Sri Lanka: Why di country dey experience economic crisis?

Protester raise hand

Reuters

Sri Lankan Prime Minister Ranil Wickremesinghe don tell di kontri military to do “whatever dey necessary to restore order” afta protestors storm im office.

Dem don declare a state of emergency afta President Gotabaya Rajapaksa run komot from di kontri.

Rajapaksa run komot from di kontri afta months of mass protest ova di kontri economic crisis.

Wetin bin dey happun for Sri Lanka?

Protests bin start for di capital Colombo for early April. Since den, e don grow and spread across di kontri.

For months, pipo bin dey struggle wit daily power cuts and shortage of basics such as fuel, food and medicines. Inflation dey run at more dan 50%.

Sri Lanka inflation

BBC

Di kontri no dey give enough fuel for essential services like buses, trains and medical vehicles, and officials tok say di kontri no get enough foreign currency to import more.

Dis lack of fuel don cause petrol and diesel prices to rise dramatically since di start of di year.

For late June, di goment ban di sale of petrol and diesel for non-essential vehicles for two weeks. Belief say dis na di first kontri to do dis kind tin since di 1970s. Di sell of fuel na sometin wey still dey limited.

Schools don close and dem don tell pipo to work from home to help conserve supplies.

Watch: Police fire tear gas at Sri Lanka protesters as they storm PM’s office
The British Broadcasting Corporation

Wetin go happun wen kontri run out of moni?

Sri Lanka no fit buy goods wey dem need from abroad.

For May, Sri Lanka fail to make interest payment on dia foreign debt for di first time in dia history.

Dem don give di kontri 30 days to find $78m (£63m) to cover di interest wey dem owe, but central bank govnor P Nandalal Weerasinghe say dem no fit pay.

Two of di world biggest credit rating agencies also confam say Sri Lanka don default on dia debt payments.

Failure to pay debt interest fit damage kontri reputation with investors, and e go make am harder for dem to borrow di money wey dem need on international markets. Dis one fit further harm confidence in dia currency and economy.

Plan dey to solve di crisis?

President Rajapaksa appoint Prime Minister Ranil Wickremesinghe as acting president for im absence.

Mr Wickremesinghe don declare a state of emergency across di kontri and im don impose curfew in di western province while im dey try to stabilise di situation.

Sri Lanka' President Gotabaya Rajapaksa (C) address di nation along with Army Commander Shavendra Silva (L), Navy Chief Nishantha Ulugetenne (2L) and Airforce Chief Sudarshana Pathirana (R) during Sri Lanka 73rd Independence Day celebrations for Colombo on February 4, 2021

Getty Images
Oga Rajapaksa family dynasty wey don dominate di kontri for di past 20 years come to an end afta e run go Maldives

Sri Lanka goment get more dan $51bn (£39bn) in foreign debt, dem owe China $6.5bn of dis debt.

Di two kontris dey negotiate about how to restructure di debt.

Di G7 group of leading industrial kontris – Canada, France, Germany, Italy, Japan, UK and di US – tok say dem support Sri Lanka attempt to reduce dia debt repayments.

World Bank don agree to borrow Sri Lanka $600m, and India don offer at least $1.9bn.

Di Sri Lankan goment also dey tok with di International Monetary Fund (IMF) about a possible $3bn (£2.5bn) loan.

Di IMF – wey work wit dia 190 member kontris to stabilise di world economy – say di goment need to raise interest rates and taxes as condition of any deal.

E go also require a stable goment to dey in place, so any bailout fit dey delayed until a new administration take ova.

A woman in a protest against food price hikes bangs dishes together.

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Pipo bang plates togeda to protest hike in food price

Acting President Wickremesinghe don already tok say di goment go print money to pay employees salaries. But dem warn say dis fit boost inflation and lead to further price hikes.

E also tok say dem fit privatise state-owned Sri Lankan Airlines.

Di kontri don ask Russia and Qatar to supply dem wit oil at low prices to help reduce di cost of petrol.

Wetin lead to di economic crisis?

Di goment don blame di Covid pandemic, wey affect Sri Lanka tourist trade – one of dia biggest foreign currency earners.

Dem also say tourists dey fear sake of series of deadly bomb attacks for 2019.

However, many experts blame economic mismanagement.

Sri Lankans shout slogans demanding di Sri Lankan president Gotabaya Rajapaksa to step down during one protest for Colombo, Sri Lanka. Monday, 4 April 2022.

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President Rajapaksa face widespread calls to step down

At di end of dia civil war for 2009, Sri Lanka choose to focus on providing goods to dia domestic market, instead of trying to boost foreign trade.

Dis wan mean say dia income from exports to oda kontris remain low, while di bill for imports continue to dey grow.

Sri Lanka now dey import $3bn (£2.3bn) more dan dem export every year, and dis na why dem don run out of foreign currency.

At di end of 2019, Sri Lanka get $7.6bn (£5.8bn) in foreign currency reserves, wey don drop to around $250m (£210m).

Former President Rajapaksa chop criticism for big tax cuts wey im introduce for 2019, wey make di goment lose income of more dan $1.4bn (£1.13bn) a year.

A farmer carries harvested paddy on his head at a field in Kalutara on the outskirts of Colombo on February 24, 2021.

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Di switch to organic fertilisers result in widespread crop failure, wey further worse foreign currency shortages

Wen Sri Lanka foreign currency shortages become a serious problem for early 2021, di gomet try to limit dem by banning imports of chemical fertiliser.

Dem tell farmers to use locally sourced organic fertilisers instead.

Dis wan lead to widespread crop failure. Sri Lanka need to supplement dia food stocks from abroad, wey make dia foreign currency shortage become even worse.