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Market intelligence for international student recruitment from ICEF
20th Apr 2022

Economic crisis at home pressures Sri Lankan students abroad

Short on time? Here are the highlights:
  • Skyrocketing inflation, a plunging currency, and heavy debt loads have put the Sir Lankan economy into a very difficult state
  • The impacts of the crisis are wide-ranging, and are now starting to extend to Sri Lankan students studying abroad

The Sri Lankan economy is in crisis. Inflation is soaring with food prices increasing by a dizzying 30% in March alone. The national currency, the rupee, has plunged in value against the US dollar and access to foreign currency is so limited that Sri Lanka is now no longer able to pay for essential imports, including fuel, which has in turn led to regular power outages.

The country's financial troubles have been exacerbated by the pandemic, which discouraged tourism (a key source of foreign funds) and, more recently, by the war in Ukraine and its inflationary impact on commodities and food prices. But the root of the crisis can be traced back to years of mismanagement by successive national governments, and to an underlying "twin deficit" issue in the Sri Lankan economy. The country has, on the one hand, a budgetary deficit -- that is, it spends beyond its revenues and is carrying very high levels of foreign debt -- but also a current account deficit, meaning that it imports more than exports.

Anger against the government's handling of the economy spilled over earlier this month when protestors clashed with police. In a March 2022 evaluation of the Sri Lankan economy, the International Monetary Fund said that, "Sri Lanka [is] experiencing a combined balance of payments and sovereign debt crisis. In [IMF] staff’s view, public debt has become unsustainable, and gross reserves are critically low and insufficient to cover near-term debt service needs. While the authorities’ efforts to raise new FX [foreign currency] financing could provide breathing space in the short term, it remains unclear how the large FX debt service obligations beyond 2022 can be met."

Students struggle to pay fees

With costs rising at home and with foreign currency controls in place – not to mention that foreign funds are now also much more expensive to obtain – more Sri Lankan students are struggling to pay fees for their continuing studies abroad.

Media reports in Canada, where roughly 3,000 Sri Lankan students are currently enrolled, cite examples such as third-year Biology student Dehan Kumburugala has had to abandon his pre-med studies and make plans to return home due to the worsening crisis. “With the critical state that Sri Lanka is in, it’s way too tough on paying the tuition fees…With no source in Canada willing to help, completing my degree is not a possibility,” Mr Kumburugala told New Canadian Media.

As local relief efforts continue to ramp up for students and their families, other students report that their parents can no longer send funds to support their studies due to the collapse of the rupee.

Growth interrupted?

It remains to be seen how the current crisis will impact outbound mobility in the medium-to-long term. But Sri Lanka has been widely pegged as an important South Asian growth market for student recruitment. The numbers of Sri Lankan students abroad have swelled in recent years, roughly doubling in the five years leading up to the pandemic to reach more than 30,000 students abroad in 2019.

For example, Canada, which is home to a large Sri Lankan diaspora, saw its numbers grow by more than 65% between 2020 and 2021 alone.

More broadly, the majority of Sri Lankan students abroad opt to study in Australia, the US, Canada, or the UK, with a growing proportion also hosted by other destinations within Asia, notably India and Malaysia.

For additional background, please see:

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