[000:00:00;00] a ah, for 4 months protesters called for new leadership escrow longest filed into a devastating economic crisis. nation and you're in month of double digit inflation, rolling power blackouts and severe shortages and food and medicine. sco longer form reserves are depleted to a point that it can no longer afford to pay for a central imports as the country defaulted for the 1st time in its history. so how did i get here, and what are the repercussions?

i'm christy i and you're watching the cost of everything for so how this green lock i get to this critical point. well, there's a combination of compounding factors like money creation, unaffordable tax cuts, a nationwide policy shift to organic or biological farming cobra, which clots is tours and trade an economic mismanagement? it's hard to really pinpoint the blame when it's really just a cascade of events. the government now lack sufficient warm reserves to pay for fuel and other key imports. and as we've discussed previously, fuel is the literal life, blood of nations and powers. everything from industry to basic heating and keeping the life on at home. for long as also a trade dependent economy and the country is very few dynamic exports and the global price and supply side chalk have really disrupted these sectors severely. for instance, for longest textile factories where once considered vibrant and promising. but now

the whole industry has come to a halt because of power cuts, and to top it off, the government's policies of tax cuts in 2019 and unsustainable welfare measures, deprived the treasury of billions of rupees. to finance the resulting fiscal deficit, the government went on on a money printing spree, heating up the economy, and exerting downward pressure on the ruby. and for more on this, we bring you a sancho. we just think research fellow at the institute for policy studies in sri lanka. so what brought through longer to this crisis in the 1st lights? how did it run out of foreign reserves? if you look at the root cause of this crisis, we need to go back in history because after the independent lank, i was experienced in 2 kinds of defeat.

when was the trade deficient or the, the budget? and then we had to finance the definition. first, it was mostly bilateral donna barry's club and the friendly nation for lake india. but around after 2 doesn't care when i started to borrow a release from the international capital my because the international. so i didn't do those and i think 2009 to 2018 period to fill out the road. 14000000000 u. s. b in this form, so short to make sure i know so high and low then

came the code 19, reduced our returns into the country and also totally wiped out. these 2 are donates and 2018 for lunch and about $4500000000.00. but doesn't 21? it was just less than 1000000000. so the things for him. so proficient i know 20212022. we had to prepare it low for in green. so so the traffic to the input. so for essential comedy and government tried to maintain artificially low rate, though for him refocused were depleted, finally relent,

forgotten and had to let it go. so the great deck was to weigh about 80 more than 80 both and in the fear of david. so this is the situation right now by a real good do feel and go ahead, suspend all the if that payment, if it can be considered the default situation. so these days longer government piece that, you know, lived in a negotiation with the credit. ready for that restructuring, because possible, i am, if the bailout is going to continue not related to restructuring process. and now are there any other follow effects of this crisis, or is this isolated? is sca longer here?

are there any knock on effects or any other nations? we can see the consequences of this financial crisis in the domestic economy of fielding, the shortage if you need a good feel and if not in a position to finance the coach as usual. for example, our phoebe are real and the cook didn't gas shortage, but right now it is kind of east because of the government. a viewed in ration it is. busy getting really well right now. so people have a feel for day to day activities though it is not like before. and

the same thing is if anything goes it couldn't guess how we were. they are a lot of import control, seeing if it link i cannot in the boat. so really goes is bad right now and you in the lot of important for day 10 days in the economy and then industrial like construction industry, if africa because so crazy. mainly due to the boats condo, and if i know most of you the high inflation rate, we didn't do it that the funding board and

inclusion is very high, especially i think didn't last month. the consumer price index. it was like 9 to one year. right. so it's about 9 different this crisis may not affect the other countries like the i will be no contingency. because like if a small economy takes about 80000000000 us the economy. so there will be no c. contagious effect on the economy like got ready or not trading that so the credit to the only avenue that lender may affect their country. our credit to our credit just some kind of piece like china,

india jap. and they have a really bare braided loans to our country land. these are really big economy. so i think the amount of loans are added to feel like that may not affect the economy. you wouldn't do the, i will be some delays in payment, especially if i did turn will be a good upper school and the say bought me some of the lowest real estate time to be a big but i think it is about do less than 2 individually. i think the government intention is to restructure

