Sri Lanka's Economic Crisis: Did the Island-nation miss the warning signs?

The Sri Lankan people are spending most of their time languishing in queues while the country's economy is also in crisis.

Productivity of the Sri Lanka and its people has come to a standstill due to the Foreign Reserve Crisis.

In the midst of all of these, politicians are on the battle path for power.

Bear in mind, that the country did not fall on its knees overnight.

February 2015 - the 1st Bond Scam

Loss - Rs.688 Million

March / April 2016 - the 2nd Bond Scam took place at two controversial auctions.

Loss - Yet to be calculated.

But, it caused a loss of Rs. 8 Billion to the Employees' Provident Fund

This was a direct blow to the already ailing economy, which was suffering the consequences of previously made poor decisions.

Do you remember the infamous Greek Bonds?

According to reports, Sri Lanka investing in Greek Bonds suffered a loss of more than 2.3 Billion or Rs. 2,300 million.

At the same time, the infamous Hedging Agreement to purchase crude oil for Sri Lanka caused massive losses to the state, while lining the pockets of a few.

Unfortunately, Sri Lankan people are yet to see any final progress report on these investigations.

During a period when scrutinized decisions were expected to be made, those in power decided to spend millions to construct the Lotus Tower, and even built a conference hall in the middle of nowhere.

The much-hyped port built in a similar fashion does not attract many ships, and the airport located next to it does not attract flights, except for the birds.

These are serious concerns as to where these so-called development projects were launched with proper planning.

Those in power also spent millions of tax-payers money to rent massive buildings for state bodies to move into, but those buildings were just left empty for years.

The dairy heifers projects that were hyped up for farmers were also marred with corruption and fraud.

To change all of this, a new administration was brought in, in 2019.

The first thing the new government did upon being elected was to cut down on taxes.

More than Rs. 600 billion was lost due to these tax cuts.

At the time same, the government granted tax relief to their close associated.

On the 14th of October the government decided to reduce the special commodity levy imposed on imported sugar from Rs. 50/- per kilogram to Rs. 0.25/- per kilogram.

Later it was revealed that from 14th October 2020 to 20th February 2021 320,000 MT of Sugar was imported into the country.

A lion's share of this amount, that's 40 % was imposed by one single importer.

A special audit revealed that within four months of reducing the tax the government was deprived of tax revenue of a whopping Rs. 16.763 Billion.

The government banned the imports of chemical fertilizers and agrochemicals including insecticides and herbicides, completely ruining the agriculture system.

Farmers were forced out onto the streets, and Agri production declined rapidly.

The government pushed aside the expert advice from intellectuals and experts from the field and implemented their ad-hoc decision leading the country's economy to a crisis.

As chaos ensued experts warned that the country will not be able to serve its debt installments.

This was the government response at the time

"We will be able to settle the loan without any issue. We are working on it and we can assure you that, said Ajith Nivard Cabraal, the Former Finance Minister on the 25th of February 2021.

Experts, Intellectuals, and even the media repeatedly pointed out the need to approach the World Bank, and the International Monetary Fund as the country continued to plunge into crisis.

But, what did the government say to that?

"From 2016 to 2019, the country was governed according to the conditions of the IMF. The fuel price formula was based on those conditions. That is also how the taxes were increased. All those measures failed, said Dr. Bandula Gunawardena on the 29th of December 2021.

The World Food Programme says that nearly 5 million people in Sri Lanka are skipping meals and suffering from hunger.

UNICEF said that Sri Lanka has the Second-highest child malnutrition rate in the whole of South Asia and is ranked 7th in the world, a list that we should not be proud of.

Food inflation in Sri Lanka spiked to 90.9%

Experts, Intellectuals, and the Media highlighted this situation back then with the warning signs

If the necessary appropriate decisions were made back then, we would not be in this position today.

Therefore, if we are to decide on overcoming the present crisis, it is important to keep the dark lessons of the past in mind when doing so.

We care less of party differences.

We report for the People,

We report for the betterment of the People,

We report for the people of Sri Lanka who love the country.