Srilanka is witnessing an extraordinary economic crisis-its worst-ever economic meltdown. Residents are facing frequent power cuts and a shortage of food supplies. According to reports, people are protesting in many places, and some are taking refuge in India.
With the reduction in foreign exchange holding, the value of the national currency has fallen drastically. Because of this, Srilanka is struggling to pay for imported commodities.
Inflation is at 17.5%, a rate worse than what the Island nation faced in 2015. Moreover, due to the severe economic situation price of essential commodities has gone up several times. There is also a shortage of fuel and gas, owing to which Restaurants are shut.
Srilankans are affected badly because of the unprecedented price rise. For example, the cost of Rice (1 kg) is Rs.290, Sugar (1 kg) is Rs.290, and Milk powder (400g) is selling at Rs.790.
The situation is so worse that the Srilankan government has postponed even school examinations because it isn’t in a position to purchase papers.
There are long queues to buy fuel and food products. In some places, clashes and protests have been reported. Due to fighting at fuel stations, the Government has deployed army personnel. According to Police, three people waiting to buy fuel succumbed to the scorching summer heat.
The Government has also halted production at oil refineries as there isn’t enough crude for refining. As a result, the availability of fuel is expected to be affected further.
The country has a loan to the tune of $400 crores, including governments bonds worth $100 crores, the maturity of which is coming by July this year. Given the situation, Srilanka has approached the International Monetary Fund (IMF) and neighboring countries for support.
The IMF could constitute a legal entity to guide the nation to come out of this economic crisis. India, for its part, has offered a loan of Rs.7500 crores to the island nation.
Meanwhile, refugees have started arriving at the Indian shores. Further, the number of people taking refuge in India could increase in the coming days.