Urban poverty triples in Sri Lanka amid enduring crisis
World Bank flags need for higher social security in the island
As Sri Lankans continue braving their worst economic crisis since Independence, urban poverty on the island has tripled in the last year, from 5% to 15 %, according to a recent World Bank report.
Sri Lanka is experiencing “its highest poverty rate since 2009 [when the civil war ended], and an erosion of the steady gains in welfare made between 2006 and 2019,” the Bank noted in its recent Sri Lanka Development Update titled ‘Protecting the poor and vulnerable in a time of crisis’, released earlier this month.
While 80% of Sri Lanka’s poor still live in rural areas, the poverty rate in urban areas has tripled since 2021, and half the population in estate areas is currently living below the poverty line, it said, referring to Sri Lanka’s hill country that is home to the island’s historically-neglected Malaiyaha Tamils. About 1.5 lakh people, mostly women, from the million-strong community work in the tea estates, bringing in crucial foreign exchange to the country. They live in dire conditions, in colonial era line rooms, and labour hard to be paid their hard-won LKR 1000 daily wage (roughly ₹ 225).
Across districts, Mullaitivu in the Tamil-majority Northern Province continues to be the poorest — 57 % poverty recorded in 2022 — followed by neighbouring Kilinochchi and Nuwara Eliya in the Central Province [hill country], the report said.
The update comes while Sri Lanka struggles to cope with a harrowing economic crash, that forced the government to default on its $50 billion foreign debt in April. The following months witnessed enormous shortages of essentials, including food staples, fuel and medicines, as well as an unprecedented people’s uprising that ousted former President Gotabaya Rajapaksa. Backed by a parliamentary vote, senior politician Ranil Wickremesinghe was elected President in July. While essential supplies have since improved, with the government’s fuel rationing policy and repurposed World Bank funds, the fundamental macroeconomic problems remain.
Headline inflation increased to 69.8% in September 2022, while food inflation spiked to 94.9%. Amid frequent local media reports of hunger and starvation, resulting in a rise in school dropouts in some areas, the World Food Programme and the UN’s Food and Agriculture Organization have assessed that nearly a third of Sri Lanka’s 22 million population are food insecure since the crisis hit.
Emphasising that national security is ensured not only with the military, but also through food and economic security, President Wickremesinghe has called for “urgent measures”, his office said on Tuesday, following a review meeting of the government’s ‘National Food Security and Nutrition Assurance Programme’. His government, while facing growing public criticism over inadequate action and repression, is counting on a $2.9 billion package from the International Monetary Fund (IMF), that will be released only after Sri Lanka’s creditors commit to a debt restructuring programme.
Social security in focus
As part of its recommendations, the World Bank has urged the government to increase financing for social assistance; come up with a social protection strategy, that includes an operational Welfare Benefits Board and a Social Registry, to enable effective targeting of social security programmes, given the addition of “newly poor” families. It has also called for an increase in cash transfers, to account for the double-digit inflation.
Meanwhile, rights watchdog Amnesty International, in a report on the current economic situation in Sri Lanka released on October 4, made a case for universal social security that sections in Sri Lanka have also sought.
Highlighting limitations to existing programmes in Sri Lanka, Amnesty, in the report titled ‘We are near total breakdown’ pointed to the “lack of sufficient funding, inadequacy of the level of benefits, poor targeting, and the exclusion of a large proportion of people due to administrative inadequacies.” “The targeting of benefits based on levels of poverty has been criticised by experts for arbitrariness, excluding people who should be covered, stigmatising effects, and higher administrative costs,” the report said.