The Impact of the depletion of foreign currency reserves on the Sri Lankan construction industry

Abstract

The construction industry is highly diverse and interconnects with many other industries The industry generated job opportunities to many and a significant economic multiplier. However, it was observed that an economic change in the country affects the industry adversely. The depletion of foreign currency reserves has significantly impacted Sri Lanka's construction industry in the recent past, from 2019 to date. Many stakeholders are currently encountering many issues, and as a result, many construction projects are in temporary shutdown. This study aimed to investigate the impact of foreign currency depletion on the Sri Lankan construction industry. The data collected from 15 semi-structured interviews conducted among professionals from the construction industry who work under contractors and professionals from the finance industry who are involved in the economic sector. A detailed literature study was undertaken to determine the causes and effects of the depletion of foreign reserves and qualitative semi-structured interviews were used to identify the positive and negative effects of the depletion of foreign currency on the construction industry. As a result, the findings featured results such as financial issues, unemployment, and frequent price escalation as severe impacts on the industry. The discussion also highlighted the strategies which are already imposed and suggested by the government and construction organisations. It included, implementing more foreign-funded projects, outsourcing new contracting or consulting overseas projects and expanding the export industry. Finally, the paper reveals the possible remedial strategies to minimise the impact of foreign currency depletion in the future.