A country “on the verge of bankruptcy” due to the Corona...

A country “on the verge of bankruptcy” due to the Corona...
A country “on the verge of bankruptcy” due to the Corona...
The collapse faced by the government led by President Gotabaya Rajapaksa, began with the direct impact of the crisis Corona Virus Tourism plummeted, then quickly exacerbated by high government spending and tax cuts that eroded state revenues, along with the repayment of huge debts to China, and foreign exchange reserves at their lowest levels in a decade.

Meanwhile, inflation was driven by the government printing money to pay off domestic loans and foreign bonds.

The World Bank estimates that half a million people have fallen below the poverty line since the beginning of the epidemic, which undermines the efforts of 5 years of progress in the fight against poverty.

Inflation hit a record 11.1 percent in November, and rising prices have left those previously well-off struggling to feed their families, while the purchase of basic goods is now out of the way for many.

After Rajapaksa declared Sri Lanka in a state of economic emergency, the military was given the power to ensure basic items, including rice and sugar, were sold at set government prices, but did little to ease people’s problems.

Anuruda Paranagama, a driver in the capital, said Colombo, The poor economic conditions pushed him to a second job to pay for the rising food costs and cover his car loan, but that was not enough.

“It is very difficult for me to repay the loan,” he said. “When I have to pay electricity and water bills and spend on food, I have no money left. My family is eating two meals a day instead of three.”

The man described how his village grocer opened one-kilogram packets of powdered milk and divided them into 100-gram packets, because his customers could not buy the whole box.

The loss of jobs and vital foreign revenue from tourism, which typically contributes more than 10 percent of GDP, has been significant, with more than 200,000 people losing their livelihoods in the sector, according to the World Travel Council andtourism.

The economic situation prompted many residents to try to leave the country, as long queues formed at the passport office, with one in four Sri Lankans, mostly young and educated, trying to leave the country.

One of the most pressing problems for Sri Lanka is the huge external debt burden, especially to China, which owes the latter more than 5 billion dollars, and last year it obtained an additional loan of one billion dollars from Beijing to help its acute financial crisis, to be repaid in installments.

In the next 12 months, Sri Lanka will be required to repay an estimated $7.3 billion in domestic and foreign loans, including a $500 million international sovereign bond repayment in January.

However, as of November, reserves amounted to foreign currency Available only 1.6 billion dollars.

Government Minister Ramesh Patirana said that the government hopes to settle its previous oil debt with Iran through “tea”, so that this product will be sent at a value of $5 million per month, in order to provide the much-needed currency.

Parliament member and opposition economist Harsha de Silva explained to Parliament recently that foreign exchange reserves will be negative 437 million dollars by January next year, while the total external debt for the service will be 4.8 billion dollars from February to October 2022, commenting by saying that “the nation You will be completely broke.”

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