Why Sri Lankan Economy Collapsed? What other countries can learn from the mistakes of Sri Lanka?

 

Recently Sri Lanka went Bankrupt, people hit the streets, President Gotbaya Rajpaksha fled from the country.  There is no fuel and electricity in many parts of Sri Lanka, thousands of people stormed into the president house, Emergency was declared in the country. The whole country went into complete chaos and stand still.

In this blog we will see that what are the reasons for such economic collapse of Sri Lanka and what other countries can learn from the mistakes of Sri Lanka.

There are two main reasons for Economic downfall of Sri Lanka:

1) Dynastic politics:

We can say that Sri Lanka was not governed by its government, instead it was governed by a single family which is the Rajapaksa family. The post of president, Prime Minister and many other important ministries were occupied by the Rajapaksha family, All the important decisions of Sri Lanka were used to be taken by the Rajapaksha family, incapable people were given huge responsibilities, in which they miserably failed.

In order to appease the voters and win elections, the government gave many freebies and subsidies, which were not at all economically sustainable and eventually led to this situation of Sri Lanka. The government didn’t had proper economic policies to run the government, as their only focus was to appease the people and win elections.

2) Excessive amount of foreign debt:

The Sri Lankan government took excessive amount of loans from other countries, especially from China. The Sri Lankan government invested the money in unviable projects which never paid back the money that was invested.

The final blow to the Sri Lankan economy was covid, which destroyed its tourism industry and economy. A huge part of Sri Lankan economy consists of tourism, and this acted as a final blow to Sri Lankan economy.

These were the mistakes done by Sri Lanka and other countries should learn from the mistakes of Sri  Lanka, so that what is happening in Sri Lanka does not happen to other countries.