Economy of Sri Lanka: Sri Lanka’s overall economic growth was minus 11 per cent in 2022 and could be 3.5 to 4 per cent this year, President Ranil Wickremesinghe said on Saturday, as the island nation overcomes its worst economic crisis since independence. worked hard to do.
Wickremesinghe, who also holds the finance ministry portfolio, said overall economic growth in 2022 was larger than expected at -8 per cent and growth in 2023 could be somewhere around -3.5 per cent to -4 per cent. “The growth rate of the economy in 2022 was – 11 percent. This year it could be -3.5 to -4 per cent.
Sri Lanka faced its worst ever economic crisis during the middle of 2022, leading to months-long public protests leading to a political crisis. Shortage of essential commodities due to foreign exchange crisis has led people to take to the streets demanding the resignation of President Gotabaya Rajapaksa.
Sri Lanka declared its first debt default in April last year
In April last year, Sri Lanka announced a debt default for the first time in its history as an economic crisis triggered by a shortage of foreign exchange sparked public protests. On Wednesday Sri Lankan Central Bank Governor Nandlal Weerasinghe told reporters that overall negative growth in 2022 would be around 8 percent. The International Monetary Fund (IMF) had estimated the growth of 2022 to be minus 8 percent. Wickremesinghe criticized his predecessor’s tax concessions introduced in 2020. About 1.6 million tax files existed in 2019, which is expected to come down to 400,000 files by December 2021, he added.
“The reduction in government revenue because of this is the primary reason for the economic crisis,” Wickremesinghe said. Wickremesinghe said the ongoing negotiations with global lender IMF for a bailout of $2.9 billion were crucial. “If the IMF program is disrupted in any way, nothing can stop the country from falling into a crisis again like in May and June last year,” he said.
Until Sri Lanka approached the IMF for a bailout, it was India’s line of credit that helped Sri Lanka import its essential commodities. India’s economic aid package totaled USD 4 billion.
(With inputs from PTI)
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