BusinessSri Lanka and Maldives collapse in Kovil; Severe financial crisis

Sri Lanka and Maldives collapse in Kovil; Severe financial crisis


Highlight:

  • Sri Lanka and Maldives collapse in Kovid
  • Economic emergency in Sri Lanka

Sri Lanka and the Maldives are now among the countries facing the worst economic crisis in the world affected by Kovid. Revenue declined as tourists arrived in both countries, which rely heavily on tourism for revenue.
The Pandemic has plunged the Maldives into further misery. The situation in Sri Lanka is no different.

The economy plummeted as GDP plummeted. According to reports, debt is expected to exceed 100 per cent of the GDP of the two countries this year.

The Maldives, with a population of just over five million, was severely affected by the Kovid Delta variant. Later expansion. Compared to Sri Lanka, which has a population of 2.1 crore, there has been a huge increase in cases. By the end of August, an average of 6,000 new cases had been reported in 7,000 days.

The Maldives had announced concessions in the tourism sector as the Kovid expansion eased. The number of visitors is also on the rise. But that is not the case in Sri Lanka. Two years ago, a suicide bomber struck on Easter Sunday. Even before the expansion of Kovid, the country had suffered a setback in the tourism sector. Covid expansion followed.

Sri Lanka has now declared a financial emergency. According to a recent media report, Sri Lanka, which relies heavily on imports for food, does not even have a foreign exchange reserve. The country has 107.9 per cent more public debt than GDP and foreign exchange reserves are $ 280 billion. This is up from $ 7.5 billion years ago.

The Sri Lankan rupee also depreciated sharply. The rupee has depreciated by 9% since the beginning of the Kovid crisis. Due to the depreciation of the Sri Lankan rupee, there is no significant gain even if tourists take advantage of tourism concessions. This also created a crisis. Sri Lanka is facing a severe shortage of imported rice, sugar, milk, pulses and cereals. The country has declared a state of financial emergency since August 31.

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The current situation is that even two months of imports is not possible with the country’s foreign exchange reserves. Sri Lanka is the largest exporter of tea to other countries. It is also the most popular export product in the country. But a sudden government action last year forced the withdrawal of $ 1.2 billion worth of tea from the market. The crisis was due to the sudden decision to eliminate fertilizers in the products. This tripled the cost of production.

After textiles, Sri Lanka is the largest exporter of tea to other countries. It is also one of the most popular export products in the country. It accounts for about 17 per cent of total exports. But a sudden government move last year forced the removal of $ 1.2 billion worth of tea. The sudden decision of the government to eliminate fertilizers was a setback for farmers and industrialists alike. With this, the cost of production has tripled. The organic tea industry did not hold the clutch as expected.

Coffee cultivation is also in crisis. Coffee plantations are also affected by fungal infections. Exports also declined. The government is too lazy to do anything. Sri Lanka now has the refuge of international organizations, including the International Monetary Fund.

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