In 2022, Sri Lanka’s economy collapsed, leaving millions in a desperate daily struggle for survival. Families queued for hours to secure fuel, grocery shelves emptied, and even basic necessities like rice and cooking gas became unattainable luxuries. Farmers reported selling portions of their land just to buy food. According to the ‘Household Survey on Impact of Economic Crisis – 2023’, by the Department of Census and Statistics of Sri Lanka, 75% of households experienced income losses, while food inflation reached 93.7% by mid-2022, indicating widespread turmoil. Rural families in regions such as Uva and Sabaragamuwa faced the hardships of food instability, frequently skipping meals or resorting to low-nutrition substitutes. As highlighted in the ‘Household Food Security Overview 2023’ report by the World Food Programme, more than one-third of households depended on food assistance to survive on household food security. Similarly, the ‘Sri Lanka Development Update – Bridge to Recovery’ by the World Bank detailed the widespread desperation caused by food shortages and inflation. Both reports painted a stark picture of desperation across Sri Lankan society.
The crisis exposed the frailty of a mismanaged system which destroyed livelihoods and uprooted life. The ‘Sri Lanka Debt Management Reform Plan’ of January 2024, by the World Bank Group and IMF, identified years of unchecked borrowing and fiscal mismanagement as key contributors to the crisis. The plan noted that by 2022, public debt had surged to 128% of GDP, leading to Sri Lanka’s first-ever sovereign default, underscoring the immediate necessity for comprehensive debt management reforms. Poorly conceived infrastructure projects, funded by high-interest loans, failed to deliver returns. The tax cut implemented in 2019 was intended to stimulate economic growth; however, it resulted in a significant reduction of one-third of government revenue, severely impacting vital services. The 2021 ban on chemical fertilizers, implemented as part of a hurried transition to organic farming, had a catastrophic impact on crop yields, leaving farmers ill-equipped to cope with the sudden changes. The policy compelled the nation to acquire essential food items at outrageously high prices. Sri Lanka, once able to sustain its own rice production, has seen its food security deteriorate, pushing numerous farmers to the edge, according to the Modern Farmer article on ‘Sri Lanka’s Organic Experiment Went Very, Very Wrong’.
The crisis exposed the frailty of a mismanaged system which destroyed livelihoods and uprooted life. The ‘Sri Lanka Debt Management Reform Plan’ of January 2024, by the World Bank Group and IMF, identified years of unchecked borrowing and fiscal mismanagement as key contributors to the crisis.
The healthcare system crumbled under the economic crisis, exposing failures in essential services and eroding fundamental rights across the country. According to a report by the Department of Foreign Affairs and Trade (DFAT) of Australia, ‘DFAT Country Information Report – Sri Lanka’, doctors were forced to cancel surgeries and, in some cases, perform medical procedures under mobile phone light due to shortages of life-saving drugs and power disruptions. The Sri Lanka Medical Association warned that, without urgent intervention, the death toll from this collapse could exceed the combined toll of COVID-19, the 2004 tsunami, and the civil war. This crisis mirrored broader systemic failures that pushed millions into poverty by disrupting access to healthcare, education, and basic utilities. The Human Rights Watch documented repression against protesters advocating for economic and social rights, highlighting how the crisis eroded freedoms of expression and association. Marginalised groups, particularly women and rural communities, faced heightened caregiving responsibilities, reduced informal employment, and increased exploitation, deepening their suffering and underscoring the need for inclusive recovery policies. Public discontent grew, with citizens increasingly voicing frustration over the government’s failure to protect their rights during the crisis.
Children bore the brunt of the crisis. Schools closed not just during the pandemic but also due to the economic fallout. Due to a lack of funds for supplies or transportation, 60% of households stated that their children skipped school, as documented in the DFAT report. In rural regions, dropout rates increased, especially for boys, who left school to work in fields or fish to support their family. Girls faced additional difficulties; many were compelled to marry young or were overburdened with domestic duties. Examinations for approximately 4.5 million students were cancelled due to paper shortages, as detailed in a publication on Research Gate titled ‘Sri Lanka’s Economic Crisis: A Brief Overview’. This widespread disruption severely impacted the academic futures of millions, as noted in multiple reports.
