 Sri Lanka is one of most beautiful country in the world. With the paradise for the sun-lovers, Sri Lanka has more than 240 kilometers of coastline with beautiful, luxurious beaches. It offers swimming, windsurfing, sailing, canoeing, speedboat racing, diving and viewing the coral of Kandakuliar in Karaitivu. Today Sri Lanka is currently experiencing its worst economic crisis in history. With long lines for fuel, cooking gas, essentials in short supply and long hours of power cuts the public has been suffering for weeks. The Sri Lanka government has said it is seeking a bailout from the International Monetary Fund while asking for fresh loans from India and China. On the surface the cause for Sri Lanka's current economic crisis can be attributed to economic mismanagement by successive governments and a string of ill-advised decisions, such as banning the use of chemical fertilizer and deep tax cuts promised by President Rajapaksha during his 2019 election campaign months before the COVID-19 pandemic decimated. Sri Lanka's major tourism sector and also stopped foreign remittances. What's behind Sri Lanka's economic crisis? Sri Lanka is facing one of its worst economic crises in recent decades. With skyrocketing inflation, weak government finances and COVID wreaking havoc on the economy. Skyrocketing inflation, weak government finances, ill-time tax cuts and the COVID-19 pandemic, which hurt the important revenue-generating tourism industry and foreign remittances, have wreaked havoc on the Sri Lanka economy over the past several months. Prices of food items, for instance, shot up by as much as 25% in the last month alone. Shortage of food and fuel Meanwhile, the nation's foreign currency reserves plummeted by about 70% since January 2020 to around $2.3 billion, 2.1 billion euros, by February, even as it faces debt payments of about $4 billion through the rest of the year. Sri Lanka's current reserves are only enough to pay for about a month's worth of goods imports. A shortage of foreign currency has meant that the country has been struggling to import and pay for essential commodities like fuel, food and medicines. These challenges has led to cuts in electricity generation with only four hours of power a day and long queues outside fuel stations. Even the newspaper and printing industries have been hit by a severe shortage of printing material, forcing cuts in publications and school examination postponements. Tax cuts and pressure on public finances The economic emergency poses a significant challenge for President Gotabaya Rajapaksa, who came to power in 2019 promising rapid economic growth. During his presidential campaign, Rajapaksa promised to cut the 15% value added tax by nearly half and abolish some other taxes as a way to boost consumption and growth. The tax cuts led to a loss of billions of rupees in tax revenues, putting further pressure on the public finances of the already heavily indebted economy. Then came Covid, which dealt a huge blow to the tourism sector, which accounts for over 12% of the nation's total economic output. Sri Lanka's public debt, which was already on an unsustainable path before the pandemic, is estimated to have risen from 94% in 2019 to 119% of GDP in 2021. India, China and IMF to the rescue, to address the economic problems, Rajapaksa's government has restricted imports of several items which have been declared non-essential. It has also approached India and China for assistance. It's reported on Monday that Colombo has sought an additional credit line of $1 billion from India to import essential items, after Sri Lanka Finance Minister Basil Rajapaksa signed a $1 billion credit line with New Delhi earlier this month. In addition to the credit lines, India extended a $400 million currency swap and a $500 million credit line for fuel purchases to Sri Lanka earlier this year. Meanwhile, Sri Lanka has asked China to restructure its debt repayments to help navigate the financial crisis. The country is also in talks with China for a further $2.5 billion in credit support.