Mayank Bhatt IPM01038 Section-A

Sri Lanka’s Economic Crisis

MEB - Assignment

Sri Lanka has been reeling from an economic crisis for the past several months now.
The economic crisis has resulted in a rise in electricity and food prices.
Inflation is at more than 50%.
There were multiple reasons for the same

Declining tourism: The recent pandemic and lockdowns has hampered its tourism
industry on which the country was heavily dependent for the country’s revenue. The
easter bombing in 2019 also led to decline in tourists.

Fertilizer trap: In 2021, All fertilizer imports were completely banned and this has
severely affected agricultural productivity.This overnight shift has impacted food
production and finally led to the declaration of economic emergency

The country is facing an acute shortage of foreign exchange that has left its citizens
struggling for food, fuel and other basic resources.

On top of that, there is political unrest in the country with their president having to flee
the capital.

Their debt has only increased in recent years, with the current debt being around $51
billion and for the first time they were unable to make payments on their interest. The
country’s currency also has collapsed by 80% which has made imports more expensive
and has worsened the inflation rate.

Further, years of mismanagement and corruption by the senior leadership and

management has resulted in this this tumultuous situation.