Sri Lanka Crisis / Inflation on the sky and fuel famine, know how the gold of Lanka reached the verge of ruin?

Stuck in the trap of Chinese debt, the situation in the island nation Sri Lanka is getting worse with every day. Foreign exchange reserves are almost exhausted, while inflation is breaking all the records of history. The Sri Lankan currency has broken badly against the dollar. Gold Lanka is on the verge of bankruptcy even before recovering from the ravages of the Kovid-pandemic. Let us know what is the condition of the country at this time and what is the reason behind them?

biggest financial crisis in history

Sri Lanka is currently facing the biggest financial crisis in its history. The situation in the country had already worsened due to the Corona epidemic and the ongoing war between Russia-Ukraine over it has made these situations worse. Due to this, the economy of this island country has collapsed badly. Which is also getting difficult to handle. The country's foreign exchange reserves are almost depleting. According to the Central Bank of Sri Lanka, the country's foreign exchange reserves stood at $2.36 billion in January. Significantly, in the country with a population of about 22 million, there has been a huge shortage of other fuels including petrol and diesel. Whereas, inflation is increasing exponentially. Due to this, a serious food crisis has arisen in front of the countrymen.

Inflation broke all records

Petroleum prices have skyrocketed amid the country's foreign exchange crisis. According to the report, there is no foreign exchange left for the government of Sri Lanka to buy petrol and diesel, due to which this crisis has deepened even more. A few days ago, such pictures came from Sri Lanka that people broke down at the petrol pump to buy petrol and the army had to be called to control the people. Thousands of people are waiting in queue for hours to buy oil. The dollar crunch in the country has affected all sectors. Inflation in the country reached a record level of 17.5 percent in February, which is the highest in the whole of Asia.

Sri Lankan rupee breaks up to 45 per cent

How deep is the crisis in Sri Lanka can be gauged from the fact that against the US dollar, the Sri Lankan rupee has broken 45 percent so far in the month of March. Since March 1, Sri Lanka's currency has broken against the dollar and has come down to an all-time low of 292.5. According to the Prime Minister of the country, Mahindra Rajapaksa, this year the country may have a trade deficit of 10 billion dollars. At the same time, on the situation in Sri Lanka, which has reached the verge of bankruptcy, the International Monetary Fund (IMF) has said that the challenges facing the country's economy are increasing and the government debt has reached a very high level. The IMF called for immediate reforms in the country's economy facing severe economic crisis.

Effect of over dependence on imports

Significantly, Sri Lanka imports most of its items. It includes everything from medicine to oil. According to the report, the share of petroleum products in Sri Lanka's total imports was 20 per cent in December last year. But, due to the decrease in foreign exchange reserves, the government of Sri Lanka is failing to import essential items including fuel. Due to this, there is a shortage of essential commodities in the country and their prices are skyrocketing day by day or else the common people of the country are getting away from their daily needs. Sri Lanka also imports petroleum, food, paper, sugar, pulses, medicines and transport equipment. Talking about the present time, due to the affected paper supply in the country, where newspapers are closed, on the other hand school examinations are not being conducted.

worst hit on tourism industry

Let us tell you that one of the reasons for the country's economy reaching the brink of ruin is the decline of the tourism industry in the country. Let us inform that Sri Lanka's tourism sector, which has contributed significantly to the country's GDP due to the Corona epidemic, was already going through a crisis, which has not yet recovered. The tourism industry contributes about 10 percent to the country's GDP. After the serial bomb blasts in Colombo in 2019, the tourism industry suffered a setback and the corona epidemic increased it so much that it became difficult to salvage it. This also directly affected the foreign exchange earnings of Sri Lanka. Apart from this, according to government data, there has also been a big decline in FDI in Sri Lanka. Explain that if FDI in a country decreases, then the foreign exchange in its reserves also decreases.

food-loving countrymen

In January, Sri Lanka's foreign exchange reserves fell by more than 70 per cent to $2.36 billion, under the debt of many countries, including China, which is continuously declining. Due to the lack of foreign exchange, most of the essential goods, medicines, petrol and diesel in the country are not being imported from abroad. According to the report in the past, due to the shortage of cooking gas and electricity in the country, about 1,000 bakeries have been closed and the remaining ones are also not being produced properly. People also have to buy a bread packet for $ 0.75 (150) rupees. Not only this, the price of one kg of rice and sugar has reached Rs 290 per kg. At present, people have to spend up to Rs 100 for a tea.

Potatoes 200, then chilies 700 rupees per kg

Significantly, on August 30 last year, the Sri Lankan government declared a national financial emergency following a sharp fall in currency value and a sharp rise in food prices after that. In this regard, in a report recently, inflation in the country was presented with figures. In this report in January, it was told that within a month between November 2021 and December 2021, food inflation in Sri Lanka had increased by 15 percent. After this, the situation that happened can be gauged from the fact that the price of one kg of chilli in the country has gone up to Rs 710, in a single month, the price of chilli has increased by 287 percent. Not only this, the price of brinjal increased by 51 percent, then the price of onion increased by 40 percent. Had to pay up to Rs 200 for one kg of potatoes.

Debt burdened economy

Sri Lanka has an external debt of about $ 32 billion. In this way, the government of Sri Lanka faces a double challenge. On the one hand, he has to pay the foreign debt and on the other hand he has to rescue his people with difficulty. The government is left with no option but to seek financial help from the International Monetary Fund (IMF). A report said that the Sri Lankan government will have to restructure the foreign debt by July. The reason for this is that the government does not have the money to repay the debt of one billion dollars in July.

country on the verge of bankruptcy

The country's coffers are drying up due to record levels of inflation, spurt in food prices and troubles created by the Corona pandemic. The situation has become so bad that this country is likely to go bankrupt this year. An earlier report said the country needs to repay an estimated $7.3 billion in domestic and foreign debt over the next few months, while it has no money left to run the country.

More than five lakh people trapped in poverty

It was estimated by the World Bank last year that 500,000 people in the country have been trapped in poverty since the start of the corona epidemic. According to the report, even for the families which were considered affluent earlier, they are finding it difficult to collect bread for June 2. Most of the families in the country have to meet their basic needs. Amidst the state of economic emergency in the country, the employment of more than two lakh people has been lost in the travel and tourism sector itself and the same situation remains in other sectors.