about 10000000 of by let alone then 9000000000 international. so are in one thank you so much for coming on a sancho. we just thing a research fellow at the institute for policy studies and sco longer, longer has been heavily reliant on credit lines advanced by a neighbor india to purchase fuel in recent months. but now the government is struggling to secure fresh fuel shipments to replenish stockpiles, as banks are reluctant to accept letters of credit when there's already $700000000.00 in overdue payments. the rapid decline of the countries middle class has plunged the country further into turmoil. the middle class is no longer able to maintain their consumption, which is a pretty big problem in a country where consumers spending makes up 70 percent of us g d p. and when we

come back, are we witnessing the worst economic crisis in so long as history? and so what countries are extending a hand to the asian country and at what price will have everything with ah, ah ah, ah ah, ah, ah, a

ah with oh, is your media a reflection of reality? ah, in the world transformed what will make you feel safe for hi solution for community. are you going the right way or are you being that somewhere? direct? what is true? what is faith? in the world corrupted, you need to descend a join us in the depths or remain in the shallows. ah

ah, by the middle of the 19th century, practically the whole of india had been under the rule of the british empire. the colonial authorities had imposed that heavy death bringing the people into poverty and were exporting natural resources. and moreover, these authorities absolutely had no consideration for the traditions of the local population, treating them like 2nd class citizens. the british were showing signs of disrespect even to those who cooperated with them. the fact of ignoring the religious beliefs of the hindus led them. you'd neil busy boys, mercenary soldiers serving under the british crown. the rebellion began on the 10th of may 1857 in the garrison town of may river, north of india. in the form of

a mutiny. the rebels quickly took over daily. the heroic resistance of the indian people lasted for one and a half years. however, the forces were not equal. the o'neill authorities dealt with the rebels, cooling scene slaves, boys were tied to the mouth of the cannon and were shot right through their bodies for the amusement of the public. these type of execution was called the devil's with the obliteration of the mutiny resulted in the 800000 inhabitants of india. however, the british empire never broke the free spirit of the indians and their will for recess. lou, we are witnessing the worst economic crisis in so long as history since its independence. and now the economy has collapsed and the country has run out of the money. it needs to import essentials. so what constitutes as an essential or

talking about basic items here? things like fuel food and fertilizer crop yields are shrinking from the lack of fertilizer, which will spin off into a serious food crisis. in a recent assessment by the you and food and agriculture organization. 6.3000000 people. nearly 30 percent of the population are food insecure, 30 percent. this is caused by the record 90 percent food inflation. the nation is seeing which makes staples such as rice, unaffordable for millions of families. the country is usually able to grow enough to feed its population of 22000000, but due to and dwindling yields from 2 consecutive harvest, failures from shifting to biological farming. things are now looking bleak. around 200000 fishermen are also out of work because they do not have fuel for their boats . and meanwhile, china has also loan a substantial amount of money to spear lava. china is 3rd largest creditor after

japan and the asian development bank. but rather than thanking china, screw langa is instead blaming china for exacerbating the crisis. sco longer has bought heavily from china over the years to plug a budget for falls and trade deficits. but much of the money has been squandered on infrastructure projects that are part of china's belt and road initiative. and let's break this down further and bring in elisha, where our research fellow at the institute for policy studies in sri lanka. thank you so much for joining us from there. so starting off, what do you think of this? do you agree or do you think your lunk, us economic trouble stem from china and taking on too much debt from china to become a crisis? was already bring by 2019 become a growth rate was at no time laurie took 2.3 percent in 2090. so with this low growth rate,

she's having so many economic problems in the country is involved huge budget and a message trade, which was almost time to conduct the g d p. and there was lots decks to g d p ratio because about 84 percent and then majority of it was denominated in fine. ready currency, so silica was already having so many problems before the pen to me and the panoramic in 2020. it's a bit more for the ongoing problems that we had from beforehand. it's so foreign currency or owning from fine exchange was the key component of the silicon economy. not going economy light a lot on earnings from the patio, the torrison effect and earnings from work or anything. but however,

the turn of dependent me all of these find exchange earnings. but a huge blow. if we look at the power sector pattern, so orders are decreased. and at the same time that will supply side issues because lots of input from outside the country. so that was important issues, but with the demand decline for an additional earnings from the we're going down at the same time the detroit them picked up was a large file exchange jayla that also was already having issues because of the east of bombings in 2019 and then along with these to travel restriction funding from the toys and that was also decline to a near the only but the worker at work, i mean, the kind of performed better than expected in 2020 of,

