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Sri Lanka
This Week in AsiaEconomics

Sri Lankans struggle with basic needs and IMF measures even as the economy is recovering

  • Many Sri Lankans have yet to benefit from a new social welfare programme and are feeling the pinch despite easing inflation
  • Their plight comes as Sri Lanka is set to receive more bailout from the IMF and its creditors ahead of key elections

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A father and son share a meal at their shanty in Colombo, Sri Lanka, on October 5, 2022. Photo: AP
Dimuthu Attanayake

Sri Lankan Jeewani Bandara had moved to Kuwait to work as a domestic helper as her country’s economic situation deteriorated, but the 45-year-old returned home last year after an accident left her unemployed.

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In a village near Talawa town in north-central Sri Lanka, Bandara currently survives with a minimal income she earns from selling groceries at a makeshift shop from her home. She has not yet been included under Aswesuma, a new social welfare programme introduced last year to provide better social security to Sri Lankans amid the economic crisis, although she applied for it months earlier.
Even as Sri Lanka is showing early signs of economic recovery and is set to receive a third tranche of International Monetary Fund financing worth US$337 million – subject to approval from the IMF executive board – many people like Bandara are struggling to survive the burden of harsh austerity measures imposed by the IMF’s bailout programme.

Although the IMF prescribes social safety nets to buffer the hardships of vulnerable communities, Aswesuma has excluded many Sri Lankans facing dire economic situations as the government works out tax reforms introduced by the programme.

According to a survey by the World Food Programme released last December, 24 per cent of Sri Lankan households were found to be moderately “food insecure”.

Jeewani Bandara, 45, has been selling groceries in a village near Talawa town in Sri Lanka after she was injured while working in Kuwait as a domestic helper. Photo: Handout
Jeewani Bandara, 45, has been selling groceries in a village near Talawa town in Sri Lanka after she was injured while working in Kuwait as a domestic helper. Photo: Handout

In January, the country raised its value-added tax (VAT) rate to 18 per cent and removed tax exemptions on several goods and services, in an attempt to increase government revenue.

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