Triggered by acute shortage of foreign currency, ill-timed tax cuts, losses to tourism, fall in foreign workers’ remittances, shortages of food and fuel, and high foreign debt, Sri Lanka is currently battling the worst economic crisis since its independence. 

The current economic crisis situation has negatively impacted the employment of about 1.2 million of those who are working in the construction industry and if this situation prevails, the entire industry faces the threat of collapse, industry sources said. 

Considering this current turmoil, GlobalData, a leading data and analytics company, forecasts Sri Lankan construction industry to contract by 4.6% in real terms in 2022 against the previous projection of 9.2% growth.

The outbreak of the COVID-19 pandemic exacerbated weakness in the tourism sector of Sri Lanka that had already been battered by the ‘Easter Sunday bombings’ in April 2019. 

The weakness in the sector – which is the third-largest source of foreign exchange – is expected to continue over the coming months, due to the ongoing Russia-Ukraine crisis, given that Russia is one of the largest tourism markets for Sri Lanka.

Pooja Dayanand, Analyst at GlobalData, comments: “The depleting foreign currency reserves, mounting debt, and the continuing weakness in Sri Lanka’s tourism sector are expected to limit the public spending on infrastructural projects this year. 

Besides the economic catastrophe, the country is also witnessing a troubled political environment.  This is expected to further weigh on investor confidence, thereby further affecting the Sri Lankan construction industry’s output this year.”

The Sri Lankan construction industry, which is one of the biggest GDP contributors and employment generators in the country, is also facing significant headwinds due to the shortage of cement. 

The severe foreign exchange crisis has prompted the government to impose strict import control measures. This has led to the shortage of raw materials required to produce raw materials domestically.

Dayanand concludes: “The Sri Lankan government’s decision to default on all its outstanding foreign debt could prevent a further deterioration of the country’s financial position. 

Although it had sought debt relief from India and China, both countries offered more credit lines to buy commodities. However, the government’s plan to seek financial assistance from the IMF and the World Bank, could provide economic aid to bounce back.

Around 75% of construction work in the country has come to a standstill owing to the increase in the cost of building materials together with the spike in fuel prices, says the National Construction Association of Sri Lanka.

Its Vice President, M.D. Paul stated that the price of a cube of sand has increased by over Rs. 8,000, to almost Rs.22,000, after the fuel price hikes.

However, since the fuel price hikes also increases all transport costs, a cube of sand now costs Rs.30,000, he added. .

Moreover, metals, ABC and all other building material costs have increased by 60 to 70%, the National Construction Association mentioned

Beleaguered Prime Minister Mahinda  Rajapaksa who has been pushed to the wall by suffering Sri Lankans  says that the Chinese Premier  has given a firm assurance  for the stability of the island nation. 

The Sri Lankan Prime Minister has made this revelation at a time where hundreds of thousands of university students led by Inter University Students Federation are planning to  covered  into Gota go Gama protesters village in Colombo Galle Face green today Sunday 24.

 Ina last ditch attempt to save his disgraceful government led by President Gotabaya Rajapksa which is responsible for the killing of a protestor who participated at a Rambukkakna protest against fuel price hike, 74 year old  Mr Rajapaksa noted that Chinese Premier Li Keqiang in telephone conversation with him  has given this pledge.

He added that China will continue to provide every assistance for Sri Lanka‘s socio economic development stability, Prime Minister’s office announced. 

China has given this assurance at time where Sri Lanka’s closest India has already stepped into assist Sri Lanka even by going out of the way, at the IMF spring meetings to persuade the donor agency to help the crisis country.  

According to Prime Minister’s office, Chinese Premier has pledged to provide assistance to solve financial problems faced by the country with the aim of improving living standard of the suffering  people of Sri Lanka.

He also told the Sri Lanka premier that he has clear understanding of the difficulties and challenges faced by Sri Lanka.

Several economic analysts noted that the Chinese Premier should also understand the reasons behind present problems were the short sighted ad hoc policies   and wide spread corruption of the present regime led by President Gotabaya Rajapaksa who has already accepted some of his misdeeds . 

China has already assured Sri Lanka that it will provide US$ 2.5 billion loan facility to overcome the present  man-made economic crisis.

The China International Development Cooperation Agency (CIDCA) has pledged an urgent emergency humanitarian aid of RMB 200 million to Sri Lanka, including 5000 tonnes of rice (with the previously announced 2000 tonnes), pharmaceuticals, production materials and other essentials. 

Furthermore, the Yunnan Province has announced a donation of RMB 1.5 million worth of food packages to Sri Lanka.