Low on funds During the austerity of an IMF bailout, Sri Lanka is “gradually” recovering from its worst economic crisis, the president stated on Sunday during a speech honoring the country’s independence.
President Ranil Wickremesinghe opted to make a brief statement instead of the traditional yearly address, citing the “indignity of being labelled a financially bankrupt country”.
The island nation was unable to acquire fuel, food, and other necessities due to a foreign exchange wipeout, which caused it to default on its $46 billion international debt in 2022.
During the height of the economic crisis, months of social unrest in Sri Lanka resulted in the overthrow of the then-president, Gotabaya Rajapaksa, after hundreds of protesters invaded his home.
The International Monetary Fund released the first tranche of a $2.9 billion four-year bailout loan to Sri Lanka in March last year under a reform programme that saw taxes raised and prices sharply increased.
“Throughout this journey, challenges will gradually dissipate, life’s burdens will lighten, the economy will fortify,” Wickremesinghe said.
According to Central Bank of Sri Lanka data, prices increased by more than six percent last month as a result of the government raising taxes in accordance with IMF requirements to keep the rescue financing in place.
The bank stated that the 6.4 percent level was significantly higher than the 4.0 percent recorded in December.
It is still less than a tenth of what was observed in 2022, at the height of the island’s financial crisis, when inflation reached a peak of about seventy percent.
“It is imperative that we obtain insights from past mistakes and avoid their repetition,” Wickremesinghe said.
