Tourism and the businesses of tea and spices have, together with exports of ready-made garments, been the mainstay of Sri Lanka’s economy. But the years of hard work have now come to naught, as Omicron takes over the country’s economy.
The news editor of a prominent Colombo newspaper dismissed a press release issued by the department of statistics of the Central Bank of Sri Lanka on 31 December 2021 as one of those regular pieces out to bother him on New Years Eve. The first paragraph was, in any case, a bland one. It was the second paragraph that carried an ominous statement that the senior professional missed.
The second paragraph of the press release read: “Inflation was driven by monthly increases of prices of items in both Food and Non-food categories. Subsequently, food inflation (Y-o-Y) increased to 22.1 per cent in December 2021 from 17.5 per cent in November 2021, while non-food inflation (Y-o-Y) increased to 7.5 per cent in December 2021 from 6.4 per cent in November 2021.” (sic)
Mercifully, someone from the newspaper’s business page, looking for the ever-meaningful single-column filler, grabbed hold of that copy and the day was saved.
It should have been page 1. Readers would have related to the story, after all: Inflation has been scaling record highs; food prices are zooming; pandemic-induced disruptions are driving coffers dry; there are no tourists; and, fishermen are catching just enough for domestic consumption.
Besides, a hurried, unplanned ban on chemical fertilisers in September has come as a curse to the spice plantation, the tea estates in Nuara Elia and the rice farmers alike. Pests have halved vegetable production.
The World Bank has estimated that half-a-million people have slid below the poverty line since the beginning of the pandemic. In other words, gone are the gains from the five years of fighting poverty.
Nobody noticed when bankruptcy was knocking at the doors.
Earlier in the week, there was the depressing news of Sri Lanka temporarily closing down three overseas missions in Abuja (Nigeria), Frankfurt (Germany) and Nicosia (Cyprus) in a bid to cut spending and conserve its foreign reserves.
The New Year doesn’t seem to have begun on a promising note. Sri Lanka is on the brink of bankruptcy with a record high inflation and mounting dues. The country needs to repay an estimated $7.3 billion in domestic and foreign loans in the next 12 months and is staring down the barrel. Many Sri Lankans are returning from their job in the gulf and they are not certain when they will go back to work. The fear is that remittances will have reduced in 2022.
A humanitarian crisis stares the country in the eye and people in the emerald island realise that they are sinking into an deepening abyss of a financial mess.
A pandemic-induced economic crisis like never before has a wall of figures to stare at, even as the figures stare back ruthlessly. The gross domestic product has contracted by over three per cent last year. Any hopes the government had to pull it out of ICU were dashed with the Omicron strain of the COVID-19 virus in the air.
But the people, out of a long war and a series of disasters, are more resileint that the generations before them. They managed when, just four months ago, Sri Lanka declared a food emergency as the foreign-exchange crisis worsened. Three years ago, Sri Lankans offered to pay oil debts to Iran with tea to avoid US sanctions.
The country’s President, Gotabaya Rajapaksa, had then invoked emergency regulations to control prices of essential food items as private banks say they were running out of foreign exchange to finance imports.
The country’s cricketers have often pulled their team out of the jaws of defeat on a number of occasions. But, today, Sri Lankans are looking for someone who can do the same with the financial mess the country is in.
Image: Wikimedia Commons. It is tea estates like this one in Nuara Elia that have bailed the country in the past. But, will it work in 2022?
