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 Since 2019 the Sri Lankan economy is
experiencing the worst economic crisis after its
independence in 1948.
 What is an economic crisis ?

“An economic crisis is a period of time when there is a lot of

economic trouble in a country.”

The crisis can be caused by many things, such as

Bad government decisions

Corruptions and mismanagement of the authorities
External shocks and foreign debts
This can mean that there is ,

* High unemployment,
* Low economic growth,
* Rising prices of goods and services.
Aspects of the financial crisis

 A country runs out of money.

 Country doesn't have enough money to pay its debts.
 The country can't buy things from other countries.
 The country's economy gets worse.
 People lose their jobs and their homes.
 Country owes a lot of money.
 Things are getting more expensive for people to buy.
 People are angry, unrest and protesting.
 What are the types of economic crisis ?

(01) Currency crisis:

When a country's currency loses value compared to

other currencies. It is being difficult for the country to buy and sell things with other
countries.

Here are some Aspects of the currency crisis,

 Loss of confidence in the country's economy

 Sudden increase in demand for foreign currency
 Decrease in the supply of foreign currency
 Devalue the currency
(02) Sudden stop crisis :

This is when foreign investors suddenly pull their money out of a country. This can
cause the country's economy to shrink and lead to a recession.

Here are some causes can be sudden stop crisis,

 Loss of confidence in the country's economy

 Political crisis
 Natural disaster
 War
(03) Debt crisis :

This is when a country has so much debt that it can't pay it back. This can lead
to a default, which can damage the country's reputation and make it difficult to
borrow money in the future.

Here are some Aspects of the debt crisis,

 Damage to the country's reputation:

[This can make it difficult for the country to borrow money in the future]
 Economic sanctions :
[Other countries may impose economic sanctions on the country,]
 Social unrest:
[such as protests and riots]

This debt crisis can be caused,

 Mismanagement of government finances:
 External shocks
 Changes in interest rates:
(04) Banking crisis:

This is when banks fail to repay their depositors or make loans to businesses.
This can lead to a recession and make it difficult for businesses to grow and create
jobs.

Here are some Aspects of the banking crisis,

 Recession
 Job losses
 Social unrest
 liquidity risk

Here are some causes can be banking crisis,

Poor lending practices
Excessive risk-taking
External shocks like pandemics or
Natural disasters
Examples of the economic
crisis in Sri Lanka
 Pramuka Bank Crisis
The Pramuka bank crisis is a financial crisis that has been unfolding in Sri Lanka since
2022. The crisis is cantered around the Pramuka bank, a small privet bank that was
founded in 1986. The bank has been accused of engaging in fraudulent and
unethical practices, including money laundering, insider trading, and providing
loans to ineligible borrowers.
OSeylan Bank Crisis
The collapse of Golden key led to a liquidity crisis at Seylan Bank, which was
exacerbated by the mismanagement of funds by the former chairman of the bank.
As a result, the Central Bank of Sri Lanka stepped in and took control of Seylan Bank
on December 28, 2008.
The CBSL injected capital into Seylan Bank to strengthen its financial position and
appointed a new management team to oversee the bank's operations. Under the
new management Seylan Bank implemented several reforms to improve its
governance and risk management practices. As a result of these reforms, Seylan
Bank has gradually removed from the crisis and is now one of the most stable and
profitable banks in Sri Lanka.
OETI Finance Company Crisis
The ETI Finance Limited crisis was a significant financial debacle that occurred in Sri
Lanka between 2011 And 2022. It involved the collapse of a non-banking financial
institution due to mismanagement, risky investments, and inadequate regulatory
oversight.

O Golden Key Credited Card Company Crisis

The Golden Key Credited Card Company Crisis was a major financial scandal that
rocked Sri Lanka in 2008. The company, which was part of the Celinco Group,
collapsed after it was revealed to have been engaging in fraudulent activities and
mismanagement. The crisis left thousands of depositors without their savings and
caused significant damage to the Sri Lanka economy.
 What are the Impacts of the
economic crisis in Sri Lanka ?
What are the Impacts of the economic
crisis in Sri lanka ?

