Sri Lanka is the only country in the world, which in 2022 was labeled ‘bankrupt’. But at the end of the year they are turning around again. The question on many minds is: How did the island nation improve its condition so quickly?
In the first half of February 2022, before the start of the Russia-Ukraine war, Sri Lanka’s inflation stood at over 20 percent. In September of the same year, it stood at 70 percent. Extreme anarchy arose within the country. Schools and colleges are closed, continuous load-shedding continues, energy crisis brings life to a standstill, foreign exchange reserves go to rock bottom.
Basically, since Gotabae Rajapakse took power in 2019, Sri Lanka’s progress has gradually stopped. The country’s large unnecessary projects and restrictions on the use of pesticide fertilizers have a direct impact on Sri Lanka’s economy.
According to a report by The New York Times last year, Sri Lanka’s main source of income has collapsed since the corona virus. Sri Lanka said last year that it would no longer be able to continue repaying foreign debt due to the disruption of key logistics and a series of bad decisions. Rajapakse fled power in the face of public anger.
After the medieval revolts, it is rare in modern times to see the king outside the palace, the general public swimming in the royal swimming pool, lying on the president’s bed watching TV or grabbing members of parliament and beating them. But the whole world witnessed such a scene in Sri Lanka last year.
Sri Lanka, which was thought to be unable to turn around before 2026, is fast moving towards positive change. Skyrocketing inflation eased to 4 percent in August 2023. While the world’s tiger economies are scrambling to reduce inflation, overcome the effects of Corona and the Russia-Ukraine war, Sri Lanka’s progress has caught the eye of the world.
Analysts say that the reform policy of the International Monetary Fund (IMF) has a major role behind Sri Lanka’s turnaround. The country has been undergoing various reforms since the IMF approved a $2.9 billion bailout package in March last year.
Recently, the IMF said that Sri Lanka’s economic development is going well. But the country still needs to go through some major reforms. If the trend of progress continues, Sri Lanka can quickly overcome the crisis.
However, analysts also say that Sri Lanka did not get out of the danger just by complying with the IMF’s conditions; In 2019, the economy of the country collapsed due to the corona virus, the tourism sector is again taking the economic progress of the country forward.
According to data provided by the Sri Lanka Tourism Development Authority (SLTDA), the number of tourists in Sri Lanka increased by 202 percent in July 2023 compared to July 2022. From the beginning of 2023, the number of tourists in the country started to increase.
About 8 lakh tourists visited Sri Lanka in the first seven months of 2023. In the month of July alone, an average of 4,500 tourists visit Sri Lanka every day.
Recently, Sri Lanka’s Minister of State for Tourism, Diana Gamage, said that the main reason for the increase in Sri Lanka’s foreign exchange reserves is the development of the tourism industry. As the country’s tourism sector is turning around and developing, the country can return to normalcy through this industry.
Analyzing the country’s official data, it can be seen that tourists from Russia, England and America are now heading to Sri Lanka. Especially the tourism sector of the country is changing with the improvement of the country’s inflation and security system. By exploiting this sector, Sri Lanka can get back the Green Jolus.
Asian Development Bank (ADB) Sri Lanka Deputy Country Director Utsav Kumar said that Sri Lanka is on the way to progress. The country has been able to identify its main major problems and is working on solutions. Although nothing can be said by oath right now. He commented that Sri Lanka has to go a long way to solve the crisis.
However, many analysts say that Sri Lanka is a model for many countries to improve day by day by reducing inflation. The country will be able to achieve milestones in overcoming the crisis if it continues to organize its plans properly.
