More than a quarter of Lankans living in poverty – World Bank

The World Bank has found that more than a quarter of Sri Lanka’s population is living in poverty,according to its latest publication.

Titled ‘World Bank Update: Bridges to Recovery’ released last week (April 2) shows that poverty has increased over the past four years—from 11 percent in 2019 to almost 26 percent in 2024 in Sri Lanka. The report briefly discusses how the unprecedented economic crisis that engulfed the country in 2022 has impacted the masses.

It however, insists that the savage austerity program dictated by the International Monetary Fund (IMF) and being implemented by the Wickremesinghe government is necessary to achieve “economic recovery.”

The World Bank report notes: “Households have been impoverished by a fall in their purchasing power due to high inflation, losses in wages, income and employment, and a drop in remittances.”

Approximately 60 percent of Sri Lankan households, it states, have decreased incomes, with many facing increased food insecurity, malnutrition and stunted growth. The persistence of this wide-scale social devastation and misery, however, is a direct result of the IMF’s brutal social attacks.

The report indicates that labour market trends in Sri Lanka have been affected by widespread closures of micro-, small- and medium-enterprises. In the third quarter of 2023, the labour force participation rate in the urban sector dropped to 45.2 percent, down from 52.3 percent in 2019. Youth unemployment, especially young adults (aged from 25–29), rose to 17.7 percent between the second and third quarters of 2023.

According to the report: “The implementation of new revenue measures increased estimated revenue as a share of GDP [Gross Domestic Product] from 8.4 percent in 2022 to 11 percent in 2023.”

As the World Bank report states: “17.5 percent of households indicated that they limited their education expenses (including on stationery and uniforms) to deal with rising costs, and most households have changed their health treatment procedures since March 2022 due to a lack of funds.”

While Sri Lanka recorded a minus 7.3 percent GDP growth rate in 2022, the World Bank said this had been reduced to minus 2.3 percent in 2023 and claimed this was “expected to turn positive” in 2024. The “improvement,” however, still means that there will be no real growth this year.

On April 2, World Bank Country Director for the Maldives, Nepal and Sri Lanka Faris Hadad-Zervos declared that the Sri Lankan economy “is on the road to recovery.” At the same time, however, he claimed that “sustained efforts to mitigate the impact of the economic crisis on the poor and vulnerable” required the government to maintain its social attacks on the working masses.

A two-pronged strategy to “maintain reforms that contribute to macroeconomic stability” and “accelerate reforms to stimulate private investment and capital inflows,” he said, must be continued. These so-called “economic reforms” mean an ever greater assault on the social position of working people.