Sri Lanka is facing its worst economic crisis in contracts. Mahinda Rajapaksa government He is struggling to pay for Core imports after 70 percent drop in foreign exchange reserves over Two years triggered Currency devaluation. fuel in Lack of supply and prices of Food and basic commodities increased and protests collapsed out Such as government preparations for talks with International Monetary Fund amid fears over it’s a ability to pay 4 billion dollars in This external debt yearincluding 1 billion dollars international Sovereign bonds that mature in July.
Reuters estimates that Sri Lanka has only $2.31 billion. left in Reserves.
The International Monetary Fund indicated its willingness to do so help. Sri Lanka government Talks are scheduled in April but global financial body looked warning Note. A report released on Friday said the island nation is facing “solvency” problems due to risks of unsustainability debt levels.
Sri Lanka received $787 million in pandemic support from the International Monetary Fund in August.
Sources told Reuters Sri Lanka financing minister Will Basil Rajapaksa also Meets with World Bank officials next a month for research support From a US based agency.
What happened to the Sri Lankans? economy?
The crisis is widely seen as a result of bad management of government Untimely financial and tax cuts, in In addition to the effect of COVID-19 pandemic.
the war in Ukraine did not help either; Fuel costs have increased by 40 percent in week.
Basically Sri Lanka is deep in debt – By some estimates, she owes about 119 percent of Its GDP, which means it borrowed more money than can be produced via Goods and services.
Who are the creditors of Sri Lanka?
The main creditors are China and the Asian Development Bank. 36.4 percent of Sri Lanka debt He is in international sovereign bonds, with Asian Development Bank (14.6 percent), Japan (10.9%) and China (10.8 percent) next on The list.
India has already extended Billion dollar line of credit to help Sri Lanka buy Fuel, food and medicine. This week, Colombo requested an additional $1.5 billion, the governor of that central country bank to Reuters.
In addition, $500 million credit has been extended for a shipment of 40 thousand tons of tidal diesel over severe fuel shortage in that state.
India has also extended $400 million coin swap and deferred payment of $515.2 million to the Asian Clearing Union (ACU) for two months.
Read: India extends billion dollar line of Credit to Sri Lanka
China has lent billions – as part of it of Belt and Road Initiative (BRI) – over The past decade for infrastructure projects like Ports and coal power Factory.
Sri Lanka asked China to restructure debt repayment of About 3.5 billion dollars.
how bad actually?
bad enough people They are now fleeing Sri Lanka and trying to enter India.
Last week 16 Sri Lankans, including eight childrenTake illegal ferries to India. They were intercepted by the Coast Guard off The coast of Tamil Nadu. The state cares for Theirs but they certainly won’t be them last refugees.
Reuters reports reveal many painful stories from Sri Lanka’s less fortunate of Who now have to take second job just to survive.
Indica Pereira, 43, security guard at A private company in Colombo said. Pereira spend now over half his salary on grocery shop for for him family But you still can’t get it more From rice once a day for three his children.
Read: Six Sri Lankans caught entering India illegally, trying to escape the crisis
The crisis has generated long queues outside Gas stations – now guarded soldiers to prevent riots-like continent.
School exams canceled due to of shortage of paper.
Tuesday, foreign India ministerS Jaishankar, it was step in to help Sri Lankan hospital stops surgeries due to shortage of Medical facilities.
Read: A foreign minister responds to a tweet from Sri Lanka – “Annoyed….”
How much worse could it get?
Since November, rating agencies like Moody’s, Fitch and Standard & Poor’s downgraded Sri Lanka on debt default concerns.
Fitch estimates that Sri Lanka will do so also need to arrange for $2.4 billion to help state-owned and private companies in State honor 2022 debt Commitments; These will be over and above 4.5 billion central dollars government debt.
Country also It needs about 20 billion dollars for Basic imports such as fuel, food and intermediate goods for exports.
What do the experts say?
Some Sri Lanka experts believe should Create a threeyear repayment structure. Doing so would lighten the burden on Sri Lankan citizens.
Sri Lanka is unreasonably obligated to repay it debt. it’s a more Wisdom in pressure pause on debt Pay and take care of critical “Economic needs,” Executive Director of Research and Economist Dr. Nichane de Mille told Reuters.
Contributed by Bloomberg, Reuters
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Source: Explanation: Sri Lanka’s economic crisis and India’s $2.5 billion line of credit | world News
