Sri Lanka Amidst Financial and Humanitarian Crisis 

Sri Lanka Amidst Financial and Humanitarian Crisis 
EPA/Chamila Karunarathne, 2021.


Judit Kolbe 

Sri Lanka and Human Rights Researcher, 

Global Human Rights Defence.


Sri Lanka is facing a financial and humanitarian crisis, as inflation hits record levels, food prices continue to increase and the State’s financial reserves are running out; the State is on the brink of bankruptcy. (De Soysa, M. and Ellis Peterson, H., 2022). For the past two years, the COVID-19 pandemic has put a heavy burden on Sri Lanka’s tourism dependent economy. This strain is intensified by the government's high spending and tax cuts which erode state revenues, an extensive debt payment to China and the State’s foreign exchange reserves being at their lowest in years. Inflation in Sri Lanka has been increased by the government printing money in order to pay off domestic loans and foreign bonds (De Soysa, M. and Ellis Peterson, H., 2022). 

According to World Bank estimates, over 500,000 people in Sri Lanka have fallen beneath the poverty line since the start of the pandemic. In November 2021, inflation in Sri Lanka hit a record of 11.1%, making basic goods unaffordable for many and previously well-off people struggling to buy food. Amidst the increasing inflation, Sri Lanka’s President Gotabaya Rajapaksa declared a state of economic emergency which gave the military power to ensure the selling of essential items, such as rice and sugar, at government prices but has done little to provide the necessary help to the people in need (De Soysa, M. and Ellis Peterson, H., 2022).

In order to save its foreign currency reserves, Sri Lanka is closing three overseas diplomatic missions. From January onwards, the Sri Lankan High Commission in Nigeria and consulates in Germany and Cyprus will be closed in line with the restructuring envisioned by the Ministry of Foreign Affairs (Al Jazeera, 2021). 

Sources and further reading:

Al Jazeera (2021, December 27). Sri Lanka shuts three foreign missions as dollar crisis worsens. Al Jazeera. 

De Soysa, M. and Ellis Peterson, H. (2022, January 02). ‘There is no money left’: Covid crisis leaves Sri Lanka on brink of bankruptcy. The Guardian.