The funds are essential for importing essential supplies like food, medicine, and petroleum products as the country is facing a peak shortage of foreign currency which in turn has led to the devaluation of the Sri Lankan rupee.

Food prices are higher than ever before and the country is counting on a bailout from the International Monetary Funding to get back to its feet.

The situation is so bad that the country has been forced to ration its food and fuel supplies, exams have been cancelled due to a shortage of ink and paper. The country’s national petroleum corporation has said that there is no diesel for public distribution for at least two days, according to an AFP report.

Faced with the double trouble of shortage of power from hydroelectric stations, the country is facing 10-hour long power cuts to deal with the oil shortage which fuels the country’s conventional power generation facilities.

The medical care setup has also been deeply impacted by routine and non-emergency surgeries put on hold indefinitely.

The handout by India is significant in light of growing China’s influence in Sri Lankan affairs. Sri Lanka had sought financial help from China too including a debt restructuring arrangement. The crisis has been triggered by fiscal mismanagement in the form of high government spending and inadequate taxation. Two years of the COVID-19 pandemic also gave a death blow to the nation as tourism, one of the backbones of the country’s economy, could not function.

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Currently, the island nation is tackling one of its worst economic crises since independence with a shortage of high-value foreign currency which is required to import essential commodities like food, medicine, and petroleum.

A financial emergency was declared as early as August 2021 by the government and has a trade deficit of $10 billion. This has led to currency depreciation and the government being forced to look for assistance from the International Monetary Fund.

The country has also sought a $2.5 billion loan from China and has also secured a credit facility of $1 billion from neighbouring India.

The situation has also sparked some tensions with incidents of violence being reported intermittently. There have been occasional protests against tourism operators over the shortage of kerosene, primarily used as a fuel in cooking stoves.

The deployment of the army is aimed at ensuring there is no hoarding, black marketeering, and better distribution of essential supplies. The situation is so dire that term tests for millions of students had to be cancelled due to a shortage of ink and paper.

The country’s economy suffered a setback with two years of the pandemic restricting the inflow of foreign tourists, a backbone of the economy. The tourism industry alone contributed 10% of the nation’s GDP and provided employment to 200,000 persons.

According to analysts, other than the devastating impact of the pandemic, high government spending and dilution of tax structures are the main cause of this debacle of the once-thriving economy. According to the World Bank, as many as 500,000 of the country’s residents have been pushed into poverty since the onset of the pandemic.

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