Economic Crisis in Sri Lanka UPSC NOTE

UNDP

United Nations Development Programme (UNDP)

The United Nations Development Programme (UNDP) is the UN's global development network, advocating for change and connecting countries to knowledge, experience and resources to help people build a better life.
Active in some 170 countries and territories, supporting their own solutions to development challenges and developing national and local capacities that will help them achieve human development and the Sustainable Development Goals.

UNDP is central to the United Nations Sustainable Development Group (UNSDG), a network that spans 165 countries and unites the 40 UN funds, programmes, specialized agencies and other bodies working to advance the 2030 Agenda for Sustainable Development.
UNDP has a critical advisory role in driving the sustainable development agenda, based on Member States’ priorities and country context.

UNDP plays an important role in fostering coordination within the UN system at country level, including by providing key system-wide services and country support platforms to support the implementation of the SDGs.
UNDP has its headquarters in New York City.
The UNDP is funded entirely by voluntary contributions from UN member states.
The UNDP was founded on 22 November 1965 with the merging of the Expanded Programme of Technical Assistance (EPTA) and the Special Fund in 1958.

Economic Crisis in Sri Lanka

The crushing economic crisis in Sri Lanka last year has left more than half of the island’s population “multidimensionally vulnerable”, according to a national citizens’ survey led by the United Nations Development Programme (UNDP).
The survey 55.7 % of the population to be vulnerable across three dimensions — education, health and disaster, living standards — and 12 indicators, including school attendance, physical condition [of health], unemployment and indebtedness.

The poor families cutting down their food intake and pulling their children out of school to cope with the high living costs.
The UNDP report said a majority, or 82%, of those found to be “multidimensionally vulnerable” lived in rural Sri Lanka and underscored the need for “more policy focus” in those areas.
Further, the study found a third of the country’s population getting into debt for essential needs like food, medical care, and education, as well as pawning jewellery or selling items.

People living in the island’s Tamil-majority north and east, impacted by the civil war, and the economically-marginalised Malaiyaha Tamil community, are among those facing the highest levels of economic deprivation.
Last year’s financial meltdown pushed Sri Lanka to bankruptcy.
The people of Sri Lanka contended with acute shortages, long power cuts, and a dramatic increase in prices.

Recovery plans

A year after defaulting on its foreign debt in the wake of a stifling balance of payments problem, the government obtained International Monetary Fund (IMF) support in March 2023, by way of a $3 billion package.
Sri Lanka must finalise a debt treatment plan before the IMF’s scheduled review this month, as the second tranche of the IMF loan is contingent on it.
The government recently announced its decision to restructure its domestic debt, mainly by recasting the outgo on the country’s pension funds.

Worker unions are fiercely opposing the move, citing its likely impact on employees’ life savings.
Subjecting workers’ pension funds to domestic debt restructuring will diminish the returns to wage-earners and deplete the fund to half its current value.
The Central Bank data showed a further slowdown in headline inflation.
The government — in adherence to the IMF programme — recently began making cash transfers to 1.5 million families out of the 2 million it has identified as poor and eligible.

However, women’s groups and government critics argue that a targeted social security programme, amounting to 0.6% of the GDP, will prove grossly inadequate to combat the economic strain.

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