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The economic crisis in Sri Lanka has significantly impacted the country's education system, with schools facing challenges in maintaining regular operations and providing quality education to students. This study examined the strategies employed by school principals to ensure teaching and learning amid the crisis. Twelve school principals were interviewed, representing 7 Sinhala medium and 5 Tamil medium schools. The findings highlighted the following challenges schools face: low attendance of students and teachers, learning loss, disruption of remote learning activities, malnutrition among students and psychological issues among students, teachers, and parents. Despite these challenges, the study found that school principals worked hard to ensure that teaching and learning continued during the economic crisis. They had implemented several strategies to address their challenges, including flexible attendance policies, temporary accommodation for teachers who travel far from school, and sharing meals with poor students. The study concludes that school principals have played a critical role in ensuring that teaching and learning continued during the economic crisis in Sri Lanka. Their strategies have helped mitigate the crisis's impact on students and teachers, but more support is needed from the government. The study recommends that the government should consider to provide the following support to schools: increasing public transport at low cost for the students and teachers for regular attendance; resuming Nutrition support for students; increasing salaries for teachers; Strengthening remote learning initiatives by reducing the price of digital devices and expanding internet access; providing psychological support for students and teachers; and prioritization of timely; and Long-term planning to build resilience in the education system. By implementing these recommendations, the government can help ensure that the education system in Sri Lanka can withstand future economic shocks.
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ORIGINAL ARTICLE
ENSURING TEACHING AND LEARNING AMIDST THE
ECONOMIC CRISIS: STRATEGIES EMPLOYED BY
SCHOOL PRINCIPALS IN SRI LANKA
F.M.Nawastheen*1; P.Ramathass2; S.Shifan3
1 Department of Secondary and Tertiary Education, Faculty of Education, The Open University of
Sri Lanka, Nawala, Sri Lanka. Email: fmnaw@ou.ac.lk
2 Department of Secondary and Tertiary Education, Faculty of Education, The Open University of
Sri Lanka, Nawala, Sri Lanka. Email:prama@ou.ac.lk
3 Department of Teacher Education, National Institute of Education, Maharagama, Sri Lanka.
Email: shifaannie@gmail.com
*Corresponding author
Abstract
The economic crisis in Sri Lanka has significantly impacted the country's education system, with
schools facing challenges in maintaining regular operations and providing quality education to
students. This study examined the strategies employed by school principals to ensure teaching and
learning amid the crisis. Twelve school principals were interviewed, representing 7 Sinhala
medium and 5 Tamil medium schools. The findings highlighted the following challenges schools
face: low attendance of students and teachers, learning loss, disruption of remote learning
activities, malnutrition among students and psychological issues among students, teachers, and
parents. Despite these challenges, the study found that school principals worked hard to ensure
that teaching and learning continued during the economic crisis. They had implemented several
strategies to address their challenges, including flexible attendance policies, temporary
accommodation for teachers who travel far from school, and sharing meals with poor students.
The study concludes that school principals have played a critical role in ensuring that teaching and
learning continued during the economic crisis in Sri Lanka. Their strategies have helped mitigate
the crisis's impact on students and teachers, but more support is needed from the government. The
study recommends that the government should consider to provide the following support to
schools: increasing public transport at low cost for the students and teachers for regular attendance;
resuming Nutrition support for students; increasing salaries for teachers; Strengthening remote
learning initiatives by reducing the price of digital devices and expanding internet access;
providing psychological support for students and teachers; and prioritization of timely; and Long-
term planning to build resilience in the education system. By implementing these
recommendations, the government can help ensure that the education system in Sri Lanka can
withstand future economic shocks.
