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| Sri Lanka: Why is the country in an economic crisis? | Sri Lanka: Why is the country in an economic crisis? |
| (8 months later) | |
| Sri Lankan Prime Minister Ranil Wickremesinghe has told the country's military to do "whatever is necessary to restore order", after protesters stormed his office. | Sri Lankan Prime Minister Ranil Wickremesinghe has told the country's military to do "whatever is necessary to restore order", after protesters stormed his office. |
| A state of emergency was declared after President Gotabaya Rajapaksa fled the country, following months of mass protests over the island's economic crisis. | A state of emergency was declared after President Gotabaya Rajapaksa fled the country, following months of mass protests over the island's economic crisis. |
| What has been happening in Sri Lanka? | What has been happening in Sri Lanka? |
| Protests started in the capital, Colombo, in April and spread across the country. | Protests started in the capital, Colombo, in April and spread across the country. |
| People have been struggling with daily power cuts and shortages of basics such as fuel, food and medicines. | People have been struggling with daily power cuts and shortages of basics such as fuel, food and medicines. |
| Inflation is running at more than 50%. | Inflation is running at more than 50%. |
| The country doesn't have enough fuel for essential services like buses, trains and medical vehicles, and officials say it doesn't have enough foreign currency to import more. | The country doesn't have enough fuel for essential services like buses, trains and medical vehicles, and officials say it doesn't have enough foreign currency to import more. |
| This lack of fuel has caused petrol and diesel prices to rise dramatically. | This lack of fuel has caused petrol and diesel prices to rise dramatically. |
| In late June, the government banned the sale of petrol and diesel for non-essential vehicles for two weeks. Sales of fuel remain severely restricted. | In late June, the government banned the sale of petrol and diesel for non-essential vehicles for two weeks. Sales of fuel remain severely restricted. |
| Schools have closed, and people have been asked to work from home to help conserve supplies. | Schools have closed, and people have been asked to work from home to help conserve supplies. |
| This video can not be played | This video can not be played |
| To play this video you need to enable JavaScript in your browser. | To play this video you need to enable JavaScript in your browser. |
| Watch: Police fire tear gas at Sri Lanka protesters storming the prime minister's office | Watch: Police fire tear gas at Sri Lanka protesters storming the prime minister's office |
| Watch: Police fire tear gas at Sri Lanka protesters storming the prime minister's office | Watch: Police fire tear gas at Sri Lanka protesters storming the prime minister's office |
| Sri Lankan PM tells military to restore order | Sri Lankan PM tells military to restore order |
| A dramatic day and moment of danger for Sri Lanka | A dramatic day and moment of danger for Sri Lanka |
| What happens when a country runs out of money? | What happens when a country runs out of money? |
| Sri Lanka is unable to buy the goods it needs from abroad. | Sri Lanka is unable to buy the goods it needs from abroad. |
| And in May it failed to make an interest payment on its foreign debt for the first time in its history. | And in May it failed to make an interest payment on its foreign debt for the first time in its history. |
| Long queues for fuel - like this one in Colombo - have made normal life impossible | Long queues for fuel - like this one in Colombo - have made normal life impossible |
| Failure to pay debt interest can damage a country's reputation with investors, making it harder for it to borrow the money it needs on international markets. | Failure to pay debt interest can damage a country's reputation with investors, making it harder for it to borrow the money it needs on international markets. |
| This can further harm confidence in its currency and economy. | This can further harm confidence in its currency and economy. |
| What's the plan to tackle the crisis? | What's the plan to tackle the crisis? |
| President Rajapaksa resigned after fleeing to Singapore. | President Rajapaksa resigned after fleeing to Singapore. |
| Before stepping down he made Prime Minister Ranil Wickremesinghe acting president. | Before stepping down he made Prime Minister Ranil Wickremesinghe acting president. |
| Mr Wickremesinghe declared a state of emergency across the country and imposed a curfew in the western province while he tries to stabilise the situation. | Mr Wickremesinghe declared a state of emergency across the country and imposed a curfew in the western province while he tries to stabilise the situation. |
| But, on Wednesday, hundreds of protesters stormed his office, amid calls for his resignation. | But, on Wednesday, hundreds of protesters stormed his office, amid calls for his resignation. |
| Mr Wickremesinghe has been prime minister six times, without seeing out a full term in office | Mr Wickremesinghe has been prime minister six times, without seeing out a full term in office |
| The president's departure threatens a potential power vacuum in Sri Lanka. | The president's departure threatens a potential power vacuum in Sri Lanka. |
| It needs a functioning government to tackle the financial crisis. | It needs a functioning government to tackle the financial crisis. |
