crisisTimelineTitle
crisisTimelineSubtitle
Sweeping Tax Cuts Enacted
New administration slashes VAT from 15% to 8%, abolishes NBT, withholding tax, and expands PAYE thresholds. Treasury loses ~Rs. 600B in annual revenue (over 30% of state income). Rating agencies downgrade Sri Lanka to B- / CCC.
COVID-19 Pandemic & Global Lockdowns
Tourism revenue drops to near zero ($4B annual inflow lost). Domestic economic activities restricted. Central Bank begins large-scale Treasury bill purchases (monetary financing).
Chemical Fertilizer Total Overnight Ban
Imports of synthetic fertilizers and pesticides banned to enforce 100% organic agriculture. Crop yields collapse (paddy -34%, tea exports hit hard), worsening forex shortages and triggering domestic food inflation.
Artificial Rupee Peg & Remittance Diversion
Central Bank artificially pins USD/LKR rate at 203 while domestic inflation climbs. Migrant workers divert remittances to informal Hawala/Undiyal channels offering 240–260 LKR/USD. Usable official reserves drop under $500M.
Currency Peg Breaks: Rupee Plummets
CBSL unpegs the rupee after running out of foreign exchange to defend the rate. The rupee crashes from 203 to over 360 LKR/USD within weeks. Import costs skyrocket.
Historic Pre-Emptive Sovereign Debt Default
Treasury announces interim moratorium on foreign debt service ($51B external debt). Usable reserves fall below $20 Million. Country lacks cash to clear docked fuel and diesel shipments.
Mass Citizen Protests & Presidential Resignation
Months of 13-hour power cuts and multi-day fuel queues culminate in hundreds of thousands marching in Colombo, occupying the Presidential Palace. President Gotabaya Rajapaksa flees and resigns.
Inflation Peaks at 69.8% / Fuel Pass QR Implemented
CCPI inflation hits historic all-time high of 69.8% (Food inflation 94.9%). National Fuel Pass QR rationing system ends physical fuel queues.
IMF Approves $2.9 Billion Extended Fund Facility
IMF Board formalizes 4-year EFF. Tax rates restored (VAT to 15%, income tax hiked, utility cost formulas enforced). Rupee strengthens from 360 to ~310/USD.
Bilateral Debt Restructuring MoUs Signed in Paris & Beijing
Agreements executed with Official Creditor Committee (OCC) and China Exim Bank for debt treatment terms. Gross financing needs locked within debt sustainability parameters.
Commercial ISB Bondholder Debt Exchange Completed
Defaulted international bonds exchanged for new Macro-Linked and Governance-Linked Bonds. Reserves surpass $6 Billion and economic growth strengthens to ~4.8%.