabry, the Finance Minister, addressed the House of Commons. 

“We won’t be able to solve this problem in two years, but the actions we take today will determine how long the problem persists.“

Foreign Exchange Reserves 

As per Sabry, the nation today has less than $50 million in useable foreign exchange reserves, which are needed to finance crucial products to keep Sri Lanka’s import-dependent economy afloat. 

Official data suggests that the country has $1.7 billion in reserves, but that amount includes a Chinese currency exchange that cannot be used to pay for imports from other nations. 

Sabry feels that delaying a bailout request to the International Monetary Fund was a mistake for the administration.  

Discussions with the IMF are ongoing, although the governor of Sri Lanka’s central bank has said that any IMF assistance will take months.  

The administration is expected to release a new budget soon, including tax increases to replenish state coffers. 

“It was a historical blunder to sharpen tax cuts in 2019,” Sabry added. The former central bank chief had also made a mistake by depleting foreign reserves to preserve Sri Lanka’s overvalued currency. 

Economic Crisis 

Sri Lanka’s economic problems began when the coronavirus outbreak decimated tourism and remittance revenues. 

Leading to a shortage of finances to pay for fuel imports, utilities have enforced daily blackouts to restrict energy, and long lines for gasoline and kerosene have formed outside service stations.  

Essential medications are in short supply in hospitals, and the government has appealed for donations from people all around the world.  

Sri Lanka defaulted on its $51 billion international debt earlier this month. 

President Gotabaya Rajapaksa has indicated that he is prepared to establish a united government to help the country navigate the issue. 

On the other hand, the opposition has refused to join a government that includes the president or any other members of the strong Rajapaksa family. 

For nearly a month, protesters have been camped outside the president’s seafront office, attempting to persuade him to resign. 

Trade unions, which went on strike last week, have announced that they will strike again on Friday to put pressure on the entire administration to quit.

Read Also: Sri Lankans Protesting in streets amid Economic Crisis.

Published By: Aman Gupta

Edited By: Vanshika Sahu