Farmer in sri lanka sad moods11/10/2023 ![]() ![]() Exports of tea, rubber, spices and garments suffered. The COVID-19 pandemic in 2020 made the bad situation worse.This weakened its currency and made it more difficult for the government to import essential goods. Consequently, the number of tourists fell sharply leading to a decline in foreign exchange reserves.In April 2019, the crisis accelerated after suicide bombings at churches hurt the island nation’s critical tourism industry.This commitment tied the hands of the government to go for counter-cyclical fiscal policy when economy slowed down after 2013.It was in this context that the government obtained $2.6 billion loan from IMF loan in 2009 with the conditionality that budget deficits would be reduced to 5% of the GDP by 2011.The 2008 global financial crisis of 2008 had led to flight of capital further draining Sri Lanka’s foreign exchange reserves. During the period of the war, budget deficits were high.Continuing drain of foreign exchange reserves.The average GDP growth rate almost halved after 2013.However, the economy was on a downward spiral after 2013 as global commodity prices fell, exports slowed down and imports rose. ![]()
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