The demand for mental health services has significantly increased due to the compounded effects of escalating costs, food insecurity, and overwhelming debt. Suicide rates surged, particularly in Jaffna and other vulnerable regions, driven by economic hardship and insurmountable debt. The DFAT report highlighted how an inability to repay high-interest microfinance loans was a primary factor, compounding the despair and mental health struggles of affected families. Studies have underscored widespread exploitation, with families resorting to extreme measures such as selling land, pawning possessions, or migrating for employment, as highlighted in the Research Gate article. Additionally, many fell victim to predatory loan sharks, plunging entire communities into cycles of despair and financial ruin.
As desperation grew, protests erupted across the nation, marking a pivotal moment in Sri Lanka’s modern history. Reports by media detail how the grassroots Aragalaya movement united people from all walks of life, including families, workers, and students, in a collective cry for accountability and reform. Protesters camped outside government buildings, recounting the anguish of watching their children go hungry and their futures slipping away. By mid-2022, mounting public pressure forced the resignation of the president and prime minister, signalling a turning point in the crisis. Yet, even as new leadership took over, the daunting realities of rebuilding a fractured nation tempered the hope for immediate change.
In 2023, the government turned to the International Monetary Fund for a $2.9 billion Extended Fund Facility, introducing fiscal austerity measures, including higher taxes and reduced subsidies. Tourism, a key economic driver contributing to approximately 5% of GDP, was devastated by geopolitical tensions and economic instability, exacerbating unemployment and worsening the crisis. Meanwhile, inflation soared, with essential goods like turmeric, lentils, and rice experiencing price hikes of up to 443% as reported by media. Fuel costs also rose sharply, with petrol and diesel prices nearly doubling from 2021. Cooking gas costs skyrocketed, forcing many to switch to alternatives like firewood and reflecting the severe economic strain on households. The World Food Programme estimated that by early 2023, 30% of the population was ‘food insecure’, with one in two children undernourished.
Debt restructuring efforts are central to recovery, despite criticism for their disproportionate impact on vulnerable populations. With over $80 billion in debt, these measures aim to stabilize the economy while addressing fiscal challenges. A BBC article, highlighted widespread criticism of pension reform proposals, which led to protests and raised concerns about their disproportionate impact on low-income populations. The Sri Lanka Debt Management Reform Plan emphasized the need for governance reforms and greater transparency in public finance to stabilize the economy. While these measures aim to restore fiscal balance, critics argue that they disproportionately affect vulnerable populations, underscoring the need for equitable implementation.
Despite these struggles, community-led initiatives emerged as lifelines, particularly in war-affected areas where local networks supported collective farming, food distribution, and social solidarity. These efforts showcased the resilience of communities, pooling resources and building systems of mutual aid to survive the crisis, as noted in the DFAT report. Diaspora remittances also offered vital relief, especially in the Northern Province, yet the road to recovery remains long and uncertain.
Sri Lanka’s collapse underscores the human toll of policy failures and economic instability. The suffering, from children missing school to families facing hunger, highlights the urgent need for systemic reform. Governments must prioritise transparency, equitable resource distribution, and sustainable strategies to protect citizens’ welfare and avoid repeating such failures.
Sri Lanka’s collapse underscores the human toll of policy failures and economic instability. The suffering, from children missing school to families facing hunger, highlights the urgent need for systemic reform. Governments must prioritise transparency, equitable resource distribution, and sustainable strategies to protect citizens’ welfare and avoid repeating such failures.
International stakeholders play a critical role in supporting recovery by funding rural development, strengthening agriculture, and facilitating debt relief. Examples like Haiti’s recovery and the Asian Financial Crisis show the transformative impact of global solidarity. Sri Lanka’s experience is a reminder that policies must prioritize human well-being over short-term gains. Governments and stakeholders must prioritize policies that center on people’s welfare, transforming lessons of failure into pathways of resilience.
