Once known as a wealthy country, Sri Lanka is suffering an intense economic crisis, with shortages of everything from food to gas, and medicines, the crisis has hit the region so bad that people are now being forced to return to cooking with firewood. Sri Lankans are facing the worst economic crisis in 70 years in their region as the country has run out of petrol and diesel and they do not have enough foreign currency to import as well.
Although, the government is in talking terms with the International Monetary Fund (IMF) to get a $ 3 bn bailout. The country just two days ago said, that “they have enough petrol to last for a day”. For the first time in 70 years, the country is halting sales of fuel to ordinary people until July 10. The Lankan government is also in huge debt with \ countries like India and China, the inflation is about 30% there. As their economy soars, their health system is on the verge of collapse, there is a massive shortage of food as among fuel shortages.
In the country of 22 million people, gas is either unavailable or too expensive for the people. At the beginning of this year when more than 1000 kitchens exploded across the country, which killed almost 7 people and injuring a hundred more. The reason behind this explosion was suppliers were looking to cut costs and increase the proportion of propane, which raised the pressure to highly dangerous levels. Few people tried to shift to Kerosene oil cookers, but the government did not have dollars to import them along with petrol, and diesel, which were extremely short in supply.
Those who bought electric cookers were in for a rude shock when the government imposed lengthy power blackouts as it ran out of money to import fuel for generators as well. Roadside eatery owner M.G. Karunawathi, 67, switched to wood and said it was a choice between closing her business or putting up with smoke and soot. “We suffer (smoke inhalation) when cooking with firewood, but we have no choice,” Karunawathi told AFP. “It is also difficult to find firewood and it is also becoming very expensive.”
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Sri Lanka blames the Covid-19 outbreak and its impact on the tourism sector for the crisis but it also included economic mismanagement which has been done by the previous government. This misery will continue for some time, with Prime Minister Ranil Wickremesinghe in parliament on Tuesday saying: “We will have to face difficulties in 2023 as well. “This is the truth. This is the reality.” Unofficial inflation is now second only to Zimbabwe, and the United Nations estimates about 80 percent of people skip meals because they cannot afford food. Before the crisis, almost all households in Colombo could afford to use gas, but now woodcutter Selinah Raja, 60, is doing a roaring trade. “Earlier we had just one customer — a restaurant that had a wood-fired oven — but we now have so many, we can’t meet the demand,” Raja told AFP.
He says his timber suppliers in the provinces have doubled their prices because of the sharp rise in demand and skyrocketing transport costs. “Earlier, land owners paid us to uproot rubber trees that are no longer productive,” lumberjack Sampath Thushara told AFP in the tea-and-rubber-growing southern village of Nehinna. “Today, we have to pay to get these trees.” Foraging for wood can also be dangerous in the snake- and insect-infested forests. Last week, a father of three died from wasp stings in central Sri Lanka and four others were hospitalised.
Prime Minister Ranil Wickremesinghe has said “the government is now so short of funds that it will be printing money to pay employees’ salaries” as reported. He warns this will lead to further price hikes, with inflation rising to 40%. He also says state-owned Sri Lankan Airlines could be privatised. Sri Lanka is also asking Russia and Qatar to supply it with oil at low prices. How Much Foreign Debt is required? Sri Lanka’s government has racked up $51bn in foreign debt. This year, it will be required to pay $7bn to service these debts, with similar amounts for years to come. The government is seeking emergency bridging loans of $3bn from the International Monetary Fund (IMF) so it can pay.
The IMF has said the government must raise interest rates and taxes as a condition of any loan. The World Bank has agreed to lend Sri Lanka $600m. India has committed $1.9bn and may lend an additional $1.5bn for imports. The G7 group of leading industrial countries – Canada, France, Germany, Italy, Japan, UK and the US – have said they will provide help to Sri Lanka in securing debt relief. Sri Lanka owes $6.5bn to China and the two are in talks on how to restructure the debt.