August 20, 2022

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Bankrupt Sri Lanka's inflation hits 54.6%. The trigger: Corruption.

Shit has not solely hit the fan but in addition the ceilings, partitions, and principally,...

Shit has not solely hit the fan but in addition the ceilings, partitions, and principally, Sri Lankans.

For the ninth consecutive report, the nation noticed its inflation rise to an all-time excessive of 54.6 %.

P/S: In case you are questioning how inflation works, we have accomplished a video about it.

It is also the primary time the Colombo Shopper Worth Index (CCPI) crossed the 50-percent mark. To place issues into perspective, inflation stood at simply 7.6 % in July 2021.

The newest determine comes after the Worldwide Financial Fund (IMF) urged the Sri Lankan authorities to rein in inflation and confront corruption to resolve the nation’s state of financial system.

What brought on Sri Lanka’s financial disaster?

IMAGE: Ishara S. Kodikara / AFP sourced from New Straits Occasions.

Whereas there are a number of components such because the COVID-19 pandemic and meals and power value shocks no due to Russia’s invasion of Ukraine, IMF pits the blame squarely on corruption.

Following a 10-day go to to Sri Lanka’s capital, Colombo, the representatives from the worldwide lender mentioned it will be an uphill activity to proper the wrongs that brought on the South Asian nation’s financial woes.

“Given the low degree of revenues, far-reaching tax reforms are urgently wanted,” IMF mentioned in an announcement, including that Sri Lanka must “scale back corruption vulnerabilities” and handle inflation.

IMF additionally urged that Sri Lanka wants to finish its power subsidies which have been bleeding the federal government’s finances.

“The authorities have made appreciable progress in formulating their financial reform program and we’re wanting ahead to persevering with the dialogue with them,” it added.

In different phrases, earlier than IMF can mortgage any cash to Sri Lanka to repair its financial system, it must stamp out the corruption that brought on the mismanagement of money within the first place.

How unhealthy is it for Sri Lankans?

 
IMAGE: AP Pic / FreeMalaysiaToday

The financial disaster is so unhealthy that Sri Lankans have been experiencing frequent energy blackouts and prolonged queues on the petrol station.

Value of gas alone has risen by as much as a whopping 400 %, inflicting the Sri Lankan authorities to default on its US$51 billion overseas debt.

22 million Sri Lankans usually are not solely out of petrol however are working out of meals, drugs, and different necessities. Many non-essential public providers have been shut down.

The United Nations (UN) Resident Coordinator in Sri Lanka, Hanaa Singer-Hamdy, mentioned the individuals within the South Asian nation urgently need assistance.

“Sri Lanka’s once-strong healthcare system is now in jeopardy, livelihoods are struggling, and essentially the most weak are going through the best influence,” she mentioned.

UN has appealed for US$47 million in life-saving help to 1.7 million individuals in Sri Lanka.

In the meantime, Sri Lankans took to the road to demand the resignation of Mahinda Rajapaksa. Mahinda resigned in Might 2022 following large protests islandwide.

All of it now hinges on Sri Lanka’s sixth president, Ranil Wickremesinghe, to not solely stamp out inflation, however boot out corruption.

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Cowl picture by Pradeep Dambarage.