Sri Lanka’s economic crisis erupted this week when protesters stormed the country's presidential palace, prompting the resignations of President Rajapaksa and PM Wickremesinghe. Here’s what caused Sri Lanka's worst crisis in 70 years:
Ten days of bailout talks with the International Monetary Fund ended without a deal at the end of June, but the international body has vowed to keep the negotiations going. Wickremesinghe last week declared that his country's economy hadWhy are people protesting?
The United Nations in Sri Lanka last month launched a bid to raise $47.2 million to assist the 1.7 million people most affected by the crisis. Around 5.7 million were in need of immediate life-saving assistance, the agency estimated.Arun Sankar / AFP - Getty Images The dwindling reserves followed years of mismanagement of the country's finances, with the government spending more than the overall income and production of tradable goods and services. To compensate, the government increasingly relied on its foreign reserves to stay afloat.
The country pre-emptively defaulted on around $51 billion in foreign debt in April, the first time it had done so. Sri Lanka’s central bank said the country could not afford to repay unless there was a debt restructure.Protesters in Colombo in recent months have blamed the crisis on Rajapaksa, whom they accuse of mismanaging the city’s finances and of corruption.
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