what and why Sri Lanka’s economy faced economic crisis

Sri Lanka is going through a major economic crisis like 10-hour long power cuts or food shortages, besides people facing a shortage of petrol and diesel.

In the last 3 months alone, the price of petrol has increased by 94% and the price of diesel has increased by 81%.

Food prices have almost quadrupled since October 2021.

In February, Sri Lanka’s foreign exchange reserves stood at only $2.3 billion while it fell below 70% as compared to January 2020.

Inflation in Sri Lanka increased by more than 16% and in February 2022, food inflation increased to more than 27%.

About 12% to 13% of Sri Lanka’s economy is dependent on tourism, and 2.3 million foreign tourists visit Sri Lanka.

According to reports, Sri Lanka owes a debt of $ 4 million.

Sri Lanka is the second largest tea exporter country in the world.

India has also signed an agreement in February, according to which India will provide a credit line of $ 500 million to buy fuel for Sri Lanka.

Sri Lanka’s total debt in 2017 was $64 billion. 95% of government revenue went into loan repayment.

Sri Lanka is a major exporter of tea, rubber, coconut, coffee, sugar, etc.

Sri Lanka economic crisis explained