Will New Year revive the penniless economy of Sri Lanka?

The island nation Sri Lanka is feared to go bankrupt in 2022 as inflation in the country is scaling record highs.

Apparently, the escalating prices have left basic goods unaffordable for many. Even those who were previously well off are struggling to feed their families now.

The World Bank estimates 500,000 people have fallen below the poverty line since the beginning of the pandemic.

Tourism, which usually contributes more than 10 per cent of the country’s GDP, has been substantial, with more than 200,000 people losing their livelihoods in the travel and tourism sectors due to pandemic.

According to the reports, Sri Lanka needs to repay an estimated $7.3 billion in domestic and foreign loans in the next 12 months.

The loan includes a $500-million international sovereign bond repayment due in January. As of November, the available foreign currency reserves were just $1.6 billion.

In September 2020 Sri Lankan President Gotabaya Rajapaksa had declared an 'economic crisis'. Later the military was given the power to ensure essential items, including rice and sugar, were sold at set government prices but it has done little to ease people's woes.

Meanwhile, President Rajapaksa in his New Year message had expressed hope of reviving the cash-strapped economy but did not announce measures to address its crippling foreign exchange crisis.