Sri Lanka economy: Sri Lanka’s overall economic growth in 2022 was minus 11 per cent and it could be - 3.5 to - 4 per cent this year, President Ranil Wickremesinghe said on Saturday, as the island nation tried hard to overcome its worst economic crisis since independence.
Wickremesinghe, who also holds the finance ministry portfolio, said that in 2022 overall economic growth was larger than expected at - 8 per cent and in 2023 the growth rate could hover somewhere around - 3.5 per cent to - 4 per cent. “The growth rate of the economy in 2022 was - 11 per cent. It could be - 3.5 to - 4 per cent this year,” Wickremesinghe told a gathering in the north-central district of Anuradhapura.
During mid-2022 Sri Lanka faced the worst economic crisis which led to months-long public protests leading to a political crisis. Shortages of essentials due to the forex crisis forced people onto the streets demanding the resignation of president Gotabaya Rajapaksa.
Sri Lanka declared its first-debt default in April last year
Last year in April, Sri Lanka declared its first-ever debt default in its history as the economic crisis triggered by forex shortages sparked public protests. On Wednesday, Governor of Sri Lankan Central Bank Nandalal Weerasinghe told reporters that the overall negative growth in 2022 would be around 8 per cent. The International Monetary Fund (IMF) had projected the 2022 growth to be minus 8 per cent. Wickremesinghe criticised his predecessor’s tax concessions offered in 2020. He said that in 2019 around 1.6 million tax files existed which came to be drastically reduced to 400,000 files by December 2021.
“The decrease in government revenue due to this is the primary cause of the economic crisis,” Wickremesinghe said. Wickremesinghe said the current negotiations with the global lender IMF for the bailout of 2.9 billion were crucial. “If the IMF programme is disrupted in any way, no one can prevent the country from falling into a crisis again similar to May and June last year,” he said.
Until Sri Lanka approached the IMF for the bailout, it was credit lines from India which helped Sri Lanka import its essentials. India’s economic assistance package totalled USD 4 billion.
(With inputs from PTI)
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