Sri Lanka currently is facing their worst financial crisis in decades, with experts calling the crisis unprecedented. So what’s actually going on, and what can be done to help?
What’s going on?
Sri Lanka imports much more than it exports, and essentially the country is out of foreign currency. Its foreign exchange reserves(cash and assets held by a country’s central bank) are in a freefall – in November last year, reserves dropped to around $1.6 billion. Fast forward to this May, useable foreign exchange reserves were below $50 million. This has caused a domino effect of extremely high levels of inflation, with the price of everyday necessities skyrocketing and the country experiencing shortages of crucial medical supplies. The cause of this economic crisis is said to be multi-faceted – the country cites the Covid-19 pandemic as a key factor, however other issues such as governmental economic management and the 2019 Easter bombings also play a role in this crisis.
In an attempt to hold on to its remaining reserves, the government has restricted the import of essential goods, including food. Sri Lanka, being a small island nation, is quite reliant on food imported from overseas to feed its people – the country’s own small industries cannot meet the demands of the population of over 22 million people. Thus, this crisis is affecting Sri Lanka worse than it may have affected other countries.
How is this affecting the citizens of Sri Lanka?
Aside from the devastating shortages of food and medicine, the island reportedly only has enough fuel to last one day at a time under current demand. Sri Lanka has imposed a ban on the sale of fuel for private citizens, with priority going to essential services like buses and medical vehicles. Even then, fuel is very scarce.
Many citizens are lining up in queues that last for days while sleeping in their cars at night for fuel. For many citizens, their livelihood relies on fuel.
All schooling in Sri Lanka is currently happening from home, too.
There have been wide-spread protests happening in the country, as many members of the public have understandably lost faith in the government.
What can we do to help?
Welcome Merchant are hosting a sold-out fundraiser for the Sri Lanka crisis – find out more about the event here. If you weren’t able to grab a ticket, you can donate directly to Greater Giving Sri Lanka and Palmera Projects.
Featured image credit: AFP Photo