Recently, Sri Lanka has been in the spotlight of the world. This is because of the chaos due to the current economic crisis. Not only that, it was reported that Sri Lanka went bankrupt until the president chose to step down from his leadership chair, you know.
The situation was getting hotter to the point where the people there flocked to hold demonstrations at the presidential palace. What actually caused Sri Lanka to become a bankrupt country? So what is the condition of a country if it really goes bankrupt? So that you are not curious anymore, read the information through the following article!
Sri Lanka Goes Bankrupt
Prime Minister Ranil Wickremesinghe said Sri Lanka was experiencing the worst financial crisis in decades, which made people struggle to buy food, medicine and fuel. As reported by CNN, the country with the nickname 'Pearl of the Indian Ocean' is now entering talks as a developing country that has turned into a bankrupt country.
Sri Lanka is a country located on the southeast coast of India. This country in South Asia has a population of around 22 million. Recently, the worst financial crisis experienced by this country made the government propose negotiations to the International Monetary Fund (IMF) for a debt sustainability plan.
Even so, the already 'collapsed' economy in this country makes the process even more difficult and complicated. In addition, in the midst of the chaotic situation that occurred in his country, the president chose to resign from his post. Through the prime minister, Gotabaya Rajapaksa as president confirmed his resignation.
Not only that, various opposition parties, members of parliament, and commanders of the three armed forces also held meetings. They decided and urged Ranil Wickremesinghe as prime minister to resign from his post.
Why Countries Can Bankrupt?
Reflecting on Sri Lanka, a country that is experiencing a crisis, especially in the economic sector, is prone to bankruptcy. Moreover, inflation has reached its highest point, skyrocketed food prices, and dry state finances are contributing factors to the bankruptcy of a country.
Even so, as reported by the India Times, it turns out that countries that fail to pay their debts are actually a rare thing, you know. Especially for IMF member countries who often seek bailouts from these international organizations before they fail to repay their loans.
The reason why a country can go bankrupt.
Why Sri Lanka is in crisis and an overview of the condition of a bankrupt country/freepik/rawpixel.com
This is because the IMF actually provides not only financial-related resources, but also technical experience that can handle the bailout program. Well, in the case of a country that failed to pay its debts, it was because of insufficient income.
For example, Jamaica in 2010 had a loan of $7.9 billion. They found excessive government spending leading to a decline in the country's most important industry, tourism.
State of Crisis
The crisis that occurred in a country that caused them to go bankrupt turned out to have a broad impact on various sectors of life, you know. As Sri Lanka has recently experienced, there are various unfavorable situations to the difficulties of life experienced by its citizens.
Launching from the BBC, it is the people who are the worst affected by the crisis in a country. As in the country nicknamed the 'Pearl of the Indian Ocean'. Power outages occurred and continued until midnight. In various places there was a snaking queue that was just refueling. Even the tuk tuk or bajaj drivers have to be willing to wait 48 hours to get fuel.
The declining value of the rupee has made food, gas for cooking, clothing, transportation, and electricity price spikes. Difficulties due to rising prices have made people only able to cook the simplest menu in the form of rice with coconut sambol (a type of sambal urap) as a side dish. The children there also have to endure the conditions that are going on with a protein diet. Ironically, the United Nations has even warned about malnutrition and the humanitarian crisis in this country.