Sri Lanka’s situation is deteriorating with each passing day. Due to the trap of Chinese debt, the economy of this island country has collapsed, and the people are also fascinated by food and drink. Inflation has reached a peak as a result of the disruption in the import of essential goods, and people are preparing to riot. India has provided a billion-dollar tax credit line to assist Sri Lanka, which is beset by economic problems, but the country has yet to recover from the crisis. According to a report, a problem with rupee payments is impeding this assistance.
The importance of payment in US dollars is emphasised.
According to a report released in this regard, access to a $1 billion Indian credit line for around 1,500 containers of essential food items stranded at the port has been hampered because some shippers refuse to accept payments in Indian rupees. According to a spokesperson quoted in the report, some shippers demand payment in US dollars only. He expressed his concern that we are facing a major problem as a result of essential commodities being stuck at the port. Trade Minister Bandula Gunawardhan, on the other hand, stated that he has directed that these cargoes be released using the credit line.
The dollar’s strength became a source of concern.
According to the spokesman, the price of imported food items has increased by at least 30-40% due to the rupee’s depreciation against the US dollar. As a result of this massive increase, such essential goods are becoming increasingly out of reach of the general public, having a negative impact on the country. According to the report, the price of pulses in the wholesale market has risen to Rs 375-380 per kg due to price increases. Sugar, rice, and vegetable spices, on the other hand, have all seen similar price increases. Imported rice prices have remained stable at around Rs 130-160 per kg.
countrymen who enjoy food
According to previous reports, about 1,000 bakeries have closed due to a lack of cooking gas and electricity in the country, and the remaining ones are not producing properly. In addition, people must purchase a bread packet for $ 0.75 (150) rupees. Not only that, but people now have to pay up to Rs 100 for a cup of tea. Significantly, the Sri Lankan government declared a national financial emergency on August 30 last year, following a sharp drop in the value of the rupee and a subsequent sharp rise in food prices. In the same month, the price of a kilogramme of chillies in India increased by 287 percent to Rs 710. Not only that, but the price of brinjal increased by 51%, followed by a 40% increase in the price of onion. For one kilogramme of potatoes, I had to pay up to Rs 200.
Inflation shattered all previous records.
In the midst of the country’s currency crisis, oil prices have skyrocketed. According to the report, the government of Sri Lanka has run out of foreign exchange to purchase petrol and diesel, causing the crisis to worsen. People broke down at the petrol pump to buy petrol a few days ago, and the army was called in to control the crowds. Thousands of people have been queuing for hours to purchase oil. The country’s dollar crisis has impacted all sectors. In February, the country’s inflation rate hit a new high of 17.5 percent, making it the highest in Asia.
Sri Lanka’s economy is undergoing a difficult period.
Significantly, Sri Lanka’s economy is undergoing a difficult period. Sri Lanka owes huge sums to China, Japan, India, and the International Monetary Fund, but it is unable to pay even the minimum payments due to a lack of foreign exchange reserves. The Indian government has offered assistance to the neighbouring country, and it has recently agreed to provide a one-billion-dollar loan to Sri Lanka for the purchase of food, medicine, and other necessities. SBI and the Sri Lankan government signed the agreement for this credit facility. Significantly, Sri Lanka’s foreign exchange reserves are nearly depleted, and the country is experiencing a severe economic crisis as a result. In terms of the current situation, petrol stations are closed, power outages last more than ten hours every day, and street lights have been turned off.
Overdependence on imports has a negative impact.
Sri Lanka imports the majority of its goods. Everything from medicine to oil is included. According to the report, petroleum products accounted for 20% of Sri Lanka’s total imports in December of last year. However, due to a decrease in foreign exchange reserves, the Sri Lankan government is unable to import essential items such as fuel. As a result, there is a shortage of essential commodities in the country, and their prices are rising by the day, or the country’s common people will be unable to meet their daily needs. Petroleum, food, paper, sugar, pulses, medicines, and transportation equipment are also imported by Sri Lanka. In terms of the present, due to a shortage of paper in the country, newspapers are closed, and school examinations are cancelled.
The economy is weighed down by debt.
Sri Lanka had a $ 32 billion external debt in April 2021, which has now risen to around $ 50 billion. In this way, Sri Lanka’s government faces a dual challenge.