'There is no money left': Covid crisis leaves Sri Lanka on brink of bankruptcy

[Eugene]

Source: The Guardian

‘There is no money left’: Covid crisis leaves Sri Lanka on brink of bankruptcy

Half a million people have sunk into poverty since the pandemic struck, with rising costs forcing many to cut back on food

Minoli Soysa in Colombo and Hannah Ellis-Petersen in Delhi
Sun 2 Jan 2022 15.00 GMT

Sri Lanka is facing a deepening financial and humanitarian crisis with fears it could go bankrupt in 2022 as inflation rises to record levels, food prices rocket and its coffers run dry.

The meltdown faced by the government, led by the strongman president Gotabaya Rajapaksa, is in part caused by the immediate impact of the Covid crisis and the loss of tourism but is compounded by high government spending and tax cuts eroding state revenues, vast debt repayments to China and foreign exchange reserves at their lowest levels in a decade. Inflation has meanwhile been spurred by the government printing money to pay off domestic loans and foreign bonds.

The World Bank estimates 500,000 people have fallen below the poverty line since the beginning of the pandemic, the equivalent of five years’ progress in fighting poverty.

Inflation hit a record high of 11.1% in November and escalating prices have left those who were previously well off struggling to feed their families, while basic goods are now unaffordable for many. After Rajapaksa declared Sri Lanka to be in an economic emergency, the military was given power to ensure essential items, including rice and sugar, were sold at set government prices – but it has done little to ease people’s woes.

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Read more: https://www.theguardian.com/world/2022/jan/02/covid-crisis-sri-lanka-bankruptcy-poverty-pandemic-food-prices

[Orrex]

1. They should just ignore it like most of our cities, counties & states seem to be doing

Heck of a money saver!