Sri Lanka facing the worst economic crisis.
The covid-19 pandemic has hit Sri Lanka's economy badly. During the pandemic, highly vulnerable to external shocks owing to inadequate external buffers and high risks to public debt including large tax cuts at late 2019”, said the IMF in a release on 25 February in global lender’s executive board’s consultative.
The price of basic food items has including milk, which is essential for a regular meal, and food businesses have been pushed up by the shortage of US dollars in the country. Sri Lanka is currently facing a double whammy of increasing prices and high external debts.
In September 2020, Gotabaya Rajapaksa, President of Sri Lanka announced an economic emergency. The government took control of the supply of basic food items and set prices to control inflation, 14.2% spiked in January 2021. Sri Lanka's debt spiral was already an unsustainable path even before the pandemic.
Sri Lanka’s government has been issuing sovereign bonds since 2007 without any plan to repay the loans. Reserve was built by borrowing foreign funds rather than high earning through export services, said Dushni Weerakoon in an interview. The Sri Lankan government has spent foreign currency on repaying the debt and the central banks have been running down.
Sri Lanka is facing the worst economic and energy crisis due to a shortage of foreign exchange. Tens of thousands of people stand in a queue for hours outside the petrol pump as the prices of key commodities and fuel shortages rise. People are also facing long hours of a power cut. Reportedly two-man fainted on Sunday in Sri Lanka, to secure fuel and sky-rocketing prices leading to inflation while waiting in the queue. On Tuesday, military personnel was located at state-run petrol pumps to manage and monitor the fuel shortage that is led to long queues outside the petrol pump.
Gamini Lokug, Energy minister said that "We have decided to post-military personnel at the petrol pump to tackle the unwanted situations where people are taking fuel in cans to do business. They will make sure that the fuel is being distributed fairly amongst the people."
“Mounting challenges” are being faced by Sri Lanka’s economy with public debt reaching "unsustainable levels". IMF (International Monetary Fund) called for urgent reforms in Sri Lanka's nation's economy in early March as it is facing the worst crisis. Currently, Sri Lanka is reeling under a severe foreign exchange crisis and falling reserves and the government is unable to foot the bill for essential imports.