Sri Lanka is facing its worst financial crisis since their independence in 1948. On Wednesday, the people of Sri Lanka marched in the streets to protest their government’s inability to address a crumbling economy. The country is so low on fuel that essential workers like nurses don’t even have enough gas to get them to work. Since June 24, no fuel tankers with supplies have arrived in the island nation while the state-run fuel retailer Ceylon Petroleum corporation says no new orders have been placed. As a result of the fuel queues thirteen people have died due to exhaustion.
Shortages of food and fuel have caused prices to soar. Inflation is running at 30%. Additionally, power cuts and the lack of medicine have brought their health system to the verge of collapse. Recently, the struggling country has been in talks with the IMF where they have been unable to reach an agreement. However, according to Squawk Box Asia “ [Sri Lanka is] very close to reaching what is called a staff level agreement [with] the Fund [on] the set of policies and programs that Sri Lanka would undertake in order to bring down the fiscal deficit and make the fiscal debt sustainable.”In order to reach this agreement, the IMF says- Sri Lanka needs a more concrete plan on debt restructuring and step up structural reforms to address corruption vulnerabilities.
The president of the country Gotabaya Rajapaksa and his brother, Mahinda who he appointed to prime minister are taking most of the blame from the public. President Rajapaska introduced tax cuts in 2019 that are responsible for the country losing $1.4 billion in revenue a year. After the tax cuts, Sri Lanka has a new prime minister and says he plans on addressing this failing economy by printing money to pay employee’s salaries. With inflation already at 30%, Sri Lanka is on the verge of total financial collapse.
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