In the aftermath of the Covid-19 pandemic, which struck an enormous blow to its previously burgeoning tourism industry, and rising global fuel costs, Sri Lanka is grappling with the worst economic crisis of its history, leading to depleted foreign reserves, depreciation of the Sri Lankan Rupee and an enormous debt crisis based primarily on market borrowings and bilateral loans. For the first time since Independence, the country has defaulted on its foreign debt.
Prices are rising, essential goods including medicines, fuel and power are in short supply and are being rationed. People have been on the streets for over a month, protesting against the President and seeking accountability. As a result, except for the President and the Prime Minister, the entire cabinet resigned in early April, and a new downsized cabinet has been sworn in on 18 April. The opposition intends to table a vote of no confidence.
The government in the meantime has agreed to an IMF bailout and until the negotiations are settled, it is reaching out to World Bank, ADB and other donor community for bridging finance. The government has also put a moratorium on paying its debts until discussion with IMF are completed.
There is mixed information about restriction on sending money outside the country for educational purposes. Banks report no such capping, but they are making their own decisions to respond to clients’ forex requests. On the other hand, political parties in opposition flag that the restriction is creating challenges for parents of students studying in foreign universities to make payments and some are resorting to buy dollars from the black market.
Once the IMF loan is agreed and the restructuring of the economy takes place, it is hard to tell how it will unfold for the education sector and how hard it may hurt the purchasing power of people. However, going by examples of previous financial crisis globally, it is seen that it does impact mobility of students for higher education in the short to long term, but opens door for TNE collaborations.
A report is available as an attachment.
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