It is no secret that Sri Lanka has an ageing population, and they have been hit disproportionately by the ongoing economic crisis. The elderly, make up a significant portion of Sri Lanka’s vulnerable communities who are often affected significantly due to inflation and market fluctuations. 

Sri Lanka is reported to have the fastest-growing ageing population in South Asia. As of 2022, approximately 16% of its population (22 million) were aged over 60, according to the World Bank. By 2041, that will rise to one in four, the WB predicts. The growth of the elderly population is fast becoming a social problem. Destitution and homelessness of the elderly is fast becoming a common sight. Recently a medical specialist called out a concerning trend, where allegedly some families ‘park’ their bed-ridden elderly parents, in hospital citing various health concerns, to relieve themselves of the responsibility for a short period to visit their villages / relatives. Sri Lanka also has no universal pension system. Elders are found to be employed especially in the informal sector. A survey on Household Income and Expenditure in 2019 identified those over 65-years-old as the poorest group in Sri Lanka, meaning that they have fewer resources to cope. Currently, only 40-50% of those in the category receive any form of benefit such as pensions or cash payments.

Many retirees depended on their pension, and or interest on their savings, which they had placed in fixed deposits of 15% return per annum following 2015. When the economic crisis hit, and strict fiscal discipline was sought, the special interest rates which the many elderly citizens relied on, was abruptly cut by the State. In October 2022, the State Minister of Finance Shehan Semasinghe informed Parliament on the decision taken by the Central Bank to terminate the Special Interest Scheme on Fixed Deposits for Senior Citizens. The Government at the time said that the interest rate would be increased whenever the normal interest rate decreases. Issuing a notice, the CBSL said the Cabinet had taken a decision in September 2022 to terminate the Special Interest Scheme on Fixed Deposits for Senior Citizens. It is reported that nearly 50% of senior citizens rely on monthly interest payments to get by.

Yesterday (25) the Opposition in Parliament urged the Government to resume the 15% interest given to the senior citizens’ special fixed deposit accounts (FDs), which was terminated by the Central Bank of Sri Lanka (CBSL). Opposition Leader, Sajith Premadasa stated that with the termination of this special interest rate, senior citizens have had to face many financial difficulties in a context where essentials and medicines are at high prices. He also said that the CBSL’s decision should be revised immediately, giving benefits to senior citizens who have made lots of sacrifices for the development of the nation. He also noted that even though he had raised the same question several times in the House, it seems that the Government does not act empathetically to address the matter. He pointed out that today, elders are given only a 7-8% interest rate, adding that such a low rate will not help many get by.  Responding to Premadasa, the State Minister of Finance Ranjith Siyambalapitiya said that the Government needs some time to make a decision in this regard as the Government is yet to allocate funds for certain banks to replenish the amount of money spent on these special interest rates. He also said that the Government has to allocate around Rs. 40 billion annually if they are giving the 15% interest rate again. However, he said that the Government has not disregarded the concerns raised by the Opposition and senior citizens, and that the prevailing conditions will be revised gradually. Meanwhile, the Collective of Pensioners' Unions, told The Daily Morning that the Secretary to the Ministry of Public Administration and Home Affairs Pradeep Yasaratne, had promised them last week to raise the particular issue with the Secretary to the Treasury to reach a final decision. The Union also noted that they have to face many hardships in terms of the economy due to the fiscal policies implemented by the Government recently and hence urged the authorities to do justice for retired senior citizens.

It’s imperative that the Government and the other stakeholders involved in Sri Lanka’s economic recovery – such as the IMF, World Bank and the ADB, act quickly to find solutions for this situation. Reinstating the 15% interest rate for senior citizens, or alternative relief will depend on how the necessary funds will be raised. While it is a significant challenge for the State, to turn a blind eye to the ageing population and their wellbeing, will not help the situation, not only is that cruel and inhumane, it will lead to greater state expenditure, when the elderly begin to see refuge in the only place left for them to seek care, the public health system.