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Sri Lanka’s inflation skyrockets to 29.8% in April mirroring economic decay

Sri Lanka's surging inflation hits the common people

Amid an acute economic crisis, Sri Lanka’s inflation touched 29.8 per cent in April. In March it was 18.7 per cent. Hit by shortage of food, fuel and medicines, the island nation is in the grip of an unprecedented economic turmoil.

In the middle of this, Sri Lanka increased prices of commonly used medicines including antibiotics and painkillers — the second time in six weeks.

Sri Lanka has already imposed bans on the import of several essential goods to save the foreign exchange reserves.

Sri Lanka announced defaulting on $51 billion external debt repayment on April 12. Colombo is now in talks with the International Monetary Fund (IMF).

The country is also reaching out to countries for bilateral financial assistance. India has said it remains committed to help Sri Lanka. It has already provided financial assistance to the now-bankrupt country.

While the IMF has prescribed implementation of sweeping reform measures, many fear that these would further push prices and hit the common people. What has raised many eyebrows is China’s reluctance to come to Sri Lanka’s rescue.

Sri Lanka’s tax to GDP ratio is one of the lowest due to various populist measures undertaken by the Gotabaya government.

While Covid 19 pandemic aggravated the country’s economic crisis, the Gotabaya Rajapaksa government’s “populist” economic policies have led to the current fiasco.

The Diplomat in a report said that “mismanaged government finances and ill-timed tax cuts,” have led to the problem.

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