Keywords: Economic Crisis, School education, School principals, Sri Lanka
DOI: https://doi.org/10.33306/mjssh/249
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This article is licensed under a Creative Commons Attribution-Non-Commercial 4.0 International License
Introduction
The COVID-19 pandemic originated in Wuhan, China, in late 2019 and rapidly spread globally,
including Sri Lanka. The country experienced multiple lockdowns throughout 2020, leading to
school closures and education disruptions. By 2021, most of the population had been vaccinated
and normalcy was returning to all sectors, including education. However, an economic crisis arose
due to government mismanagement of finances unrelated to COVID-19. The term economic crisis
is used to describe a wide range of situations in which financial institutions or assets experience a
sudden and significant decrease in value (Shibly, 2013)1. Sri Lanka has faced its worst economic
crisis, which has had a devastating impact on its citizens (Subhash, 2022)2. According to George
et al. (2022)3, the economic crisis in Sri Lanka from 2019 to 2022 was caused by a combination
of factors, including economic mismanagement, a rise in foreign debt, diminishing foreign
reserves, currency depreciation, and rising prices. Other factors that contributed to the crisis
include the Easter bomb attacks in 2019 and the COVID-19 pandemic. The economic crisis caused
power cuts, shortages of necessities such as fuel and food leading to nationwide protests. The
shortage of supplies forced schools to close, and people were urged to work from home to conserve
resources (Perera, 2022)4. According to Tripathi et al. (2022)5 and Waghmode (2022)6, the long-
standing financial crisis in Sri Lanka has significantly impacted the country's citizens, leading to
shortages of food, basic medical supplies, and fuel. The country's $51 billion in external
obligations has also led to the downgrading of 13 Sri Lankan banks. In 2021, the Sri Lankan
government banned importing chemical fertilizers, resulting in protests by many farmers and
disruptions in school transport. Schools had to be closed several times due to protests by school
principals and teachers' unions (Tripathi et al., 2022)5. Furthermore, the government's
mismanagement of funds has resulted in a decline in the country's foreign exchange reserves,
making it difficult to import essential goods, including petroleum products. It has created obstacles
to the smooth operation of school education activities, particularly in the aftermath of the COVID-
19 outbreak. The economic crisis has also affected the education system, with schools postponing
exams indefinitely due to a nationwide paper shortage caused by a lack of foreign currency. The
crisis has also affected remote learning activities due to frequent power outages, negatively
impacting students' physical and mental health. During a crisis, conducting schools becomes
challenging, and school principals are under immense pressure to ensure that school education
continues for the children. Therefore, Wijerathne (2023)7 opined that the current economic crisis
in Sri Lanka, a nation of 22 million people, poses a significant threat to the country's acclaimed,
free education system. This system, previously recognized for achieving the Millennium
Development Goal (MDG) for education and hailed as a success story since gaining independence,
is now facing challenges. In this context, it is crucial to examine how school principals responded
to ensure teaching and learning during the Economic Crisis in the country. The study aimed to
examine the school principals' responses to ensure teaching and learning amid the economic crisis.
The following research question guided the study:
What strategies are employed by School Principals to ensure the teaching and learning
among school children during the crisis period in Sri Lanka?
Received 17th June 2023, revised 5th July 2023, accepted 28th July 2023
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In answering the question, the study will provide insights into effective strategies that can be
employed during a crisis in the education sector.
Methodology
A qualitative research approach and a case study research design were employed to identify the
strategies employed by school principals in ensuring school education during the economic crisis
in Sri Lanka. Twelve school principals were selected for the study interview using purposive
sampling, representing 7 Sinhala medium and 5 Tamil medium schools. The interviews were semi-
structured and lasted for approximately 40 minutes each. The interviews were conducted using the
Zoom video conferencing app, and the data was transcribed verbatim. Thematic analysis was
utilized to analyze the collected data. Based on the common themes observed in the data, they
were categorized, and conclusions were drawn. Table 1 shows the characteristics of the study
sample. The sample of twelve school principals included five from national schools, three from
1AB schools, two from 1C schools, and one each from type 2 and type 3 schools. The sample also
included six principals from urban areas, four from rural areas, and two from estate areas,
representing six districts of the country.
