In addition to the impact of the Covid-19 outbreak, the Sri Lankan economy has been experiencing one of its worst ever economic crises as a result of mishandled government finances and ill-timed tax cuts.
Huge foreign debt stacks, a series of lockdowns, skyrocketing inflation, fuel shortages, a drop in foreign currency reserves, and currency devaluation have all harmed the country's economic growth.
The economy of Sri Lanka increased at a slower-than-expected 1.8 percent in the fourth quarter of the 2021 fiscal year, bringing full-year growth to 3.7 percent, according to government statistics.
The central bank of Sri Lanka predicted a 5% growth rate for the year.
Countries like as India, China, and Bangladesh have offered assistance to Sri Lanka.It has also approached the International Monetary Fund for financial aid (IMF). Even before the Covid epidemic, Sri Lanka's economy was in jeopardy. The lockdowns exacerbated the situation and harmed the informal sector, which employs roughly 60% of the country's workforce.
The country's foreign exchange reserves have dropped 70% in the last two years to $2.31 billion, leaving it unable to pay for basic imports such as food and fuel. A serious shortage of foreign money contributed to the financial crisis, leaving traders unable to finance imports.
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