“Mysticals, Sri Lanka is in a huge crisis,” Scorch shared in a worried tone, “Sri Lanka is a country in South Asia. It is an island country in the Indian ocean.”
“What sort of a crisis are you talking about?” Verum said.
“In recent months, the country has been experiencing a debt crisis. President Gotabaya Rajapaksa held the Covid-19 pandemic responsible for the economic crisis. There was a huge loss of tourist income as well due to the pandemic.
In September 2021, the country had declared an economic emergency. There was a drop in the value of its currency (rupees) and the prices of the food items increased,” Scorch said.
Scorch explained, “Debt is borrowed money. It is money owed to someone else. It needs to be repaid.”
“How much debt does Sri Lanka have?” Felix said.
“Sri Lanka owes $251 million to Iran for oil imports. In the last 10 years, China has lent Sri Lanka over $5bn (£3.7bn) for roads, airports, ports, and other projects. In 2022 itself, Sri Lanka has to pay off $4.5 billion,” Scorch replied.
“Woah, that’s a lot of money,” Orak said, “How does Sri Lanka plan to repay it?”
“It plans to repay the Iran debt with Ceylon tea. It is tea produced in Sri Lanka,” Scorch said, “Sri Lanka hopes to send $5m (£3.8m) worth of tea to Iran each month and clear its debt.”
“Tea to settle a debt? Is that…allowed?” Felix scratched his head in confusion.
“It’s the first time I have heard such a thing too!” Scorch replied, “but it is allowed as tea is categorized as a food item. It would not violate any rules set by the United Nations (UN).”
“And what about debt with China?”
“President Rajapaksa has asked help from Chinese authorities to change the repayment structure. It will make the debt easier to repay,” Scorch said.
“In return,” Scorch added, “the country has offered to allow Chinese tourists to Sri Lanka under Covid-19 protocols. Before the pandemic, Chinese tourists were the main tourists in Sri Lanka.”
“It’s a worrying situation,” Orak noted.