Sri Lanka Affirms Gradual Ease in Financial Crisis.image/Malay Email
Sri Lanka Affirms Gradual Ease in Financial Crisis
Amidst a cash crunch, Sri Lanka is cautiously navigating its way out of its direst economic predicament, remarked the president during his Independence Day address in Colombo. President Ranil Wickremesinghe, in his brief statement, acknowledged the country’s painful journey from being branded financially bankrupt to its current state.
The island nation’s default on its $46 billion foreign debt in 2022, triggered by a foreign exchange crisis, crippled its ability to import essentials like food and fuel, igniting months of civil unrest. This tumultuous period culminated in the ousting of then-president Gotabaya Rajapaksa, as thousands stormed his residence in protest.
Sri Lanka’s economic lifeline came in the form of an IMF bailout, with the first tranche of a $2.9 billion four-year loan disbursed in March of the previous year. The conditions attached to this financial lifeline demanded tax hikes and sharp price increases, to which the government reluctantly adhered.
President Wickremesinghe expressed cautious optimism, believing that the country would gradually overcome its challenges, alleviating the burdens faced by its citizens while stabilizing the economy. However, recent data from the Central Bank of Sri Lanka revealed a significant spike in prices, rising over six percent in the past month due to the tax adjustments mandated by the IMF.
While the current inflation rate is a fraction of the staggering 70 percent witnessed during the peak of the financial crisis in 2022, President Wickremesinghe stressed the importance of learning from past mistakes to avoid repeating them. The road to economic recovery remains uncertain, but Sri Lanka is determined to forge ahead with resilience and prudence