Table 1
Sample Representation
School
Type
Province
Zone
Nature
Medium
Location
01
Type-2
Western
Homagama
Mixed
Sinhala
Rural
02
1AB
Western
Colombo
Mixed
Sinhala
Urban
03
1C
Eastern
Kalmunai
Mixed
Tamil
Rural
04
National
Western
Colombo
Girls
Trilingual
Urban
05
National
Central
Hatton
Mixed
Tamil
Estate
06
1AB
Central
Wattegama
Mixed
Tamil &
English
Urban
07
1C
Central
Nuwara Eliya
Mixed
Tamil
Estate
08
National
Western
Colombo
Boys
Tamil &
English
Urban
09
Type 3
Southern
Elpitiya
Mixed
Sinhala
Rural
10
National
Western
Minuwangoda
Boys
Sinhala &
English
Urban
11
1AB
Western
Colombo
Girls
Sinhala &
English
Urban
12
National
Southern
Hambantota
Mixed
Sinhala &
English
Rural
Attendance of Students:
The economic crisis has made it difficult for schools to operate normally. Efforts have been made
to resume student learning and teaching activities, including opening schools a few days a week.
However, student attendance has been low. All the principals in this study agreed that the number
of students coming to their schools had decreased. Despite lower overall student attendance in
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rural and estate sector schools, a number of students continued to attend classes by walking or
cycling. For instance, the following statements confirm the situation of student attendance in rural
and estate sector schools:
Principal 3: "My school is rural, and most of our students walk or use bicycles to come to school.
Despite the economic crisis, my school's overall number of students has not been affected.
However, during these tough times, we have noticed a slight decrease in student attendance
compared to regular days."
Principal 5: "I work at an Estate sector school. It is a mixed school, and many of our students walk
to school. The economic crisis has not caused a decrease in overall attendance. However, we have
observed that many female students who usually take three-wheelers to commute face difficulties
due to the ongoing fuel crisis, leading to their absence from school."
However, urban school principals noted a more acute problem in urban schools. Many
urban students could not attend school as private and public transportation was disrupted due to
the fuel shortage. Moreover, some principals mentioned that students were affected because they
had to stand in long queues to buy gas and fuel, especially Kerosene oil, for their homes. A
principal from an urban school confirmed this issue:
Principal 11: "My school is in Colombo, an urban Girls' school. Many female students rely on
public transportation, including buses and trains. Some students also use three-wheelers and
school van services to come to school. Unfortunately, due to the economic crisis affecting the
country, we have experienced a notable decline in attendance among these students who depend
on various transportation services."
Similar responses were received from all Tamil and Sinhala principals.
In addition, the principals were asked about strategies to improve student attendance. Many
school principals mentioned that they had become more flexible with students' daily attendance.
For example:
- One principal explained: "My school used to require students to arrive before 7:30 am. However,
we have become more flexible with the morning timing because of the country's economic crisis
and transportation problems. Latecomers were allowed into classes without any punishments. We
have also relaxed rules about school uniforms and shoes. These changes have helped increase
student attendance to some extent."
- Another principal shared: "My school is urban outside Colombo. The number of students in my
school is low too. We have relaxed strict rules about when students need to arrive. Also, since the
government made school days three days a week, we have noticed more students coming."
Recent studies have reinforced the views of school principals, finding that low school
attendance is a major contributing factor to learning loss among students. Leanage and Saito
(2023)8 also found that the closure of schools during the crisis has resulted in learning loss for
children. A survey conducted by UNICEF (2022)9 found that the economic crisis in Sri Lanka has
significantly impacted education. According to the survey, 56% of households had at least one
school-going child of age 19 years or younger, and almost 60% of households with schooling
children reported that their child had missed school at least once due to lack of fuel or transport
since March 2022. 17% of households with children missed school most days of the week or could
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not attend school for more than two weeks at a time. 31% of parents indicated that they did not
think their child’s school had taken adequate steps to compensate for lost learning. It further found
that costs for the stationary, school materials, transportation, etc., were reported as the primary
challenges to ensuring their child’s school attendance (UNICEF 2022)9.
