Sri Lanka, an island country located southeast of India, on July 6, 2022, the country’s prime minister said that Sri Lanka was bankrupt. Mainly because Sri Lanka is seriously short of food, fuel, medicine and other import-related things.

Sri Lanka, an island country located southeast of India, on July 6, 2022, the country’s prime minister said that Sri Lanka was bankrupt. Mainly because Sri Lanka is seriously short of food, fuel, medicine and other import-related things. The main reason is that Sri Lanka has run out of foreign exchange and cannot import foreign goods.

Sri Lanka is a small country with a population of only about 22 million, which is not as large as Shanghai in our country. This results in Sri Lanka relying on imports for many things. In recent years, the COVID-19 epidemic, the instability of the US dollar, and the conflict between Russia and Ukraine have caused Sri Lanka's economy to encounter the most serious economic crisis in 1948. Even local people took to the streets on a large scale on July 9, 2022, forcing the president and prime minister of their country to resign.

Sri Lanka is such a good country, how can we run out of foreign exchange?

In the past, Sri Lanka relied on growing black tea, rubber and exporting natural gemstones to earn quick foreign exchange. However, in the past few years, the whole world has vigorously developed tourism, and Sri Lanka and other tourism resources are also quite rich, so Sri Lanka's tourism revenue also accounts for They are important parts of GDP.

About 60% of Sri Lanka's economic structure relies on the service industry, and only about 25% of industry. Sri Lanka is not completely self-sufficient in food, of which about 45% wheat will be imported from Russia and Ukraine, More than half of sunflower oil and soybeans are also imported from Ukraine. Sri Lanka’s tourism industry and black tea exports are particularly dependent on Russia. Therefore, we can imagine the extent of Sri Lanka's foreign exchange and foreign debt risks under such preconditions.

In 2019, Sri Lanka experienced another terrorist attack, and nearly 300 people died. This kind of thing was too deadly for a tourist country.

In 2022, the new coronavirus epidemic will sweep the world again, and the tourism industry is definitely one of the most severely affected industries in the world. Naturally, Sri Lanka's foreign exchange earnings have plummeted. At first, Sri Lanka was willing to print money like crazy, firstly to ensure the normal operation of its own country, and secondly to repay overseas debts it had owed for decades.

However, in 2020 and 2021, the U.S. dollar has been issued in excess, resulting in the world's commodities , food, energy, and resources, all rising sharply. These things are becoming more and more expensive, which means that Sri Lanka's economic crisis is getting more and more serious. If it cannot earn foreign exchange, it can only rest on its laurels and then accelerate the printing of money, which forms a vicious circle.

Sri Lanka has no energy, no food, no medicine, and no ability to earn foreign exchange. As a result, we encountered the Russia-Ukraine conflict in 2022, which was the last straw that crushed Sri Lanka's economy. Because Sri Lanka is particularly dependent on Russia and Ukraine. Oil, natural gas , wheat, sunflower oil, and tourism industries have all encountered crises.

In fact, Sri Lanka’s economic problems have been very serious since the beginning of 2022. The stock of basic medical supplies is about to be exhausted, and there is not so much foreign exchange to import. Gasoline and natural gas are even more in short supply, which has caused transportation in Sri Lanka to become a big problem. It is becoming increasingly difficult to refill private cars and trucks, and the prices of daily necessities have become more and more difficult. It keeps rising again and again.

In order to save paper, Sri Lanka cannot even print textbooks and examination papers for students. Once the education and medical industries are implicated, a country's economy will collapse. In April, the local government simply stopped paying overseas foreign debt in order to reduce Sri Lanka's inflation rate. Therefore, Sri Lanka’s foreign debt creditors, including our country, don’t know how long it will take to get back the money they lent.

But the people of Sri Lanka are having a hard time right now. They have no food, no gasoline, and no medical supplies. They can only rely on international aid for emergencies. If a country can go bankrupt due to debt problems, Sri Lanka's government workers do hold a considerable share of the responsibility. Under pressure, the president of Sri Lanka also officially announced his resignation on July 11, 2022.Ministers of other important departments have almost resigned.

There are many countries around the world that are experiencing debt crises similar to Sri Lanka, such as Turkey , Argentina , Brazil , Egypt, and many other countries, which have experienced a serious rise in inflation . The importance of food, energy, medical supplies, and foreign exchange is really becoming more and more obvious.