Sri Lanka, before the onset of the corona pandemic, during the first quarter of 2020 the economy recorded a growth of -1.6%. The situation worsened in the second quarter and the pandemic is cited as the reason for the sharp economic downturn.
There are five main crises in our economy: The first is the loan crisis as the revenue received by the Treasury is not sufficient even to pay the installments of loans taken. To pay-back the due installments the country needs to borrow an additional 135 billion rupees. The total outstanding loans as at 2019 was Rs 14,115 billion. That increased to Rs 16,427 billion in 2020. The government has to pay 6.9 billion US dollars as loan repayments.
The second is the import-export crisis, with sea areas, eight times the country’s land mass, we imported fish worth Rs 34,650 million in 2020. In 2010, we produced 27 percent of the onion requirement in this country; now it has dropped to eight per cent so that we have to import 92 per cent of the country’s onion requirement. We have imported Rs 27,610 million worth of salt, milk and milk products worth Rs 61,930 million.
The third crisis is the weak government revenue. In 2016 the government income was around 23 per cent of the GDP. As at 2014 the figure dropped to 11.5 per cent. Now it’s at 9.1 percent.
The fourth crisis is the collapse of the industrial sector due to the high cost of raw materials, failure to combine technological support with the industrial process and inability to create a proper market for industrial output.
The fifth crisis is the inequitable distribution of national wealth. Of the total population, the top 10 percent of rich enjoy 38.4% of national income while 10 per cent at the bottom receive only 1.1 per cent of the national income. There is a huge tax burden on the people, as the indirect taxes are around 80 percent. Sri Lanka is the only country in the world with this much taxes on food consumed by the people. Even in India it’s 49 per cent, in Indonesia its 50 percent and in Thailand it is at 40 percent.
In this scenario, with the country’s economy sliding into a recession; every citizen must irrespective of their political beliefs, join the rest to rebuild the nation battered by the civil-war and now the coronavirus pandemic!