Attendance of Teachers:
Another challenge faced in providing school education during Sri Lanka's economic crisis is
teachers' attendance. Most teachers use public transport or motorcycles, and many travel together
in three-wheelers. Teachers from many schools travel a long distance to reach the schools. Because
of the economic crisis, especially due to fuel shortage, transportation services were severely
affected. It meant teachers who had to travel far to school daily spent huge amounts of money from
their monthly income.
Moreover, teachers who use motorcycles and three-wheelers are reluctant to use their
motorcycles and three-wheelers. Therefore, the government temporarily requested teachers to
work in schools near their homes, but many schools still had low teacher attendance. An urban
school principal shared: - "In my school, many female teachers travel from quite far away. They
used to come by public transport or hire three-wheelers. Because of the economic crisis in the
country, transportation has become difficult or more expensive. It has made it challenging for
teachers to come to school."
Similarly, another urban principal said: "Many teachers in my school come from far places
and face transportation problems. It makes it hard for them to come to school. We heard similar
answers from all principals, no matter the school's type or medium and location. Principals were
asked how they were addressing the issue of low teacher attendance. They mentioned that, similar
to the flexibility given to students, they were also being flexible with teachers. One urban principal
explained that they had set up temporary accommodation close to the school, with the help of
parents, to make it easier for teachers to stay and teach. This led to more teachers coming and
staying closed to the school. Similar strategies were observed among rural school principals. One
principal mentioned:
- "Even though our school is rural, many teachers come from nearby urban places. So, we asked
the community to provide temporary places for teachers to stay in our village. This helped ensure
that teachers from far away could stay and teach in our school."
Nutrition Levels of School Children in Economic Crisis
The nutritional well-being of students is of immense importance for their whole balance
development and academic performance. Proper nutrition provides a solid foundation for various
aspects of a student's life, influencing their physical health, cognitive abilities, and emotional and
social well-being. The economic crisis in Sri Lanka has badly affected the nutritional levels of
school children. According to Leanage and Saito (2023)8, the crisis has affected households' ability
to afford daily nutritious food, leading to an increased risk of children dropping out of school. Due
to the economic crisis, many industries were closed for various reasons, such as fuel shortages and
restrictions on the import of raw materials. According to this situation, a considerable number of
parents lost their employment. Due to these reasons, parents face the challenge of providing
nutritional meals for their children. Similarly, a survey conducted by Save the Children found that
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one out of five families is unable to meet their minimum food needs and children from one in three
families have reduced how much food they eat each day (Groundviews 2022).10
Furthermore, the government's budget cuts have impacted free school meal programmes,
leaving socio-economically disadvantaged households struggling to provide sufficient food for
their children. Therefore, the principals in this study asked questions related to the student's
nutrition. Almost all participants of this study have agreed that the nutrition levels of school
children have declined significantly due to the country's economic crisis.
"Most of the parents of my school students are daily wage earners, and they do not have permanent
income," said one principal. "Due to the economic crisis, many people have lost their jobs and
food prices have skyrocketed. As a result, many children are not getting enough to eat. A
considerable number of children coming to school without having morning breakfast."
Another principal said he had seen more children fainting during school hours due to
hunger. "This is a serious problem," he said. "Children who are not getting enough to eat cannot
learn effectively. During the lesson hours, students got to sleep."
The principals interviewed for this survey said they are taking several steps to address the problem
of child malnutrition. These include:
Encouraging children who bring food to share it with other hungry children.
Providing food to needy children from a "food box" in the school. This "food box" concept
was implemented with support from school teachers and wealthy students.
Some teachers gave their own meals to needy children in their classrooms.
Receiving occasional help from the school community to provide food to students.
In addition, School children and parents were guided by teachers and principals to take
enough of the freely available fruits in their home surroundings.
The principals said they are concerned about the long-term effects of child malnutrition on
the country's education system. "If we do not address this problem, we will see a decline in the
educational attainment of our children," said one principal. These findings highlight the need for
urgent action to address the problem of child malnutrition in Sri Lanka. The government, the
private sector, and civil society must all work together to ensure that all children have access to
the food they need to grow and learn.
