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Sri Lanka can overcome its current economic challenges

United States, Russia, Sri Lanka, German, French, Électricité de France, Uniper

Economy

Sri Lanka can overcome its current economic challenges

World Bank’s recent remarks branding Sri Lanka as a bankrupt country is a direct insult. Following this remark, many people around the world are competing in portraying the country as a country heading towards absolute doom. But in reality, Sri Lanka, a country with hugely educated and skilled manpower as well as rich natural resources and one of world’s top tourist destination sites, it is impractical to think – Sri Lanka is not going to overcome the ongoing crisis. Before discussing the matter in detail, let us first try to look into the world to understand, what actually is currently happening in most of the countries in the world, including the United States.

According to media reports, Russia and the West have signaled their intent to commit to a long-term confrontation over Ukraine. While Russia possibly feels certain degree of difficulties due to sanctions, the European Union remains much vulnerable as according to information, during the coming winter, millions of Europeans will be freezing due to non-availability of Russian gas in their households. Secondly, because of sanctions imposed on Russia, there is disruption in supplying of food grains from Russia in particular and even Ukraine, which are major producers of wheat in the world. Within the next several months, most of the countries in the world will start feeling acute food shortage, because of the Ukraine war and disruption in food grain shipments.

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On June 13, 2022, French President Emmanuel Macron declared that Europe required a “wartime economy” to manage the economic fallout from the conflict and to reinforce its strategic autonomy. On July 6, the French government announced it was nationalizing its nuclear company, Électricité de France (EDF). On July 22, the German government provided a multibillion-euro bailout to the major gas importing company, Uniper, which was the first energy company in the country.

However, these maneuvers are merely a reflection of Europe’s wider economic vulnerability through energy.

After the US and China, the 27 EU states form the third-largest energy market in the world. Much of their energy supply comes from non-member states, notably Russia. And even though the West’s economic strength far outstrips Russia’s, money alone cannot solve the issue of dwindling energy supplies stemming from sanctions and Kremlin initiatives to cut energy exports.

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According to the International Monetary Fund (IMF), in Germany, the “complete and permanent shutoff of the remaining Russian natural gas supplies to Europe” could result in a GDP loss of 4.8 percent between 2022 and 2024 in comparison to the 2021 GDP, states a working paper by the International Monetary Fund.

The German government already escalated from level one (“early warning”) of its three-tier emergency gas plan to level two (“alarm”) on June 23. Level three (“emergency”) would allow the German government to impose rationing and to seize control over the allocation of natural gas countrywide.

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Austria, Denmark, Sweden, the Netherlands, and other countries have also recently raised emergency gas measures.

Meaning, Ukraine war is already having serious impact on every country in the world and Sri Lanka is not the only country that is currently suffering. President Ranil Wickremesinghe has said Sri Lanka’s economic woes would last for another year and it will have to think outside the box and look at new sectors such as logistics and nuclear energy to revive the economy.

“The next six months to one year I think till about July next year, we will have to go through a hard time”, he said, adding that for recovery Sri Lanka would have to look at new sectors such as logistics and nuclear energy. “One I believe in very much is logistics, if you see the growth of the Indian, Bangladeshi and Pakistani economies, logistics can have a big role to play here in Colombo, in Hambantota and Trincomalee. This is how we use our strategic position”, he said, referring to the two major ports of the island nation.

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In my opinion, Sri Lanka should put immediate focus on its tourism industry as it is the backbone to country’s economy. Due to COVID-19, Sri Lanka witness decline in foreign currency earning from this sector. Later, political unrest has also discouraged tourists from visiting Sri Lanka. While Sri Lanka needs to opt for nuclear energy as alternative to existing sources of energy, there should be comprehensive and drastic initiatives in encouraging tourists from around the world in visiting Sri Lanka. Colombo needs to undertake a 180-days masterplan which would not only revive the tourism industry, it also can generate much more income than before. For this, Sri Lanka needs to simplify visas to prospective tourists, ensure security to those foreign tourists and encourage local entrepreneurs and prospective foreign investors in investing money in further improving the tourism sector. We have seen how Thailand, for example has succeeded in reviving its struggling tourism industry from crisis it had faced due to COVID to not only resuming and drawing tourists, most possibly because of dynamic policies adopted by the Thai authorities, country’s foreign exchange earnings from the tourism sector will be significantly increased during the next several months and this sector will be able to substantially cover the losses it has faced due to the pandemic.

Sri Lanka is one of the top tourist destinations in the world. Its immediate focus on getting prepared to welcome foreign tourists will have huge positive impact on the economy. Secondly, Sri Lankans needs to give up frustrations and unnecessarily consider themselves as bankrupts. They surely need positive attitude and dedicatedly work with the aim of coming out of the current crisis. Sri Lankan media as well as its missions abroad should play pivotal role in projecting a ‘Wonderful Sri Lanka’ instead of telling the world of its frustrations and crises.

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An internationally acclaimed multi-award-winning anti-militancy journalist, research-scholar, counter-terrorism specialist, and editor of Blitz. Follow him on Twitter Salah_Shoaib

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