COLOMBO, Sri Lanka (AP) — Sri Lanka celebrated its Independence Day on Friday with an appeal from the president to the country’s expats to send money home as it battles its worst economic crisis. for decades, mainly due to the depletion of foreign exchange reserves.
Sri Lankans face shortages of powdered milk, cooking gas, kerosene and other basic necessities. Cash shortages hampered imports of raw materials for manufacturing and worsened inflation, which jumped to 12.1% in December.
The pandemic has dealt a severe blow to an economy that relies heavily on tourism and trade, with the government estimating a loss of $14 billion over the past two years. The economy is estimated to have contracted by 1.5% in July-September 2021, according to the central bank.
President Gotabhaya Rajapaksa said that Sri Lankans abroad who send foreign currency home are a major resource.
“I invite all expatriate Sri Lankans to invest in their homeland,” he said in remarks at a ceremony to mark Independence Day in the capital, Colombo. A colorful military parade followed his speech.
Data shows that overseas remittances – the country’s main source of foreign exchange – fell nearly 60% to $812 million in December from a year earlier. For the year as a whole, remittances fell 22% to $5.4 billion. The decline came after the government ordered mandatory foreign currency conversion and exchange rate controls.
Due to the shortage of foreign currency, importers cannot clear their cargo and manufacturers cannot purchase raw materials from overseas.
Sri Lanka has borrowed heavily and has to repay $15 billion in international sovereign bonds.
Officials said the government was gradually building up reserves to ensure it could service its debts.
“None of the crises we are experiencing today is a long-term problem. We can find solutions for them with an optimistic approach,” Rajapaksa said. “We have also faced critical issues in recent history and found solutions.”