Thousands of people have taken to the streets in recent days to demand the resignation of the President.
The island nation is facing its worst economic crisis since gaining independence from Britain in 1948 and is facing food shortages, soaring prices and power cuts.
Many say the government is to blame.
The foreign currency reserves of Sri Lanka have run dry.
It means it can't afford to import food and fuel, which leads to shortages and high prices.
The government blames the Pandemic for killing off the tourist trade.
Three years ago, a series of bomb attacks on churches frightened tourists.
Many experts say economic mismanagement is to blame.
One of the main reasons for this is that at the end of its 30-year civil war in 2009, Sri Lanka chose to focus more on its domestic markets instead of exporting to foreign ones. The bill for imports kept growing while income from exports remained low.
The government racked up a lot of debt to fund unneeded infrastructure projects.
At the end of the year, Sri Lanka had $8.6 billion in foreign currency reserves, but by March 2020 it had only $2.3 billion.
The President decided to cut taxes when he came to power. The government had less money to buy foreign currency on the international markets.
The government tried to stop the outflow of foreign currency by banning all imports of chemical fertiliser.
This led to a lot of crop failures.
The foreign currency shortage made it worse that Sri Lanka had to supplement its food stocks from abroad.
Since then, the government has banned the import of a wide range of non-essential items, from cars to certain types of food and even shoes.
One way to boost exports is to cut the value of the currency, but the government refused to let the Sri Lankan rupee fall against other currencies.
The rupee fell against the dollar after it did so.
The government of Sri Lanka will have to raise $7 billion in foreign currency this year. It will have to make similar payments in the future.
The government would like to make new finance deals to settle its debts, but its credit rating has fallen so low that very few institutions will lend it money. As a result, it has been running down its foreign reserves to pay off its loans.
The president has refused to step down, despite mass protests in April calling for him to do so.
The cost of living has become too expensive for many people. Some people are having to cut down on the number of meals they eat due to the fact that they are paying up to 30% more for food.
Long lines at petrol stations have been caused by the fuel crisis.
I used to get a bus in 15 minutes, now I have to wait for two hours. One woman said that sometimes the bus stops midway with no fuel.
The president imposed a curfew, an emergency law and a ban on social media as demonstrations grew. He withdrew the measures when they failed to keep protesters off the streets.
The prime minister, who is the brother of the president, was the one who was sacked. The governor of the central bank was sacked.
The finance minister resigned less than 24 hours after he was appointed.
The president asked the opposition to form a new government. More than 40 of the ruling coalition's MPs have left it.
In March, the International Monetary Fund was asked for a loan by the government of Sri Lanka.
The negotiations between the government and the International Monetary Fund will be led by the new central bank governor. The talks have been put off until a new finance minister is found.
Friendly neighbours such as India are helping Sri Lanka. It has a $500m credit line.
China has agreed to bolster Sri Lanka's foreign currency reserves by exchanging the rupee for the renminbi.
Japan and Bangladesh have given it loans.
All Rights Reserved © 2024