| The country owes more than $51bn (£39bn) to foreign lenders, including $6.5bn to China, which has begun discussions about restructuring its loans. | The country owes more than $51bn (£39bn) to foreign lenders, including $6.5bn to China, which has begun discussions about restructuring its loans. |
| The G7 group of countries - Canada, France, Germany, Italy, Japan, UK and the US - had said it supports Sri Lanka's attempts to reduce its debt repayments. | The G7 group of countries - Canada, France, Germany, Italy, Japan, UK and the US - had said it supports Sri Lanka's attempts to reduce its debt repayments. |
| The World Bank has agreed to lend Sri Lanka $600m, and India has offered at least $1.9bn. | The World Bank has agreed to lend Sri Lanka $600m, and India has offered at least $1.9bn. |
| The International Monetary Fund (IMF) is discussing a possible $3bn (£2.5bn) loan. | The International Monetary Fund (IMF) is discussing a possible $3bn (£2.5bn) loan. |
| But it would require a stable government that could raise interest rates and taxes to help fund the deal, so any bailout may be delayed until a new administration is in place. | But it would require a stable government that could raise interest rates and taxes to help fund the deal, so any bailout may be delayed until a new administration is in place. |
| Banging dishes together to protest at the food price hikes. | Banging dishes together to protest at the food price hikes. |
| Mr Wickremesinghe had already said the government would print money to pay employees' salaries, but warned this would be likely to boost inflation and lead to further price hikes. | Mr Wickremesinghe had already said the government would print money to pay employees' salaries, but warned this would be likely to boost inflation and lead to further price hikes. |
| He also said state-owned Sri Lankan Airlines could be privatised. | He also said state-owned Sri Lankan Airlines could be privatised. |
| The country has asked Russia and Qatar to supply it with oil at low prices to help reduce the cost of petrol. | The country has asked Russia and Qatar to supply it with oil at low prices to help reduce the cost of petrol. |
| What led to the economic crisis? | What led to the economic crisis? |
| The government blamed the Covid pandemic, which badly affected Sri Lanka's tourist trade - one of its biggest foreign currency earners. | The government blamed the Covid pandemic, which badly affected Sri Lanka's tourist trade - one of its biggest foreign currency earners. |
| It also says tourists were frightened off by a series of deadly bomb attacks in 2019. | It also says tourists were frightened off by a series of deadly bomb attacks in 2019. |
| However, many experts blame President Rajapaksa's poor economic mismanagement. | However, many experts blame President Rajapaksa's poor economic mismanagement. |
| Mr Rajapaksa's departure ends a family dynasty that has dominated Sri Lanka's politics for the past two decades | Mr Rajapaksa's departure ends a family dynasty that has dominated Sri Lanka's politics for the past two decades |
| At the end of its civil war in 2009, Sri Lanka chose to focus on providing goods to its domestic market, instead of trying to boost foreign trade. | At the end of its civil war in 2009, Sri Lanka chose to focus on providing goods to its domestic market, instead of trying to boost foreign trade. |
| This meant its income from exports to other countries remained low, while the bill for imports kept growing. | This meant its income from exports to other countries remained low, while the bill for imports kept growing. |
| Sri Lanka now imports $3bn (£2.3bn) more than it exports every year, and that is why it has run out of foreign currency. | Sri Lanka now imports $3bn (£2.3bn) more than it exports every year, and that is why it has run out of foreign currency. |
| At the end of 2019, Sri Lanka had $7.6bn (£5.8bn) in foreign currency reserves, which have dropped to around $250m (£210m). | At the end of 2019, Sri Lanka had $7.6bn (£5.8bn) in foreign currency reserves, which have dropped to around $250m (£210m). |
| Mr Rajapaksa was also criticised for big tax cuts he introduced in 2019, which lost the government income of more than $1.4bn (£1.13bn) a year. | Mr Rajapaksa was also criticised for big tax cuts he introduced in 2019, which lost the government income of more than $1.4bn (£1.13bn) a year. |
| How Sri Lanka's war heroes became villains | How Sri Lanka's war heroes became villains |
| Sri Lanka's suffering was avoidable - bank boss | Sri Lanka's suffering was avoidable - bank boss |
| The switch to organic fertilisers resulted in widespread crop failure, exacerbating foreign currency shortages | The switch to organic fertilisers resulted in widespread crop failure, exacerbating foreign currency shortages |
| When Sri Lanka's foreign currency shortages became a serious problem in early 2021, the government tried to limit them by banning imports of chemical fertiliser. | When Sri Lanka's foreign currency shortages became a serious problem in early 2021, the government tried to limit them by banning imports of chemical fertiliser. |
| It told farmers to use locally sourced organic fertilisers instead. | It told farmers to use locally sourced organic fertilisers instead. |
| This led to widespread crop failure. Sri Lanka had to supplement its food stocks from abroad, which made its foreign currency shortage even worse. | This led to widespread crop failure. Sri Lanka had to supplement its food stocks from abroad, which made its foreign currency shortage even worse. |
| Related Topics | |
| Asia | |
| Sri Lanka |