Crisis in Sri Lanka: How did the country reach the extent of destruction?

Thousands and millions of people have been on the streets for months. People are demanding the resignation of the President and the Prime Minister.

Prime Minister Mahinda Rajapaksa resigned in May after public anger broke out on the streets. And now President Gotabaya Rajapaksa is also going to resign.

Not only this, the number of trains has also been reduced. Hundreds of people are forced to stand in line for hours to buy fuel in several major cities, including the capital Colombo. Many times people have clashed with the police and the army.

According to sources, the situation in Sri Lanka has become so bad that schools have to be closed. Fuel has also been restricted to essential services only.

Patients are unable to go to the hospital due to the shortage of petrol and diesel. Food and drink are skyrocketing.

Who is responsible for the situation?

1. Increased closeness with China

Relations with China have grown since the Mahinda Rajapaksa government came to power in 2015.

China gave huge loans in the name of infrastructure. China is believed to be the major cause of Sri Lanka’s economic crisis.

2. Decrease in foreign exchange reserves

Sri Lanka’s foreign exchange reserves depleted sharply due to high borrowings and low earnings.

In April 2018, there were foreign exchange reserves of around $10 billion, which has come down to $1.7 billion by May 2022.

3. Debt increased

The foreign debt on Sri Lanka continued to grow. According to Sri Lanka’s central bank, the country had an external debt of $21.6 billion in 2010, which increased to $46.6 billion in 2016.

At present, Sri Lanka has a debt of more than 51 billion dollars.

4. Impact on tourism due to Corona

The economy of Sri Lanka is heavily dependent on tourism. Corona has had a negative impact on tourism.

The share of tourism and allied sectors in Sri Lanka’s GDP is about 10%. Foreign exchange reserves also declined as a result of the absence of international visitors.