 Shortages of essential goods

The forex shortage has led to difficulties importing essential goods, such as food,
medicines, and fuel. Sri Lanka's economic crisis is rapidly turning into a health crisis
amid growing shortages of basic drugs and medical supplies.
 Impact for the tourism
Since tourism accounts for approximately 10 percent of Sri Lanka’s GDP, Yet tourist
arrivals decreased to 30,207 by May 2022 due to the economic crisis in Sri lanka. The
decrease in tourist arrivals due to the COVID-19 pandemic was one of the factors that
contributed to Sri Lanka's dwindling foreign exchange reserves
 Impact to the society
Increased unemployment, loss of income and increased vulnerability have been
among the dominant social impacts of the crisis
O Increased poverty
poverty rate has doubled from 2021 from 13% to 25%, according to the World Bank
O Political uncertainties
All political parties became uncertainties because collapsed the believe of the their activities
to the peoples in Sri lanka

O Impact to quality of lives

Many have been left jobless due to fuel shortages and power cuts, as these problems also
affect industries and businesses. The people of Sri Lanka are suffering as they face daily power
cuts and shortages of necessities such as fuel, food and medicine.
O Increase scarcity
Scarcity, or the lack of sufficient resources, affects virtually all aspects of life, as people
must constantly acquire wealth to pay for needs that are in short supply. ... Without
scarcity, goods and services have no value because they are abundant .Scarce items
are said to be at low supply.
O Incurred the political uncertainties
All political parties became uncertainties because collapsed the believe of the their
activities to the peoples in Sri lanka
O Increased inflation
The country has struggled with high inflation owing to the vicious debt trap that it has
found itself in. As a result, the interest payments on sovereign debt and the cost of imports
have been rising steadily. The increase in inflation has hit every stratum of society hard,
but has hit those with the lowest incomes the hardest.
O Negative impact to the education
The current economic crisis has hit the country’s education sector severely. From pre-school
children to undergraduates, students, teachers and non-academic staff attached to our
educational system, have been affected in unprecedented ways. Our educational
institutions are struggling to run academic activities due to frequent power-cuts and
shortages of supplies, such as stationery and chemicals. Hostellers, and students boarded in
private houses, face difficulties in meeting their daily needs, including food and transport.
These financial constraints have resulted in a decline in students enrolled in some four-year
special degree programmes this year at universities.

O Increasing migrations
Migration trend has been increasing away from Sri lanka. Included skilled labors and
professionals like Specialist doctors , Engineers , Charted accountants and other
professional job seekers. This is a very big impact for our country development
How to overcome Sri Lanka
economic crisis?
1.) Export Promotion
Implementing NES (National Export Strategy)

 - Simply NES stands for National Export Strategy. NES stimulates growth and job creation by
improving the ability of firms to export and compete in foreign markets
 - It allows Sri Lanka to become a regional trade hub, which will attract foreign investment to the
country and high economic development.
 Major Focus Sectors of NES
• ICT/ BPM Services
• Wellness Tourism
• Boating Industry
• Electrical & Electronics
• Process Food & Beverages
• Spices & Concentrates
Implementing Exporter Help Program

-EDB (Export Development Board) provides new Sri Lankan exporters with extra assistance and resources to
grow their businesses, start an export business in Sri Lanka, and access new international opportunities.

Services provided by EDB

 Providing proven strategic advice and necessary training

 Target and attract more buyers online

 Developing methods to secure sources of export financing

 Provide special loan facilities and encourage them financially

Enhance trade agreements and partnerships with other countries to boost exports
• South Asian Free Trade Agreement
• Asia Pacific Trade Agreement
2.) International Assistance

Seek assistance from financial institutions

- Seek assistance from international financial institutions like the “International Monetary Fund” (IMF) or the
“World Bank” for financial support and technical expertise.
- Mr. Ranil Wickremesinghe brought in the International Monetary Fund and has focused on reaching
macroeconomic stability. Today, as Sri Lanka embarks on its 17th IMF program, it has a unique opportunity to
restore stability and push forward sustainable growth.

Build strong relationships with other countries for trade and investment opportunities
Moreover, we find that there is a strong complementary effect between FDI (Foreign Direct Investment) and
human capital, that is the contribution of FDI to economic growth is enhanced by its interaction with the level
of human capital in the host country.

3.) Infrastructure Development

- Invest in critical infrastructure projects to stimulate economic growth and create jobs as all types of
infrastructure represent an essential input in any production of goods and services.
- Investments in infrastructure like transportation systems, communication networks, water, and energy supply
contribute to higher productivity and growth, facilitate trade and connectivity, and promote the economy
positively.
 Thank You !

PRESENTATION GROUP :
 ADBM23.3P – 022 – K.G.D.A. SANJEEWA
 ADBM23.3P – 027 – R.A.K. RANAWEERA
 ADBM23.3P – 022 – DINUSHA
 ADBM23.3P – 022 – SEWWANDI