After bankruptcy: Where’s light at end of the tunnel

Rather than investing heavily in agriculture, and bringing down our import bill by 25%, Government continues importing vegetables which can be locally produced

It is now four years since our country declared bankruptcy in April 2022 and a year and a quarter since the NPP Government was elected to power in our country. Though recovering from our situation of indebtedness, we have not yet repaid the entirety of our external debts. 

At the time the country declared bankruptcy our total foreign or external debt stood at US Dollars ($) 34.8 billion. Simply put, at that time we had no hard currency to repay outstanding debts, or import basic necessities. It soon led to violence and the overthrow of the then government.

Thanks to a $4 billion Indian line of credit and a $3 billion Extended Fund Facility (EFF) from the International Monetary Fund (IMF), the shortages eased. But the external debt keeps rising as we continue to spend precious hard currency to import essentials like rice, vegetables, dairy products and sea food requirements all of which could be produced in country. 

By end 2025, our external debt had grown to $37.2 billion and it continues to grow. The present Government while in Opposition was highly critical of the IMF deal. They promised to renegotiate its terms of the agreement which they said laid onerous burdens on poorer sections of the community. 

Unfortunately since Government came into power over a year ago, we have only seen more burdens laid at the doorstep of the poor. While workers wages have remained largely stagnant, the cost of living has continued rising. Resultantly nearly 25% of our children, according to the UNICEF, are today malnourished.

Our country was earlier known as the ‘Granary of the East’. Shockingly today we import our food requirements. A study by the University of Peradeniya reveals the country spent Rs. 577.6 billion on food and beverage imports in 2024 alone. A marked rise from Rs. 173 billion in 2011.

What is most concerning is that our country continues importing rice and vegetables. Despite a fertile land and plentiful water resources, vegetables are being imported into the country. A report by this newspaper revealed costs of imported vegetables jumped from Rs. 34.4 billion in 2011 to Rs. 177.6 billion in 2024 a staggering fivefold increase. 

Despite being referred to as ‘the Granary of the East’, today we have become a net importer of agricultural produce. After the British conquest of then Ceylon, to consolidate their hold on the island, the invader destroyed the agricultural infrastructure on which the economy depended. 

Soon the country became a net importer of rice. By the time Lanka regained independence it was heavily dependent on imported rice to feed its population.   The fact of the matter is that rice and vegetables can be easily grown in our country. In fact Sri Lanka achieved near self-sufficiency in rice in 2005 and maintained it for about two decades, other than occasional shortages due to adverse weather conditions. Making matters worse, we now import even vegetables. 

This situation could be reversed easily if more care, funds and efforts were spent on agricultural production. But rather than investing heavily in agriculture, and bringing down our import bill by a good 25%, Government continues importing vegetables which can be locally produced. 

For instance the permission to import of potatoes and onions during the last local harvest led to low prices for the locally produced products. The drop in income left farmers with little option but to withdraw from their fields and flee to cities in search of alternative occupations. Farmers claim insufficient measures have been taken to market their produce and numerous other issues have largely been ignored in the budget.

Today the Government is also indulging in the importation of large numbers of luxury vehicles and the expansion of a network of highways. Government needs rather to focus on developing a better public transport system and develop better road network. This would help both the tourist industry as well as benefit the farming community especially in transporting goods to markets. Most importantly development of agriculture will help to lower import costs (approximately 25%) and thereby help lower our ever-growing external debt.