In August, Sri Lanka recorded an increase in the annual inflation rate above 70 percent

22.09.2022. / 16:30

COLOMBO – Sri Lanka, which is struggling with the biggest economic crisis in more than seven decades, recorded an increase in annual inflation above 70 percent in August.

FOTO: Pixaby

According to official data, food prices rose by 84.6 percent year-on-year. The South Asian country of 22 million inhabitants has fallen into financial and political chaos this year, caused by a shortage of foreign currencies.

The country could not afford to import key goods, including fuel, agricultural fertilizer and medicines. Last month, the central bank of Sri Lanka announced that inflation is expected to moderate after it reaches 70 percent, writes the BBC.

Official figures released last week showed the economy contracted by 8.4 percent in the three months to the end of August.

Prior to the pandemic, Sri Lanka was most reliant on tourism for foreign currency. However, the closure of borders to stop the spread of the corona virus kept tourists away, which further negatively affected the country’s economy.

Because of this situation, combined with years of inadequate governance, Sri Lanka was unable to pay off its debts at the beginning of this year.

Earlier this month, Sri Lanka reached a preliminary agreement with the International Monetary Fund (IMF) for a $2.9 billion loan. However, the deal is dependent on the country also getting funding from private creditors.

The Central Bank of Sri Lanka raised the reference interest rate

India said on Tuesday that it had started debt restructuring talks with Sri Lanka and said it would offer long-term investment. This country has previously provided almost billions of dollars in financial aid to the neighboring country.

The Indian authorities also postponed the payment of imports from Sri Lanka worth 1.2 billion dollars and offered a credit line of 55 million dollars for the import of fertilizers. Biznis.rs


Source: Capital.ba – Informacija je capital by www.capital.ba.

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