Sri Lanka is back in trouble, and the once-tourist destination of the Indian Ocean island nation is once again in a state of emergency. Last time, a month ago, 26 ministers in Sri Lanka's cabinet resigned en masse late at night, and this time, the prime minister simply resigned.
At this time, the mentality of the people collapsed, and they ran into the streets, so that they had to impose a national curfew. This time from top to bottom, it was really a mess, what is the reason? The economy is completely paralyzed! Sri Lanka is suffering its worst economic crisis in 74 years! To sum up, not enough energy, not enough materials, not enough foreign exchange, soaring prices, shops closed, banks closed, businesses closed, because there is no money to buy energy, Aslanca is currently short of electricity, often a power outage is more than ten hours, the factory can hardly start, even if the factory has a backup generator, this worker may not be able to come, why? Lack of fuel!
Thousands of people broke into the gates of the official residence
Sri Lanka nearly 50% of public transportation are all stopped, traffic lights are also turned off in order to save electricity, waiting for a bus has not been a matter of minutes and ten minutes, but have to wait for an hour or two, wait until you are not happy, the car is driving, it is not good to stop without oil. And the factory can not start, has been very fatal, this Sri Lankan economic pillar tourism, that is more than enough choking, originally because of the epidemic toss, to now this complete collapse, tourists to live in a hotel, eat also no, electricity also all day to night stop, this feel is not to come to vacation, but to cross the robbery! Who would dare to come to Bo Ren Character?
The past few months should have been the peak tourist season for the local area, and it is hoping to give the economy blood back. Today's locals can only look at the empty hotel lobby in a daze. When the pillar industry collapses, the urgently needed foreign exchange cannot be earned, and it is even more impossible to buy the energy and materials that are urgently needed. So the domestic price of a variety of just needed products flew to the sky, last time we said, Sri Lankan food overall price increased by about 30%? Now, it's all cheap, and the latest figures show that rice is up 93 percent, wheat is up 65 percent, pineapple is up 52 percent, and overall food prices are up 50 percent on a more month-by-month basis.
People lining up for energy shortages
According to Sri Lanka's finance minister, who resigned less than 24 hours after the last emergency, he said that Sri Lanka's available foreign exchange reserves are less than $50 million, which is almost one-fifth of Musk's value, but how much foreign debt is there? $51 billion! In other words, the money in your hand is not even a fraction. The last international forecast was that foreign exchange reserves were 400 million US dollars, and now that we look at it this way, the situation is even worse, what should we do now? Can only ask for people everywhere, the Sri Lankan government now, while appealing to Sri Lankans overseas, donate money and materials for the motherland, although this may be a drop in the bucket, but it is better than nothing, on the one hand, it is urgent to seek help from the International Monetary Fund, seeking loan support, but the governor of the central bank himself also said, even if there is no possibility to get to the account immediately, let alone a few months. That is to say, if there is no better solution to this situation, it is likely to last for many months, so how did it get to this point?
In fact, as an island country, Sri Lanka's economic model is too single, too dependent on tourism, and most of the people's consumer goods, have to rely on imports, these two years everyone knows that the tourism industry is sluggish, coupled with the conflict that began a few months ago, resulting in oil prices, food prices, fertilizers and other commodity prices also took off, this is a house leak and overnight rain, the ship is late and encountered the first wind, not to mention that Sri Lanka's imports of oil, grain are basically settled in US dollars, you see now the Fed interest rate hike and shrink the balance sheet, As a result, the dollar liquidity contracted, the dollar strengthened, and the Arlan national currency, the rupee, depreciated relatively, and the rupee fell by nearly 50% against the dollar in the past month, which directly led to a sharp spike in Sri Lanka's import costs.
The economy is driven solely by tourism
Let's take an analogy. You used to import a cup of coffee for 1,000 rupees, now you have to spend 2,000 rupees. Not to mention that about 60% of the external debt has to use the US dollar, and Sri Lanka, which has a single industrial structure, is overly dependent on the US dollar, and the main resources need to be imported in large quantities, and there are not a few countries that also owe a large amount of foreign debt. It's just that Sri Lanka is making a lot of noise at the moment, but it's likely that he won't be the last.
More financial stories, we will tell them in the next issue!
Well, today I will share it here, like the old iron people to point out a concern, leave your point of view