How Long Will Sri Lanka’s Economic Crisis Last: Sri Lanka’s finance minister said on Wednesday that the country will have to endure its unprecedented economic hardships for at least two more years. Months of blackouts and severe shortages of food, fuel and pharmaceuticals have brought widespread distress across the South Asian island nation.
Sri Lanka is going through the worst economic crisis since independence in 1948. There is huge resentment among the public about the government’s failure to deal with the economic crisis and people are protesting against the government on the streets. Both the President and the Prime Minister are under increasing pressure due to massive protests demanding their resignations to deal with the country’s worst economic crisis.
“People should know the truth. I don’t know whether people understand the gravity of the situation,” Finance Minister Ali Sabri told Parliament. “We won’t be able to solve this crisis in two years, but the action we take today will determine how long this problem will last,” he said.
Sabri said the country now has less than $50 million in usable foreign exchange reserves, a requirement for financing essential commodities to prop up Sri Lanka’s import-dependent economy.
Official figures show there are $1.7 billion in reserves, but much of that figure includes a Chinese currency swap that cannot be used to pay for imports from other countries. Sabri said the government had made a mistake by delaying contacting the International Monetary Fund for relief.
Talks are on with the IMF but Sri Lanka’s central bank chief has said any aid from the lender is months away. The government will soon present a new budget and increase taxes to replenish the state’s revenue.
“The rapid reduction in taxes in 2019 was a historic mistake,” Sabri said. He said the previous central bank chief had also made the mistake of liquidating foreign reserves to protect Sri Lanka’s high-value currency.
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