Cost of Crisis Rises to A Crescendo in Sri Lanka
The extent of the economic crisis since last years are telling on households and has now been documented officials via a comprehensive survey done by the Department of Census and Statistics (DCS).Released last week, the survey assessed the impact of the economic crisis on the education sector, on employment, on person’s income, on household income and expenditure and its coping, on health, on the indebtedness of the households and household food consumption.
As per the survey, the impact of the economic crisis on household finances, including both income and expenditure is significant. “ This crisis has led to significant changes on households manage their finances. Many households have experienced a decrease in their income due to various economic factors that has subsequently affected their spending patterns,” DCS said.
It said the economic crisis has significantly impacted household income and expenditure patterns, compelling households to make strategic adjustments and implement coping mechanisms to manage their financial stability in these challenging times.
As per survey a majority comparing 60.5% of households, have experienced a decrease in their total income as a result of the economic crisis. The survey findings indicate that 54.9% of households in Sri Lanka are currently indebted. It highlights that over half of the households of Sri Lanka have some financial obligations or outstanding debts they are managing or repaying. This level of indebtedness could have implications for households finances, budgeting and financial stability especially during periods of economic challenges or uncertainties.Repayment challenges emerge due to the inability to meet financial obligations, potentially resulting in late payments, defaults, or reliance on credit. High levels of households debt induce stress and financial strain impacting mental well-being. The crisis might also lead to adverse consequences such as foreclosure or bankruptcy filing as households struggle to manage their debts.
The highest proportion of indebtedness is from mortgage matters (31.0%),followed by banks (21.9%), money lenders (9.7%). Notably, 22.3% of indebtedness arises from loans taken to meet daily food needs, highlighting server financial constraints in fulfilling basic necessities.
The survey revealed that 21.9% of the households nationwide had implemented crisis strategies to address the scarcity of food and financial constraints. This was followed by stress strategies, and it is about 19.2%.Notably, in the rural sector, this crisis strategies used proportion rose to 22.8% of households.
DCS said the economic crisis has bought about diverse effects on household income and expenditure, prompting the adoption of various coping strategies to mitigate its impact.
The survey aimed at understanding how the economic crisis is affecting individuals within the country. This survey specifically designed to gauge how households are responding to the crisis. Its findings help evaluate the various strategies households are using to cope with the situation.
Additionally, it assesses the alterations in access to crucial services like healthcare, education, and overall living standards brought about by the crisis. By shedding light on the effects of the economic downturn on households, the survey provides insights into the coping mechanisms employed by these households and the shifts in their access to essential services.
