Debt Crisis In Sri Lanka
A once-promising country is now a failed state
Just a few years ago, Sri Lanka was a growing and promising country. Thanks to its beautiful mix of beaches, jungles, and mountains, it used tourism to grow richer. The average Sri Lankan was squarely and comfortably middle class, affording a quality of life that was the envy of so many of its neighboring countries in South Asia.
Now Sri Lanka is mired in an economic crisis that has already collapsed its government and could threaten the continuity of the country as a whole.
Life has gotten so bad that families, unable to find fuel for cooking let alone driving, are cooking via bonfires outside. Many have no power. People that need to drive are queuing up for ten hours or more just to get a day’s worth of gas. Thanks to its plunging currency (and the fact that as an island nation, it imports most things), the country is running low on food, energy, and medicine.
How did it get to this?
Sri Lanka was seen as an Emerging Market success story for many years. It used tourism, manufacturing, and commodities (e.g. tea and precious stones) to accumulate sizable foreign exchange reserves relative to the size of its economy. This allowed its currency to remain stable versus major global currencies like the U.S…