Remote Learning Activities
During the COVID-19 pandemic, governmental and non-governmental organizations
implemented various remote learning activities to assist students affected by the abrupt closure of
schools in Sri Lanka. In collaboration with the National Institute of Education, the Ministry of
Education introduced two television programs, Gurugedera and Gurukulam, in partnership with
the state TV network Rupavahini. Educational content was also broadcast on Channel Eye and
Nethra TV channels. The Ministry's e-learning portal, E-chakalaka, also provided study materials
for students across grades one to twelve (UNESCO, 2020; Nawastheen & Perera, 2021;
Nawastheen et al., 2022)11,12,13.
Schools in Sri Lanka saw some improvement in remote learning activities during the
COVID-19 pandemic. However, the economic crisis in Sri Lanka has created uncertainty in school
education and remote learning activities. The economic crisis has caused problems in the country,
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such as frequent power outages, rising food and livelihood costs, disruptions to internet services,
sharp increases in the price of digital devices, increased charges for internet services and telephone
bills, and increased poverty. This has caused a significant setback to remote learning activities that
had already made progress. Leanage and Saito (2023)8 found that power outages and the high cost
of internet connectivity made it difficult for students from socioeconomically disadvantaged
backgrounds to access resources and participate in online learning. This hindered their ability to
learn effectively. Principals who participated in this interview said that teachers in their schools
promoted remote learning activities for students through various media during COVID-19.
However, the remote learning activities were affected by the subsequent economic crisis that
affected all people in the country.
"During the COVID-19 period, my school teachers used to deliver learning activities to students
through social media platforms like Zoom and WhatsApp by spending their own money. However,
the current crisis has also affected teachers. Due to frequent power outages, rising costs of digital
devices, lack of internet access, and other factors, remote learning activities cannot be conducted
as before. However, we try to do remote learning activities for students as much as possible," said
a principal”.
Psychological issues
Interviews with school principals revealed that the economic crisis in Sri Lanka has caused
significant psychological distress among students, teachers, and parents. Reduced purchasing
power, uncertainty about the future, postponement of the GCE O/L and A/L examinations, poor
salaries of teachers and academic staff, high transportation costs, and exorbitant food prices have
all contributed to high levels of stress, anxiety, and depression among these groups.
Principals emphasized that the loss of learning and the postponement of major exams
contribute to students' psychological distress. During the economic crisis, schools were frequently
closed. Due to this school closure, students were expected to stay home without their parents' or
guardians' adequate support and supervision for their learning activities. This situation also
psychologically affected students and parents. According to Groundviews (2022)10, children were
experiencing increased stress and anxiety and were more likely to be involved in child labour due
to the economic crisis in the country. Interviewed school principals also expressed similar concerns
about the psychological well-being of students.
The following are some of the concerns expressed by the principals:
"The school closures during the COVID-19 pandemic have already set back student educational
attainment. This economic crisis has exacerbated the problem. Students are lacking confidence in
their learning."
"My school serves primary-level students from Grades 1 to 5. Most grade one students were
admitted without proper pre-school education. Due to this reason, these students needed to be
fully acquired pre-entry competencies. Also, they need to develop essential competencies at school,
but these still need to be fully acquired due to the continuous disruption of school education. I am
concerned about how this will affect their future."
"The learning loss among primary-level students will affect their future academic attainment.
Although parents are concerned about this, most low-income earners cannot do anything."
“The postponement of school terms and exams has created fear among GCE (O/L) and (A/L)
students about their uncertain future. There is concern that these students may drop out of school.”
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"Postponing school terms and exams will only prolong the problem. It is, therefore, appropriate
to complete the school terms and examinations on time without delay."
