Sri Lanka inflation hit a record high for the sixth month in a row as the country tries to battle an economic collapse. The National Consumer Price Index rose 21.5%, which is 4 times greater than the 5.1% record last year.
Food inflation remains at 29.5% which means that current prices of goods will increase. Diesel has also risen by 64.2%. This increase in prices has triggered a massive protest across the country asking the president to resign.
Last week, the Sri Lankan government asked for a bailout fund from the International Monetary Fund. IMF however cited its external debt being too “unstable” and it needs to be “reconstructed”. Among the countries, they owe money to is China which has announced they are willing to provide humanitarian support but did not discuss the default of the debt or any granted extensions.
“When IMF determines that a country’s debt is not sustainable, the country needs to take steps to restore debt sustainability prior to IMF lending,” Country Director Masahiro Nozaki said. “ Approval of an IMF-supported program for Sri Lanka would require adequate assurances that debt sustainability will be restored.”
The country already announced that they will default on their foreign debts as their cash reserves will be used for essential needs.
As the protests grows, an incident of a police shooting occurred during one of the protests resulting in deaths and injuries. This has sparked more people to rise up and join the protest.
While IMF negotiations are ongoing, India has pledged to support Sri Lanka in terms of essentials and oil supply. Both countries acknowledged this announcement and pledged to work with each other to revive Sri Lanka’s ailing economy.