Sri Lankan economy shrinks due to crisis as protests intensify

Colombo, Mar 16 (EFE).- Sri Lankan university teachers protested on Thursday against the conditions imposed by the International Monetary Fund for releasing a bailout package, even as the country’s severe economic crisis seems to continue unabated with the GDP falling by 7.8 percent in 2022.

The Federation of University Teachers’ Associations (FUTA) came out on the streets for the second day in a row against “the oppressive tax policy of the unscrupulous government,” even though the rest of the state sector workers’ unions had concluded a massive strike on the issue on Wednesday evening. .

“We don’t see a reason to do so (call off the strike) because we didn’t receive a concrete solution to our demands from the government,” FUTA President Shyama Banneheka told EFE.

Amid repeated protests and the much-anticipated IMF bailout that has not materialized so far, the Sri Lankan Department of Census and Statistics said on Wednesday that the country’s GDP had contracted by 7.8 percent in 2022.

The industry and agriculture sectors fared the worst, reporting contractions of 16 percent and 4.6 percent respectively.

According to the department, the GDP shrank by 12.4 percent in the last quarter of 2022, compared to a 1.4 percent growth registered in the same period in 2021.

The Sri Lankan economy had grown by 3.3 percent in 2021 and the country expected to stage a recovery after the Covid-pandemic – which had severely affected the important tourism industry – but a series of misguided fiscal policies and sky-high debt triggered an economic crisis that has resulted in people struggling to fulfill basic needs.

“This is mainly caused by the deepening of the economic crisis and youth and social unrest that began in the early part of the year 2022,” the official report said.

Sri Lanka sought IMF assistance in March 2022 to fight its worst economic crisis since independence from the British in 1948.

The government is hoping that the bailout package would get approved by the end of this month, after China offered last week to furnish guarantees to the IMF for restructuring Colombo’s debt.

Sri Lanka has an annual debt load of around $6 billion for the next five years, around 10 times higher than its current foreign currency reserves. EFE

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