Conclusion and Recommendations
The economic crisis in Sri Lanka has significantly impacted the country's education system, with
schools facing challenges in maintaining regular operations and providing quality education to
students. This study examined the strategies employed by school principals to ensure teaching and
learning amid the crisis. The study's findings highlighted the following challenges schools face:
low attendance of students and teachers, disruption of remote learning activities, malnutrition
among students and psychological issues among students, teachers, and parents. Despite these
challenges, the study found that school principals worked hard to ensure that teaching and learning
continued during the economic crisis. They had implemented several strategies to address their
challenges, including flexible attendance policies, Temporary accommodation for teachers who
travel far from school, and Food boxes for poor students. The study recommends that the
government provide the following support to schools by the government and relevant authorities:
Providing financial assistance to schools to help them cover the costs of transportation,
food, and other essential items for students and teachers.
Resuming and expanding nutrition support for students
Improving the availability of digital devices and internet access in schools so that students
can continue learning even when they cannot attend school in person.
Providing psychological support to students, teachers, and parents struggling to cope with
the stress of the economic crisis.
Conducting general examinations on time without postponing them.
Developing a long-term plan to build resilience in the education system so that it is better
prepared to withstand future economic shocks.
By implementing these recommendations, the government can help to ensure that the education
system in Sri Lanka can withstand future economic shocks. Similarly, UNICEF (2022)9 also
highlighted in their survey the urgent need to address the impact of the economic crisis on
education in Sri Lanka. The government and other stakeholders need to ensure that all children
have access to quality education, regardless of their family's income or location. This study focused
only on the strategies used by the school principal during the economic crisis. It employed a
qualitative study approach. Further research is needed to address various issues of education
caused by the economic crisis using different research approaches, such as surveys, interviews,
and focus groups, with teachers, students, and school communities.
References:
1. Shibly, A. (2013). Economic crisis and its impact on economic development (special
reference to Sri Lanka). Global J. of Arts & Mgmt.,3 (2).
2. Subhash, B. (2022). Sri Lanka's Economic and Political Crisis: Causes and Consequences.
IUP Journal of International Relations, 16(3).
3. George, A. H., George, A. S., & Baskar, T. (2022). Sri Lanka's economic crisis: A brief
overview. Partners Universal International Research Journal, 1(2), 9-19.
https://doi.org/10.5281/zenodo.6726553
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4. Perera, A. (2022, July 14). Why are Sri Lankans protesting in the streets? BBC News.
https://www.bbc.com/news/world-61028138.
5. Tripathi, S., Sharma, K., & Pandya, R. (2022). A Study of the Economic Crisis and Its
Impacts with Special Reference to Sri Lanka. Towards Excellence, 14(4), 218-231.
6. Waghmode, P. S. (2022). Investigative Study of Economic Crisis in Sri Lanka.
International Journal for Research in Applied Science and Engineering Technology, 10(5),
53595372. https://doi.org/10.22214/ijraset.2022.42919
7. Wijerathne,H. (2023) Economic Crisis Threatens Sri Lanka’s Education Gains.
https://indepthnews.net/economic-crisis-threatens-sri-lanka-s-education-
gains.https://indepthnews.net/economic-crisis-threatens-sri-lanka-s-education-gains/
8. Leanage, K., & Saito, E. (2023). Concerns about the impact of crisis on children in Sri
Lanka. Management in Education. https://doi.org/10.1177/08920206231153291
9. UNICEF (2022). Round 7- Impact of the Economic Crisis on Households’ Social and
Economic Wellbeing. https://www.unicef.org/srilanka/reports/round-7-impact-economic-
