16 Apr Bankruptcy and Redemption of Sri Lanka : An Analysis in special context to measures for revival of the Sri Lankan economy
Bankruptcy and Redemption of Sri Lanka – Today Current Affairs
Context : Sri Lanka is facing the worst economic crises since its independence Millions of families are struggling to put food on the table. Long lines of people queuing for fuel or gas are a common sight across the country. There is the crisis of medicines in hospitals, papers in school . In such a situation what measures should be adopted by Sri Lanka to revive its economy. IMF is ready to assist Sri Lanka but this would not be helpful for Sri Lanka in long term. The IMF agreement and fallout will be the central point of contention between the elite and the working people
Today Current Affairs
Introduction :
- Sri Lanka is facing the worst economic crises since its Independence . With the support of the IMF, Sri Lanka would try to recover its economy . In the process of the recovery of the economy , Sri Lanka should not impose more burden on the middle class only .
- However, the Sri Lanka government has clarified that We have seen huge cuts to the country’s revenue and are trying to recover from the current economic crisis. Reforms are going to be crucial,” We definitely need a safety net for the poor. We cannot ignore the poor.
- But many experts think that taking out loans and the redemption of old loans is not the right and appropriate measure to revive the Sri Lankan economy. Sri Lankan Government must bring some structural changes in its economy Government should find out the root cause of the economic crises and accordingly should opt the measures
Sri Lankan economical crisis : The Hindu Analysis
The basis reason of the Sri Lankan crises was the political reason . This government is an authoritarian government and still it is not ready to resign. People had stopped to ask questions about government policies .
Now The Government recently announced two two major decisions – to default its external debt U.S.$51 billion to America and negotiate a support package with the International Monetary Fund (IMF ) as the country “restructures” its debt.
How this crisis erupted in Sri Lanka : The Hindu Analysis
- Sri Lanka is economically poor not only because of maladministration of the government but also because of some fundamental evil economical politics . In fact the Sri Lankan elite group wanted to make the policies of Sri Lanka in their favor and the government worked to protect the interest of the elite class in the name of development (Sri Lanka is going to be Singapore) ignoring the middle and lower class . Again this country must learn the lesson from past crises .
- Taking a loan from the IMF and working for the elite class. This government should resign , if it failed to preserve its economy and tax regime must be justified. The package from the IMF would be beneficial for the Sri Lankan economy for a short time only. But the real cost of such a “reform” package will be much higher, and invariably borne by the working people. Today Current Affairs
- The government will increase the tax which would be borne by hard working people . In the process of the development it must be understood that it should not increase inequalities between different classes . It it happens , it would be dangerous for the politics and stability of the country
- Through Defaulting, debt restructuring, America has not been ready to assist with funds to Sri Lanka. Once it would be defaulted, it would fade up the image of Sri Lanka and in future, no country would assist Sri Lanka financially. Once Sri Lanka would be bankrupt, it would be a disaster for Sri Lanka as well as it is not guaranteed that Sri Lanka would recover after the assistance by IMF .
- Logic of default and bankruptcy consists of many futuristic problems for Sri Lanka. Better to be bankrupt. The Sri Lanka government should reform its government and cut the expenditure of the government . Sri Lanka should take more financial assistance from the IMF and try to repay and Sri Lanka should negotiate with America regarding some concessions in the repayment of the debt. But Sri Lanka should not be defaulter . The Hindu Analysis
- Tax increment and the price hike on energy fuels and luxurious things tightening towards inflation targeting; a market-determined and flexible exchange rate; and targeted social safety nets would be other measures which should be opted by Sri Lanka . However most of the recommendations have been implemented by Sri Lanka also . The exchange rate has been floated, passing on the higher costs of imports to the consumers; interest rates have been doubled to 14%, putting at risk small business and the livelihoods of rural producers, and energy price hikes, for example of petrol and cooking gas, have been transferred to consumers.
- Significantly, many of these recommendations are already being implemented by Sri Lanka. The exchange rate has been floated, passing on the higher costs of imports to the consumers; interest rates have been doubled to 14%, putting at risk small business and the livelihoods of rural producers, and energy price hikes, for example of petrol and cooking gas, have been transferred to consumers.
Today Current Affairs
Conclusion
Hence , as per the above discussion, it can be clearly said that bankruptcy and defaulting is not the solution for Sri Lankan Crises . It could fade the financial image of Sri Lanka and in future , no country in the world would give loans to Sri Lanka. Hence, gradually Sri Lanka should reform its economy with the support of the IMF and try to increase its production of the cash crop. It should enhance its service sector also.
plutus ias daily current affairs 16 April 2022
In this article we mention all information about Bankruptcy and Redemption of Sri Lanka Today Current Affairs.
Plutus IAS Current Affairs Team Member
No Comments