Sri Lanka faced a severe economic crisis due to a combination of factors: high foreign debt, tax cuts implemented before the pandemic, a disastrous ban on chemical fertilizers that reduced agricultural output, and the collapse of the tourism industry due to bombings and COVID-19. Sri Lanka's foreign debt reached 94% of GDP in 2019 and 119% in 2021. Tax cuts and a switch to organic farming hurt government revenue and agricultural production. The pandemic and anti-Muslim violence further damaged the tourism industry, a key source of foreign currency. As a result, Sri Lanka struggled to pay debts and experienced shortages of food, fuel and other essentials.

1. Sri Lanka Economic Crisis
By : Ujjwal Shah (Epsilon)

2. About Sri Lanka
 Formerly known as Ceylon and
officially the Democratic Socialist
Republic of Sri Lanka, is an island
country in South Asia.
 Sri Lanka was granted its independence
on 4 February 1948 from the British
empire.
 The main economic sectors of the
country are tourism, tea export, rubber
export, textile, rice production and
other agricultural products. Also, Sri
Lanka is the world’s second largest Tea
exporting country.

3. What Went Wrong For
Sri Lanka?

4. Foreign Debt
Foreign debt, this has always been a problem
for Sri Lanka historically.
In 2017, Sri Lanka’s total debt was $64Billion.
94% of government revenue, went to debt
payment
Now, the conversion rate has dropped to $1
being about LKR 357.

5. The Cabinet Cut Tax and Money Creation
The Sri Lankan President, Gotabaya Rajapaksa
(Promised to cut down VAT, to half)
Tax cut came into effect on 1st December 2019
( 3 months before pandemic)
In 2019 Debt was 94% of the GDP.
By 2021, it had gone up to 119% of GDP
After 3 months, The country was locked down
due to covid 19

6. Organic Farming disaster
The Sri Lankan President, Gotabaya Rajapaksa
(Promised to convert the country’s agriculture
into organic)
Overnight, there was nationwide ban on
synthetic fertilizers and pesticides.
Sri Lanka’s agricultural output came down, They
had to import rice and Tea as their production fell Exports of agriculture items were a source of
major foreign currency for the government.

7. Entire Tourism Industry Collapsed
April 2019, Multiple bombing in the country Covid 19 Pandemic
Large scale anti Muslim violence in Sri Lanka Entire Tourism Industry Collapsed

8. Swiss Cheese Model Of This Crisis
Foreign
Debt
Cut
Tax
Organic
Farming
Covid 19
Crisis

9. Impact on people’s lives

10. Cartoons

11. Bibliography
1. https://en.wikipedia.org/wiki/2019%E2%80%93present_Sri_Lankan_economic_crisis
2. https://thediplomat.com/2022/07/the-deep-roots-of-sri-lankas-economic-crisis
3. https://www.youtube.com/watch?v=LLw-T_d-wWo&t=13s
4. https://sketchplanations.com/the-swiss-cheese-model
5. Hindustan Times
6. TOI