• The country is facing the worst economic crisis in its history, which started in 2019. In the year 2022, even the prices of basic staple foods, and fuel are so high that the common people are not able to afford them.

The present situation in Sri Lanka:

  • People are queuing up at stores to buy basic staple foods. There is a massive food and fuel shortage in the country, and hence the prices of daily food items and fuel have increased to unbearable levels.
  • In June 2022, inflation in Sri Lanka is reached to 54.6%, which is an all-time high.
  • There is a severe shortage of foreign exchange reserves. The country is not able to repay foreign debt.
  • Due to the severe shortage of foreign exchange reserves, the hospitals are struggling to buy essential drugs and equipment to treat patients.
  • The country’s currency value depreciated.
  • India is helping Sri Lanka by sending financial assistance, food and medical supplies.

Reasons for the present economic crisis in Sri Lanka:

  • Sri Lanka is heavily dependent on tourism. 10% of the country’s GDP (Gross Domestic Product) comes with tourism. With tourism, the country fills foreign exchange reserves and uses them to import goods.  But due to the Covid-19 pandemic, the tourism industry was hit very badly and that impacted the country’s economy. Moreover, the terrorist attacks in Sri Lanka in the year 2019 too affected the tourism sector. That resulted in a shortage of foreign exchange reserves.
  • The majority part of the available foreign exchange reserves is being used to pay the interest of the country’s debts.
  • As the Sri Lankan rupees are sold to buy foreign currency to use for imports, the country’s currency value depreciated.
  • Sri Lanka imports some basic food items. With the shortage of foreign exchange reserves, the imports were affected negatively and that contributed to food shortage.
  • The country decided to go 100% organic in farming. Even though organic farming has plenty of benefits for the environment and for the health of people, it gives very less yield in the initial years of cultivation. Less produce contributed to even more food shortages. That resulted in heavy demand and low supply and hence the prices rose sharply, which caused inflation. Moreover, due to less yield, Sri Lanka is forced to import more food, which put even more pressure on foreign exchange reserves.
  • Tea and spices are one of the main exports from Sri Lanka. Exports fetch foreign currency. But the switch to organic farming resulted in a low yield of tea and spices.
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Steps that were taken so far:

  • The central bank of Sri Lanka raised interest rates to control inflation.
  • Sri Lanka approached the International Monetary Fund (IMF) to to bail its economy out of crisis. IMF is monitoring the situation in the country.


Several factors caused the economic crisis in Sri Lanka. There is a severe shortage of foreign exchange reserves in the country. The utmost priority should be to prevent its negative impact on the common people.

Your Turn…

What are your thoughts on Sri Lanka’s economic crisis? Express your point of view through the comment section below. And subscribe to our blog to read answers to the trending GD topics.


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  • Vijay, Jul 1, 2023 @ 11:30 pm Reply

    2021 the government of srilanka facing wrost economic problems food medicine as well as fuel.currency of Sri Lanka in value depreciation day by day the governruyyrkuuyment of srilanka decided the cultivated the only organic farming so these yeare crop provide very less on the other hand on the other hand impact of COVID 19 another major reason.russia Ukraine conflict Russian import and export the crude oil natural gas srilanka government dependency of the haively tourism sector and tea plantations.2019 terriost attack is another major reason affect the tourism sector cyclone mendos is another reason

  • b.keerthy mounika, Jul 1, 2023 @ 11:25 am Reply

    In june 2022, then prime minister “Ranil wickremesinghe said in parliament that the economy had collapsed, leaving it unable to pay for essentials. In sep,2022 a united nations report said that the economic crisis is a result of offical’s impunity for human rights abuses and economic crisis. in my point of view, government taken a few wrong steps,which leads poverty, asking help for other countries. India is helping srilanka by sending finanical assistance, food and medical suplies,

  • Sachin, Feb 1, 2023 @ 9:14 am Reply

    The main reason of srilanka crisis is their currupt government

  • piyush choubey, Nov 27, 2022 @ 1:05 am Reply

    I explain it to some point
    1.) Covid 19
    2.) Economic miss management
    3.) Terrorism
    4.) Corruption

  • Daya, Nov 23, 2022 @ 8:11 am Reply

    Srilanka need to stop innovative ideas such as Organic farming during this period .
    Ultimately Covid situation control and other hand increase slowly on our tourism sector.
    firstly focus on primary need of people and fulfil basic need .
    definitely Lanka’s people driven and minimizing this situation .

  • vikram kumar, Sep 1, 2022 @ 6:26 pm Reply

    In my point of view that borrowing money and spending more than from earning, is a major factor by which the Sri Lankan economic went down as well as few wrong steps which was taken by government of the Sri lanka.

  • Shrashti Varshney, Aug 22, 2022 @ 10:07 pm Reply

    In my opinion, Sri Lanka’s government must have asked its citizens to take initiative in improving the condition of their country which might be more beneficial rather than increasing the price of basic food and oil.

  • Sam007, Dec 17, 2021 @ 1:15 am Reply

    Before going to shift fully into organic farming, its agricultural ministers should have thought this thoroughly with providing a little incentive to organic farming this could have been averted.

  • ramdev baba, Sep 15, 2021 @ 10:40 pm Reply

    I believe sri-Lanka must have thought of the effect of organic farming on their food supply,not all countries are blessed with a fertile land ,all developing countries have lots to learn from this crisis in Sri Lanka

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