Sri Lanka in the Verge of Bankruptcy: Report

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• Jan 4, 2022 | Deleted

Digital Desk: Sri Lanka is in the midst of a rising financial and humanitarian catastrophe, with predictions that it could declare bankruptcy in 2022 as inflation touches new records, food price increase, and the country's coffers running dry, the Guardian reported.

The government's collapse, led by Sri Lankan President Gotabaya Rajapaksa, is worsened by high government spending and tax cuts depleting state income, massive debt obligations to China, and foreign exchange reserves at their lowest levels in a decade, according to the report.

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Meanwhile, the government has stoked inflation by printing money to pay off domestic loans and foreign bonds.

Since the beginning of the epidemic, the World Bank estimates that 500,000 individuals have slipped into poverty, equating to five years of progress in poverty reduction.

According to The Guardian, inflation touched a record high of 11.1 per cent in November, leaving individuals who were previously well off struggling to feed their families, while basic amenities have become unaffordable for many. The military was granted the power to supply essential products, including rice and sugar, at regulated government prices after Rajapaksa declared Sri Lanka in an economic emergency. Still, it has done little to alleviate people's suffering.