Sri Lanka Crisis: Factors Behind Triggering A Historic Depression

Sri Lanka has been in the news such a lot recently that its current woes are the things of popular knowledge.

The acute deprivation caused to its people thanks to the absence of their staple food at a reasonable price within the market and therefore the shortage of petrol at the pump is evident.

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The Covid-19 Pandemic that put the entire tourism industry on hold which was the beauty of Sri Lanka. As far as the percentage is concerned, It accounted for 10% of Sri Lanka’s GDP.

This led to a dip in the forex reserve (from $7.5 billion in 2019 to $2.8 billion in July 2021). High debt resulting from other sources of revenue led to high cost in importing of essential items, including food.

A depreciated currency, high dependence on imports and hoarding led to a steep rise in food prices in the country. The Hambantota port was another white elephant project by the current government to shorten its economic woes.

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Instead, it only further increased the debt problem that country faced because it had taken $1 billion from China.

The ongoing Russo-Ukrainian Conflict is also an element which has effects on the already precarious financial condition of the country.

Sri Lankan Crisis: श्रीलंका में बवाल का असर, अधर में AUS टीम का दौरा, एशिया कप पर भी सवाल - Sri Lanka Economic Crisis effect on Cricket Australia tour of Sri lanka

The obvious reason is that the both the Sri Lankan tourism relies on arrivals from Russia and Ukraine and we all know about the war situations. Russia is additionally the second biggest market for the country when it involves tea exports.

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Thus, the war within the Ukraine put a significant dent within the path of economic recovery of land.