Colombo: Sri Lanka has gone bankrupt with its external debt of $51 billion and is in a deep economic crisis. As a result, there are widespread protests against the government. Along with food and fuel shortages, electricity is cut-off locally.
Out of 24 hours, electricity is available only for 12 to 13 hours of the day. Since its independence in 1948, Sri Lanka has never seen such a crisis.
People’s aggression has increased so much that they have started besieging the residences of government ministers. Security forces used tear gas and rubber bullets to disperse the angry crowd.
Sri Lanka’s finance ministry said the country was bankrupt on all external debt fronts of $51 billion. It also includes loans from foreign governments. He filed for bankruptcy before being bailed out by the International Monetary Fund.
The government has taken such an emergency measure to prevent the state of public finances from deteriorating. Creditors are free to capitalize on any capital payment. They can also pay in Sri Lankan rupees, the ministry added.
Sri Lanka’s Economic Crisis
Sri Lanka’s economic crisis began with the inability to import essential commodities. Coronavirus caused a drop in revenue from its tourism and remittances. The government imposed a massive ban on imports to maintain foreign exchange reserves. The government wanted to use the foreign exchange reserves to pay off debts but couldn’t.
The situation got exacerbated because of years of government mismanagement and unnecessary tax cuts. The people are outraged by the government, and there are long queues. With the passing of the day, there is a daily shortage of petrol-diesel, gas, and natural gas in Sri Lanka.
In the capital, Colomba, thousands of people are protesting outside the office of President Gotabaya Rajapaksa. Tuesday would be the fourth day of the protest. International agencies downgraded Sri Lanka last year. Because of this, he couldn’t make money from foreign markets. It was difficult for him to meet his food and fuel needs.
Official figures show that Sri Lanka’s main creditors are China and Japan. They account for 10 percent of Sri Lanka’s debt.
Sri Lanka had recently sought relief from India and China. But, both countries provided them with more credit lines and forced them to buy commodities from them.