Prime Ministers of Sri Lanka

Marxist lawmaker Anura Kumara Dissanayake waves as he leaves from the election commission office after winning Sri Lankan presidential election, in Colombo, Sri Lanka, Sunday, Sept. 22, 2024. (AP Photo/Rajesh Kumar Singh)

Sri Lanka is considering the possibility of allowing the use of the Indian rupee for local transactions, as the island nation struggles to build its depleted foreign reserves and to emerge from last year's unprecedented economic crisis.

Sri Lanka's inflation eased to 12 percent in June, official data showed on July 1, the lowest figures since the island nation careened into an unprecedented economic crisis last year.

Sri Lanka defaulted on its $46 billion foreign debt in April 2022 and the public endured months of food, fuel and medicine shortages.