crisis-households-social-and-economic-wellbeing
10. Groundviews. (2022 August 8). Economic Crisis Badly Impacting Most Vulnerable.
https://groundviews.org/2022/08/08/economic-crisis-badly-impacting-most-vulnerable/
11. UNESCO. (2020). Global Education Coalition, message from Audrey Azoulay. UNESCO
Director-General. https://www.youtube.com/watch?v=St_BQRSXmew&t=37s
12. Nawastheen, F. M., & Perera, S. A. S. K. (2021). Students’ Perceptions on Participating in
Remote Learning Activities in the Time of Covid-19 Pandemic. Studies in Learning and
Teaching, 2(3), 33-44. https://doi.org/10.46627/silet.v2i3.81
13. Nawastheen, F. M, Shifaan, S &.Bisthamy. M.W.A. (2021). Primary school teachers’
perceptions towards the Remote Teaching and Learning Activities (RTLA) during
lockdown period in Sri Lanka. Muallim Journal of Social Sciences and Humanities, 6(1),
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The present study aimed to assess Sri Lankan school students’ perceptions on the experience of participating in remote learning activities (RLA) available to them during the time of COVID-19 pandemic. This study was conducted as a survey. Using the exponential non-discriminative snowball sampling technique, data were collected from 613 school students through a questionnaire administered as a Google Form. Data were analyzed as mean values, standard deviations, and percentages. Analysis of data revealed that majority of respondents (92%) were well aware of the various RLA. Majority of the respondents (62.6%) used mobile internet and 69.5% used prepaid services. The main challenges they faced were related to affordability, heavy load of educational content presented through RLA, and concerns on cyber security when engaging with RLA. To make opportunities for learning more accessible to learners, it is recommended that mobile data be made available to school students at low costs and all educational programs should be made available to them free of charge. In addition, devices such as tablets should be provided to all students in order to ensure equality of access to education. Further, studies on parents’ and teachers’ experiences with their children’s and students’ learning through RLA would complement the findings of this study.
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Aim : The aim of the study is to find out the reason of economic crisis in Sri Lanka and the recovery methods for reducing the impact of economic crisis on Sri Lanka’s developments. Methodology: Since it is a qualitative research, data were collected from articles, books and online resources. Result: There is no universal recipe for all types of crisis, not only for Sri Lanka, But also all countries in case of a specific crisis. The best strategy to cope with such events is to use the optimal undesirable effects on the combination of policy ingredients that will minimize the economy .Sri Lanka must be concentrated and responded on Prevent increasing and possibly unsustainable deficits; Contrary to the policy in developed economies affected by the crisis, interest rates should be slightly increased in order to maintain inflation at low levels; Precautionary investment policy, especially with respect to large (and somehow risky) projects in manufacturing, when such projects are financed by the state budget; Better and careful monitoring over the internal financial system, even if the system seems healthy and not affected by contagion. Prevention, rather than curing, is the right policy in these times. Among the experts in the field, there is a clear consensus that in case of such a financial crisis, with possible implications on real economy, the first thing to be done by decision makers is to avoid populist policies. Conclusion: The economic crisis severely affects on Unemployment, Inflation, Ecconomic growth, Export and Import .but, Sri Lanka tries to prevent from such hazards. Therefore what is desirable is to formulate a new/alternate economic model (based on socially- oriented market economy) where the benefits of economic development are not concentrated in a few but shared by all. Coming back to the Russian summit, BRIC refers to four fast-growing developing economies, namely Brazil, Russia, India and China. Now that Sri Lanka has been granted delegate status at the Shanghai Cooperation Organization, we would be eligible to get enrolled into “BRIC block” if Sri Lanka could truly demonstrate its capabilities as an emerging economy by working out and adopting this new economic model which is in line with “Mahinda Chintana” policies.
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This paper analyses the reasons and scenario of the current economic crisis in Sri Lanka. The study examines the possible reasons for the crisis, its ongoing impact on GDP, tourism industry, and on Sri Lankan rupee against other major currencies in the world. The paper shows that Forex reserves of Sri Lanka mainly depend on Tourism revenue, thus underscoring the importance of the tourism industry. But due to current circumstances of the Covid-19 and its severe impacts leads to a high decline in tourism revenue which ultimately affects the country’s reserves. This resulted in the high depreciation in the value of the Sri Lankan rupee against other major currencies in the world. To assess if the country has enough reserves, we have used the Guidotti - Greenspan rule and we found that since the Covid pandemic has begun, Sri Lanka has been unable to follow this rule and the ratio of reserves to short term debt is continuously decreasing. The external sector of Sri Lanka is also not performing well due to the sharp decline in exports. The IMF has approved a bailout package through its Special Drawing Rights to get over this crisis. Therefore, appropriate actions must be undertaken to overcome the crisis and revive the economy
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