Recently, the economic situation of Sri Lanka has worsened owing to government policies which have backfired. Sri Lanka used a debt-financing model for building infrastructure. It appears that Sri Lanka despite good infrastructure, has not acquired the capabilities to repay the debts. Coupled with a reduction in the tax and decreased government revenue, the Sri Lankan government has spiralled down the debt sinkhole. The national debt stands at a whopping $7.1 billion as of date.

As a result, the masses have been protesting and demanding that the ruling party quit. Needless to say that the political turmoil has added fuel to fire.

Scarcity of basic goods and services has rendered a state of high inflation and the Sri Lankan Rupee has plummeted against the USD (1 USD: 300 Sri Lankan Rupee).

India, IMF, ADB, and China have given a helping hand to the island country- loans, and credit lines. But, the problem looms large as there are few ways in which the government can generate sufficient revenues to honour timely repayment of debt. Or improve their balance of payments position. There will be a problem if Sri Lanka defaults on paying the loan.

Thus, the political and economic machinery has an insurmountable task yet one has to have faith in efforts toward comebacks. Only time will tell what the future holds.