IRL Sri Lanka

Sri Lanka Is In Trouble #EconomicCrisisLK

The small island nation of 22 million people that I call home is in the grips of its worst economic crisis as an independent nation leading to shortages of essentials and mounting food insecurity.

Hi! My name is Nico and I have spent almost two-thirds of my life so far (~20 years) living in the small island nation of Sri Lanka as an expat. If you’re a returning reader of my blog, it is nice to see you again. I’m sorry I’ve been awfully quiet for the last 2 years but I am planning to change that – more on this later!

Anyways, to the more pressing matter at hand. Thinking about my opening statement some more, I really need to rephrase it.

I grew up in Sri Lanka as a child of expat parents during the turmoil of the civil war that rocked the island in the 90s/early 2000s, leaving for college and starting my young adult life elsewhere, and then returning to Sri Lanka in the late 2010s to marry the love of my life.  

Don’t get me wrong –  I have my qualms living here when I envisioned myself settling down in a more developed country, but, I choose to be here! In recent memory, I had the wedding of my dreams here, continue to press through the raging COVD pandemic here, and continue to receive the care I need for my chronic medical condition here. 

In short, Sri Lanka is my home but it is in trouble. Deep, deep trouble.

A trifecta of calamities in the last 3 years – namely the 2019 terrorist attack, ill-timed tax cuts in the same year, and the economic repercussions at the hands of the ongoing COVID pandemic, have all come to a head and spawned arguably the biggest economic crisis the country has ever seen since it gained independence in 1948.

Since I am deeply apolitical in nature, I am not going to linger much on the political crisis that has erupted recently and currently unfolding as I type this post. Instead, I want to focus on the devastating impact this economic crisis is having on the people of Sri Lanka. If you’re keen to learn how Sri Lanka got to this point, this Bloomberg article has done a great job going over all the gritty details.

RELATED: How Sri Lanka Landed in a Political and Economic Crisis and What It Means (Bloomberg)

The turmoil has led to rising inflation and the local currency Sri Lankan rupee losing almost half of its value against the US Dollar when the Central Bank of Sri Lanka decided to float the exchange rate of the Sri Lankan rupee against the world’s basket of currencies in early March 2022.

RELATED: Sri Lanka rupee is floated, Rs230 a guidance: CB Governor (Economynext)

Image courtesy of Wise

The weakening of the currency has made essentials imports (fuel, food, medicines, etc) into Sri Lanka much more expensive causing severe shortages all over the island as the country struggles to find funds to pay for these necessities. As an indication of how bad the local currency has gotten, it was recently revealed that the Sri Lankan rupee is now the worst-performing currency in the world against the US Dollar (the world’s reserve currency) this year to date, leapfrogging the Russian Rouble for this ominous honor despite the myriad of sanctions imposed on the Russian financial sector by NATO and its allies in the hopes of crippling its war efforts in Ukraine.

RELATED: Sri Lanka’s currency plunges to world’s worst-performing in economic meltdown (Financial Times)

What impact does this economic crisis have on the people at large? It has manifested itself into rolling daily blackouts (up to 13 hours per day!) to conserve fuel, shelves at grocery stores not being able to stock items reliably, and prices of commodity goods skyrocketing. For example, I went to my nearest grocery store recently and saw the milk section completely bare as the raw material for liquid milk production in Sri Lanka is imported.

Shortages at the grocery store

Driving around the capital city of Colombo, and even the country at large, you are bound to see extremely long lines at gas stations as vehicle owners desperately try to fill up their tanks.

Rolling daily power blackouts, mass shortages, and the lack of vehicle fuel are hitting every socioeconomic class in the country with more and more people in danger of falling under the poverty line with every passing day as illustrated by this recent letter to the International Monetary Fund (IMF) by the Human Rights Watch:

The World Bank estimates that 11.7 percent of people in Sri Lanka earn less than US$3.20 per day, the international poverty line for lower-middle income countries, up from 9.2 percent in 2019.

Letter to IMF Managing Director Re: Economic Crisis in Sri Lanka (April 4, 2022) – Human Rights Watch

I want to surmise that this problem is far more widespread and the actual figure much higher based on all the chatter I am hearing on the ground here in Colombo.

Before I go on to my call to action, I want to reassure you that I, along with everyone closest to me in Sri Lanka are all fine. We are extremely lucky to be weathering this storm largely unscathed with very minor inconveniences to our current lifestyle in Colombo.

I want to turn this position of privilege into something that will benefit as many people in the community who are not so lucky. There are scores of people who are now food insecure largely due to the fall in income due to the COVID pandemic and now further exacerbated by the current Economic crisis as the price of everyday staples, items such rice and vegetables, have increased substantially.

RELATED: As prices soar in crisis-hit Sri Lanka, many forced to moonlight (Al Jazeera)

If you have made it this far, I want to thank you for your time and kind attention.

I want to help as many Sri Lankans as I can from being food insecure and it is going to take a village to get us there. Are you ready to help? Let’s get started.