with the growth of 5.8 percent to 7, beginning with dollars. however, this was not and still all the 3 last and economy in place because there were a lot of deck that was coming view and i went ahead and get these on time. and that as well as issues in the trade and having to import lots of goods of at the higher exchange, i'm going with a lot of pressure on the exchange rates. create a lot of issues in the foreign exchange front. now, when we talk about the foreign exchange, artificially maintained the exchange rate at about $200.00 to put us down the for a long time. and that create that a lot of impact on the remy turned in. but what could be done

because the informer channels for the remittance was busy too high up change made so many people didn't want to send through the former channels and shows the, the foreign currency coming into the country. took a job to keep towards the end of from 2020 by 2021. the officers. but this not to decline significantly. like in 2019 we had about $4600000000.00 us dollars. that results. but by 2021, it declined to $1800000000.00 had been sent them in 2022. it declined father with all this bullshit and political issue that is going on and down the existing pressure in the foreign currency. the sudden, floating off against the us dollar and that was a huge depreciation. sri lankan will be so all in all at one point

she was as low as the t 1000000. he was above foreign exchange, reserved in the pantry. $15000000.00 only as one fund. so this is how the situation evolves to become a tie and the foreign exchange situation in the country. and now what are the next steps? first go lanka. is there a way out of the debt crisis in terms of the crises? the, the, the whole gamut of thing for right now is in the process. but the restructuring the support of the ins. but probably we have reached the extended fun facts of the day of the month or us $1.29 for 48 month plan. so with this what's like, i've been into achieving the restore economic stability and also what she did

sustain ability. so in terms of the ability to, to need to do is we have to kind of get the support of our creditors and their willingness so that we can restructure the debt and the paid over a reasonable time in a reasonable manner. but however, the talk going on in the front and then also going for good luck, i will need to secure a funding as the bilateral partners on the list. because to bridge the gap in the finances apart from that, she also has to control the fiscal side of the economy, where there is the government revenue and the government expenditure maintain big enough for ranch and all as part of these i you, i did restructuring package,

substantial component medical stability built in was the ability and addressing last making government institutions and also possibly looking at the non public sector workforce, the currency and credit of a nation really all depends on confidence and now that's longer has defaulted. there's absolutely no confidence in the currency anymore. the government or the credit of the nation are outside investors. so can you longer rebuild itself? i think the, the confidence in the currency, the critical issue. one of the main reasons why, even though the mon, my going to be turned as the was to do before. so then obviously the party. now investors also have a low confidence in that you're not going economy and they will not send as much as they would otherwise. so the on demand,

the thing it's to take out of the macro economic indicated in the country and it should not be stability. that is content. and that is a realistic exchange rate. and then that is some stability and exchange rates and varies permits meant by the political parties and the government towards tabulating the economy. and that is consistent policies coming up so that that is in the investment. and now how are the daily lives of citizens being affected by this crisis? what hardships are they facing? the 3 long population is really affected by the people. on the one hand, the inflation is having a huge impact on everybody's lives for lifestyle and much thing, par and all. so that is

a little shar pages specially in terms of the 10 months. the distribution of was as what has been some sort of transportation issues, but now it is easy off but not normal yet. so because of that, the daily life is because it would not have the public transportation as frequent as you would want to. and then the social safety nets have to come into effect because the low income population, it's not really struggling with this inflation and the economic situation in the country. and unless that protection we can with them coming in the night will be even worse. because the daily wage find it very difficult to meet ends with the current impression and the, the income that the on right now. but a show where our research fellow at the institute for policy studies in grid longer

. thank you so much for joining us. and now as always, there are winners and losers. the losers are unfortunately, the citizens of ski longer than nearly 22000000 people who are educated and form a solid middle class and have a median income among the highest in south asia. now the very same people are living on the edge unable to buy, even the basics. grocery shells are barren and food is expensive. a kilo of tomatoes is selling for a $150.00 rupees, while akila potatoes is selling for $220.00 rupees. carrots go for a whopping $490.00 rupees. as transportation cost skyrocketed for farmers with no petrol. now that represents an increase of over 75 percent in the last 12 months. meanwhile, wages have not kept up. the inequalities in the countries have deepened during this crisis, as a small sliver of the population is managing just by wealthier skill,

long cans with access to funds outside the country can more easily ride out the inflation pressures and falling rubies. so how. 7 this crisis play out how well the i m f. step in to support your langa and who will resume power. only time motel. thanks for watching. i'm christy i and i'll see you next time as we continue to break down the cost of everything. ah ah. oh when i want something wrong, when i just don't hold any world to shave out

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