Sri Lankan economic crisis

What has been happening in Sri Lanka? 

Sri Lanka has declared a state of emergency after the crisis-hit nation's president fled to the Maldives, with protesters also demanding the prime minister quit.

What led to the economic crisis?

Sri Lanka's vital tourism sector was first hammered by extremist bomb attacks on churches and hotels    in 2019 and again the next year by the coronavirus pandemic. Its coffers were further depleted by government tax cuts, and Sri Lanka ran out of foreign currency needed to import everything from medicines to food and fuel. However, many experts blame President Rajapaksa's poor economic mismanagement.

What went wrong?

The country owes more than $51 billion to foreign lenders, its foreign debt pile and has been in bailout talks for months with the International Monetary Fund. The United Nations had warned that Sri Lanka is facing a dire humanitarian crisis, with millions already in need of aid.

What happens when a country runs out of money?

More than three-quarters of the population had reduced their food intake due to the country's severe food shortages, the UN says. The country doesn't have enough fuel for essential services like buses, trains and medical vehicles, and officials say it doesn't have enough foreign currency to import more. The government tried to limit them by banning imports of chemical fertilizer. It told farmers to use locally sourced organic fertilizers instead. This led to widespread crop failure. Sri Lanka had to supplement its food stocks from abroad, which made its foreign currency shortage even worse. Plus unofficial inflation rates are second only to those of Zimbabwe, making many goods if they can be found too expensive for many people to afford.

What's the plan to tackle the crisis?

Mr Wickremesinghe had already said state-owned Sri Lankan Airlines could be privatized. The country has asked Russia and Qatar to supply it with oil at low prices to help reduce the cost of petrol. Plus The World Bank has agreed to lend Sri Lanka $600 million, and India has offered at least $1.9 billion.

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