I am Ayush Chudasama and I am a content writer. In the last year, I have written many articles and blogs.
Sri Lanka has been in crisis for the past year, ever since Prime Minister Mahinda Rajapaksa announced a reduction in import duty on cars. The move was expected to cause an increase in car sales but it did not go according to plan. Instead of boosting exports and helping the economy recover from the downturn caused by low global oil prices, lowering the taxes on cars led to a sharp spike in demand for dollars - which sent the value of Sri Lanka's currency plummeting even further than it already had been.
Sri Lanka has been in the grip of an economic crisis since October when it spiraled out of control through a series of ill-judged decisions by the government.
Sri Lanka has been in the grip of an economic crisis since October when it spiraled out of control through a series of ill-judged decisions by the government. The crisis has sent the value of Sri Lanka's currency plummeting to record lows.
The country was already struggling with rising unemployment and poverty rates before October's meltdown; now its problems are compounded by plunging exports and stagnant foreign direct investment (FDI). The government's response to these problems has been to blame foreign countries like India for their own domestic problems - but this is not only unfair towards them; it also ignores factors entirely outside their control such as global commodity prices and interest rates...
The crisis has sent the value of Sri Lanka's currency plummeting to record lows.
The crisis has sent the value of Sri Lanka's currency plummeting to record lows. In the past three years, the rupee has fallen by about 20% and is now at its lowest level since March 2011.
The economic crisis in Sri Lanka has led to higher unemployment and poverty rates among its people, as well as a sharp decline in exports and tourism revenues.
So how did the country get itself into this mess?
The country has been in the grip of an economic crisis since October when it spiraled out of control through a series of ill-judged decisions by the government.
The crisis has sent the value of Sri Lanka's currency plummeting to record lows and caused food shortages, while foreign investors have fled one after another due to fears of running afoul with local law enforcement authorities.
What happened to spark the crisis?
The financial crisis in Sri Lanka was sparked by a series of ill-judged decisions by the government, which led to its inability to manage its finances. The Maldives – a neighboring country with whom Sri Lanka shares strong cultural ties – experienced political instability and had to declare a state of emergency after months of large-scale protests against president Abdulla Yameen. As a result, many citizens left the island in search of better opportunities elsewhere (including here). These factors combined with what appears to have been poor economic planning by successive governments have meant that many people are unable to find work or afford basic necessities such as food and shelter.
On 26 October, Prime Minister Mahinda Rajapaksa got rid of his finance minister, Mangala Samaraweera.
On 26 October, Prime Minister Mahinda Rajapaksa got rid of his finance minister, Mangala Samaraweera. The move was made by the President and not for political reasons. It was done because there are elections coming up in 2020 and he wants to improve the country's economy so that it can win them.
The Maldives is an archipelago located in the Indian Ocean off India's eastern coast and has been ruled by its own president since 2008 after being under British rule from 1838 until 1965 when it gained independence from Britain following a referendum process similar to Sri Lanka's independence movement at that time. The Maldives also had a history similar to Sri Lanka’s: Both countries were colonized by European powers but eventually gained independence through peaceful means such as voting campaigns or coups d'état (as opposed to violent ones).
This decision may have been influenced by a political crisis that was unfolding in neighboring Maldives.
The Maldives crisis could have played a role in Sri Lanka's decision.
The Maldives is a close neighbor and has been under economic distress for some time now. It is also a democracy, but it has suffered from political instability since 2014 when President Yameen took office after his predecessor was ousted in an election that was marred by allegations of fraud and bribery. When Yameen became president, he appointed his brother as vice president and then dismissed parliament - which led to riots across the country that left many dead and injured thousands more. This year's presidential election saw another round of unrest after Yameen refused to step down despite calls from within his own party for him to resign over corruption allegations related to his family members' business dealings abroad at state expense (which would have required them to be sent back home).
Mr. Rajapaksa's younger brother Gotabaya is contesting presidential elections due in November in the Maldives.
The Maldives is a small island nation in the Indian Ocean. It's a Muslim democracy, but it also belongs to the Commonwealth and the UN, which means it's also part of global trade agreements.
In fact, there are many similarities between Sri Lanka and Maldives: both countries were once ruled by authoritarian leaders (Sri Lanka by Mr. Rajapaksa and the Maldives by Mr. Mohamed Nasheed), and both were once known for being more developed than other countries nearby but now face similar problems such as high unemployment rates and poverty levels among their citizens; both have been affected by terrorism from extremist groups like ISIS or Al-Qaeda, and finally - though this may seem like an odd connection - both countries have large Buddhist populations living alongside Muslims who are mostly Hindu (which makes sense since these religions originated as offshoots) or Christian (again because they share common roots).
Samaraweera refused to support Nasheed, saying it would violate the constitution and escalate tensions with India.
Mr. Samaraweera, who was president of Sri Lanka until last year, said he had decided not to support Mr. Rajapaksa's brother in the Maldives because it would violate the constitution and escalate tensions with India, traditionally the Maldives' closest ally.
The Maldives is a Sunni Muslim nation, but the country's constitution guarantees freedom of religion. Mr. Rajapaksa's brother, Namal, is Hindu and has been accused of supporting radical groups in Sri Lanka. "I am worried about the implications for our country if his brother becomes president," Mr. Samaraweera said.
Mr. Samaraweera said: "I will not support him for president. I've done enough damage already."
In place of the prime minister, he appointed Rajitha Senaratne to make two announcements that were thought to be influenced by Mr. Rajapaksa's desire for popula
In his place, he brought in his loyalist Rajitha Senaratne who immediately announced two big decisions - both thought to be under direct pressure from Mr. Rajapaksa who was looking for popularity among voters ahead of polls in January next year. The first decision was to pardon all those who had been convicted of corruption during the Rajapaksa regime, including his two brothers. The second was to change the constitution so that he could be nominated for president one more time in January.
One decision was to reduce the value-added tax (VAT) on food items by 10 percent and another was to raise fuel prices by 20 cents per liter. This led to an outcry from traders and consumers alike who hit out at these measures as being too costly at a time when there are already problems with inflation spiraling out of control.
The first was a reduction in import duty for cars - especially popular among young men - which caused a sharp increase in imports and caused a spike in demand f
The first was a reduction in import duty for cars - especially popular among young men - which caused a sharp increase in imports and caused a spike in demand for dollars to pay for them.
The second factor was the devaluation of the Sri Lankan rupee, which led to an increase in prices across all goods. Inflation hit its highest level in 2014 and it has been steadily rising since then.
The third was a large increase in fuel prices which also contributed to demand dollars and led to inflationary pressures. In 2017, there were two major factors that caused an economic crisis:
The second move caused even more damage.
The second move caused even more damage. The government announced a tax amnesty that was open to all citizens, regardless of income or status. The amnesty was open to anyone who had not paid taxes for the previous five years, including those who had embezzled money from their companies or received kickbacks in exchange for contracts.
The plan was intended to encourage people who had hidden money abroad and were afraid that they would be charged with tax evasion if they came back into the country (their assets could be seized). But it turned out that most citizens were willing to come forward because they did not want their assets confiscated by authorities—and so many people were able to get away with paying little or nothing on their taxes by filing false returns under this program instead!
In the end, what happened is that Sri Lanka's economy has been pushed to the brink.
This content is accurate and true to the best of the author’s knowledge and is not meant to substitute for formal and individualized advice from a qualified professional.
© 2022 Ayush Chudasama