Sri Lanka: Economic Background of Mass Protests

On weekend (July 9-10, 2022) Sri Lanka's President and Prime Minister were forced them to resign after 100,000 protesters massed outside President's residence. In this dashboard we collected key indicators revealing economic background of mass protests in Sri Lanka.

• Because of pandemic number of tourist arrivals in Sri Lanka dropped from 2.3 millions in 2019 to just 194 thousands in 2021. According to the World Travel and Tourism Council total contribution of tourism sector to Sri Lanka economy accounted for 12% of GDP and employment before the pandemic.
• In recent decades government and business relied heavily on foreign loans to increase investment in infrastructure development. Between 2011 and 2020 external debt of Sri Lanka increased from $25.8 bln. (40% of GNI) to $56.3 bln. (72% of GNI). Over the same period interest payment on external debt increased from 0.8% to 2.2% of GNI. In 2022 government debt reached 109% of GDP and total debt (including government, households and non-financial corporations) amounted to 150% of GDP.
• Sri Lanka imports nearly 30% of cereals and over 80% of energy consumed in the country. Between 2019 and mid 2022 world prices for energy and cereals almost doubled pushing up domestic inflation. 
• Government and Central Bank of Sri Lanka had to fall back on its foreign exchange reserves to pay off government debt, support national currency and pay for imported food and energy. Sri Lanka's foreign exchange reserves dropped from $7.5 bln. in Mar. 2020 to $1.9 billion in May 2022. As foreign reserves dwindled Central Bank of Sri Lanka had to devalue national currency.
• Consumer price inflation accelerated to 33.8% year-over-year and Sri Lanka's Rupee lost 44% of its value since the start of 2022.