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

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.

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”.

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.

In September 2022, Sri Lanka reached an agreement with the IMF for financing worth US$2.9 billion for its “macroeconomic stability and debt sustainability” following the country’s historic default in May 2022 amid a worsening economic crisis.

The economy is showing signs of recovery after it rebounded to 4.5 per cent year-on-year growth in the fourth quarter of 2023 following six consecutive quarters of contraction. Inflation eased to 5.9 per cent last month, compared with a staggering 70 per cent in September 2022.

By the end of February, the country’s gross official reserves rose to US$4.5 billion with its central bank making “sizeable” foreign exchange purchases, said Peter Breuer, IMF senior mission chief for Sri Lanka, last week.

These economic indicators have yet to translate into improvements in the daily lives of Sri Lankans like Bandara.

“We have economic problems even when it comes to food. I buy things I sell in my shop on credit. There are barely