The World Bank has warned that poverty will increase in Sri Lanka this year

2 weeks ago
Kanesu Balasuresh

Kanesu Balasuresh

The World Bank has warned that more Sri Lankans will live in poverty this year. The World Bank has urged the debt-ridden island nation to take urgent policy action to address high levels of debt, reduce the deficit and mitigate adverse effects. Poor and vulnerable.

Sri Lanka has been mired in an unprecedented economic crisis since gaining independence from Britain in 1948.

The crisis is caused by a shortage of foreign exchange, which means the country cannot pay for imports of key foods and fuels, leading to severe shortages and very high prices.

About 11.7 percent of Sri Lankans earn less than $ 3.20 a day, and the international poverty line for low- and middle-income countries has increased from 9.2 percent in 2019, the bank said in a spring update on the South Asian region.

The other reason for the increase in poverty rates in the country is that the government's Samurdhi program, which covers about 1.2 million poor families in the country, is inadequate.

Furthermore, due to the epidemic, Sri Lanka's economy will shrink by 3.6 percent by 2020.

The revision of the World Bank's macro poverty outlook for Sri Lanka in April 2022, high financial and external risks and challenging political situation are causing significant uncertainty in the economic outlook and the country faces external financial gaps in 2022 and beyond.

The necessary adjustment can adversely affect growth and poverty, but it will correct significant imbalances and then lay the foundation for strong and sustainable growth and access to international financial markets.

Sri Lanka needs at least $ 4 billion to deal with the growing economic crisis, and talks are underway with international organizations such as the World Bank and countries such as China and Japan for financial assistance.

Sri Lankan officials, led by Finance Minister Ali Sabri, held talks with the International Monetary Fund in Washington last week on bail.

India has agreed to provide a $ 500 million loan to help Sri Lanka import fuel.

India has already agreed to defer $ 1.5 billion in Sri Lanka's import payments to the Asian Clearing Union.

Last week, the Sri Lankan government said it had temporarily defaulted on $ 35.5 billion in foreign debt due to an epidemic and war in Ukraine that left foreign debtors unable to repay.

Thousands of protesters have taken to the streets since April 9, demanding the removal of Sri Lankan President Gotabhaya Rajapakse and accusing him of mismanagement of the economy.

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