SOCIOECONOMIC IMPACTS OF ECONOMIC CRISES IN SRI LANKA: LESSONS AND IMPLICATIONS FOR OTHER NATIONS

Abstract

Since 2022, Sri Lanka has been grappling with an unprecedented economic crisis - the most severe the nation has faced since gaining independence in 1948. This crisis is the cumulative result of multiple factors, including decades of poor governance, short-sighted policy decisions, long-standing economic mismanagement, and even certain misguided societal attitudes. In April 2022, the Central Bank of Sri Lanka (CBSL) officially declared a default on the country's sovereign bonds, marking a critical turning point. The economic downturn has had devastating impacts not only on macroeconomic stability but also on the well-being of the population. This analysis aims to examine the socioeconomic consequences of the crisis and to consider the broader implications for other developing economies. Data and insights from a range of credible sources including the CBSL, Department of Census and Statistics (DCS), International Monetary Fund (IMF), World Bank, and academic research - were used to support the analysis. Findings indicate that the crisis has significantly exacerbated poverty levels, reduced household incomes, heightened food insecurity, and limited access to essential services such as education and healthcare. The key lesson to be learned is that implementing responsible fiscal and monetary policies, combined with strong political leadership, leads to positive outcomes.