Sri Lanka's Economic Situation Depletes, Could Go Bankrupt in 2022

Colombo: The tiny island nation of Sri Lanka could go bankrupt in 2022 as the country is in the midst of a deepening financial and humanitarian crisis.

The inflation rate in the country has risen to record levels with skyrocketing food prices. The high level of inflation has been fueled by the printing of money by the government to pay off domestic loans and foreign bonds.

The reason behind Sri Lanka's depleting economic scenario is partly caused by the immediate impact of the Covid crisis along with the decrease in tourism.

It is also due to high government spending coupled with tax cuts which have led to the government's revenues getting eroded.

Reportedly, the country's foreign exchange reserves also happen to be at their lowest levels in a decade.

Colombo's vast debt repayment to China is another factor behind its plummeting condition. It is widely believed that Colombo had fallen prey to Beijing's debt-trap diplomacy.

As many as 500,000 people have fallen below the poverty line since the beginning of the pandemic according to World Bank estimates. This is equivalent to five years of progress in fighting poverty.

The country saw a record high inflation rate of 11.1 per cent in November as a result of which basic goods have become unaffordable for many.

 Those who were previously well off are now struggling to feed their families according to reports.

Strongman President Gotabaya Rajapaksa himself declared that Sri Lanka is in the midst of an economic emergency and the military was given the responsibility of ensuring that essential commodities, including rice and sugar, were sold at set government prices.

However, the report added that this measure has done little to ease people's woes.

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