End of the year: Sri Lankan struggles with another year of financial turmoil, looks forward with signs of hope

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Colombo: Bidding Goodbye to the year 2022, Sri Lankan are still battling to cover up the multidimensional consequences of a continuing economic crisis.

According to the statistics department’s report on December 30, the Consumer Price Index (CPI) in the island nation’s capital Colombo for the month of December eased to 57.2 percent from 61 percent in November.  The food inflation fell to 64.4 percent from 73.7 percent in November. But the prices of food and non-food prices have continued to go up.

The island nation has been struggling with its worst economic crisis in seven decades.  The ongoing currency inflation is said to be the worst in the history of the central bank. The nation is going through a soaring inflation for more than a year after then president Gotabaya Rajapaksa abruptly banned the imports and use of agrochemical products as an attempt to preserve the nation’s fast-depleting foreign exchange reserves.

According to a survey conducted by the Institute of Health Policy, a large percentage of Sri Lankans agreed that the economic crisis and inflation are the most crucial problems faced by people at present.

Food crisis and malnutrition among children

Food has been the centre of the nation’s financial crisis. With the skyrocketing prices of food and low income, people are forced to skip meals. Labour workers and people of the plantation sector make up a significant part of malnourished children and anaemic mothers. But according to law maker Rohini Wijeratne, even children of high-income earners too have malnutrition because of lack of knowledge about food and nutrition. She urged the government to provide subsidies and conduct food programs to save pregnant mothers and children.

According to a latest figure published by UNICEF, in Sri Lanka 5.7 million including 2.3 million are in need of humanitarian assistance. It assessed 3 out of 10 households are food insecure, among them 65,500 are severely food insecure.

Agrochemical ban and crippling of food and plantation sectors  

The abrupt switch of banning synthetic fertilizer and pesticides from use and import with no pre-planning has weighed heavily on the nation’s agriculture industry.

President Rajapaksa argued his overnight decision and said that industrialization of farming techniques is against the nation’s heritage of sustainable farming practices and it leads to adverse environmental and health impacts.  The ban helped the government save $400 million annually spent on importing synthetic fertilizer, so that the money could be used in importing other goods. 

Six months after the ban, the local rice production along with other agricultural production plummeted by 20 percent while those who account for 27 percent of the nation who are dependent on agriculture fell into acute poverty and food shortage. The nation of self-sufficient rice production pushed to spend $450 million on importing rice from other countries. 

Sri Lanka was the world’s fourth largest exporter of tea. The well renowned Ceylon tea of the island nation served as the backbone of the agricultural economy, until the economic down fall tea exports accounted for $1.3 billion revenue every year.

As a result of the agrochemical ban, the plantations announced heavy financial loss due to yield plummeting into half as a result of crop failure.

Around 5 months into the ban, the government allowed the farmers to use synthetic fertilizers for tea and some selected crops, but much damage has been caused by then.

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But in the month of November the production marginally improved by 0.9 percent with the total production of 231.8 million kgs while the same month last year it was 278.9 million.

According to the data published by Walker’s Tea Broker Show this is the lowest yield recorded since 1995.

 With the reasons such as agrochemical product use being cut off for the past one and half years and prices risen by almost 50 percent electricity usage, workers wages and packaging cost all skyrocketing, the future does not look good to the plantation sector to revive the oldest and one of the most revenues fetching industry of the nation.

Tourism sector

Tourism is the third largest source of foreign exchange of Sri Lanka, it accounts for 12 percent of the nation’s GDP (gross domestic product) earning $4.4 billion foreign revenue to the nation.

In wake of Easter Sunday bombings in 2019 which claimed the lives of 250 including 42 foreign nationals marks the free fall of the nation’s tourism industry. Following the incident, the tourist arrivals dropped by 70 percent within two months. The Covid-19 pandemic, Russian- Ukraine war devastated the industry further leaving it with a large deficit with its down fall to just 0.8 percent in 2020.

At the beginning of political unrest, protests and the downfall of the economic crisis wreaked havoc out of the tourism industry.  The industry had started to bear the brunt with about 40 percent of pre-booking being cancelled at that time.

This year the people of the island nation dealt with long power cuts, skyrocketing food prices and shortage of fuel and gas. The government has declared multiple emergencies since April. Schools have been shut for students for so many days. with reduced public transportation frequency, medicine shortage and prices of food items soaring high. The 22 million people faced the worst economic turmoil in 7 decades. 

The minister of tourism says, tourism can play a key role in helping the island nation come out of its economic crisis. “We have set an ambitious target of 1.5 million tourist arrivals for next year, and 3 million arrivals for 2024. I am confident that we can make a leapfrog growth from 2024 onwards” he told journalists at a special media briefing event.

According to Shirantha Peiris chairperson of Sri Lanka Institute of Tourism and Hotel Management (SLITHM) said the large numbers of migration of the workforce of the country makes it challenging for them but underscored commitment and initiative are being taken to build employment and meet the workforce of the nation.

In the end, it wasn’t the politicians or their failure to make policies that serve the nation, but the consequences of their ill driven outcome is there for all to see. 

The author Sahana David Menon can be contacted on email -sahanadavidmenon@gmail.com