Since January, inflation has skyrocketed and commodity prices are at unprecedented highs. The economic meltdown began before the pandemic and the government crisis. Between 2019 and 2020 the poverty rate rose from 11.3 per cent to 12.7 per cent. Thousands of Sri Lankans are waiting for assistance.
Colombo (AsiaNews) – As a result of Sri Lanka’s economic meltdown, 2.7 million more Sri Lankans are now living in poverty, bringing it to the highest level in the country's history. At the same time, inflation has skyrocketed and commodity prices have risen to unprecedented levels since January.
In its biannual Sri Lanka Development Update, the World Bank reports that the poverty rate in Sri Lanka doubled from 13.1 per cent to 25.6 per cent (US$ 3.65 per day per capita at 2017 purchasing power parity) between 2021 and 2022.
In some areas, the poverty rate is even higher. In Mullaitivu district, it reached 57 per cent in 2022, the highest in the country, followed by Kilinochchi and Nuwara Eliya. Conversely, in cities, it tripled from 5 per cent to 15 per cent between 2021 and 2022.
This week State Minister of Finance Shehan Semasinghe, a member of the Podu Jana Peramuna (SLPP) party, called on hundreds of thousands of poor people to register with the Welfare Benefits Board for assistance.
According to government data, 867,696 Sri Lankans (including 117,101 seniors) are waiting to receive social benefits, 21,459 are waiting for a disability allowance, and 2,687 patients suffering from chronic diseases need social assistance.
Some observers note that that the ministry in charge of the Samurdhi (Prosperity) programme and its politicised staff are known not to fully spend the allocated funds.
The situation is such, a senior government official told AsiaNews, “that more Sri Lankans have fallen into the ranks of the helpless and the hopeless.”
Data from the Central Bank of Sri Lanka (CBSL) show that 1.76 million families benefit from the Samurdhi programme, which includes emergency subsidies provided by the World Bank, worth an estimated 55.4 billion rupees (about US$ 151 million) in 2021.
According to a senior CBSL official, “Sri Lanka’s economic meltdown was set in motion well before the COVID-19 pandemic”. In effect, “unsustainable debts” and “unprecedented levels of corruption strangled the economy under the Rajapaksa government” after it “veered off macroeconomic fundamentals”.
As a result, the rate of poverty “increased from 11.3 per cent in 2019 to 12.7 per cent in 2020” with 300,000 “new poor” in 2020 alone.
To overcome the crisis, Sri Lanka must boost employment in industry and services as well as restore the real value of incomes in order to mitigate the crisis’s impact, some economic analysts note.
A coordinated approach is needed to help the poor and vulnerable, while building long-term resilience in people.
This year, the GDP is expected to shrink by 9.2 per cent. This should continue by a further 4.2 per cent next year, but recovery should also start.
Foreign exchange reserves stand at US 0 million, while foreign assets in August of this year were a negative US$ 2.03 billion.