Sri Lanka declares food emergency

As the country’s foreign currency-strapped private banks are no longer able to finance imports, Sri Lanka, in the grip of a serious economic and monetary crisis, declared itself in a state of food emergency on Tuesday.

President Gotabaya Rajapaksa says he has ordered the introduction of emergency measures to counter the hoarding of sugar, rice and other essential foods. He appointed a senior army officer to the post of “commissioner general of essential services, responsible for coordinating the supply of paddy, rice, sugar and other consumer goods”.

Certain products prohibited for import

In particular, the government has increased sanctions against food stocks, while long queues form in front of stores. This measure follows the sharp rise in the prices of sugar, rice, onions and potatoes in this country of 21 million inhabitants which also suffers from shortages of powdered milk, kerosene and cooking gas. Queues formed in front of food stores. These shortages come in the midst of the Covid-19 wave which currently claims more than 200 victims per day.

Since the start of the pandemic, the country has officially counted 436,081 contaminations and 8,991 deaths. The drop in tourism from March 2020 due to the pandemic caused the economy to contract 3.6% last year and hit its foreign currency reserves. In order to save them, the government has banned the imports of many non-essential products such as vehicles, sanitary equipment but also edible oils and turmeric, an essential spice in local cuisine.

Towards fuel rationing?

Importers say they are no longer able to raise the dollars needed for the authorized purchase of certain products and drugs. Energy Minister Udaya Gammanpila called on motorists to consume fuel sparingly so the country can spend its foreign currency on the essential purchase of drugs and vaccines. An employee of the president warned that fuel rationing could be introduced by the end of the year if consumption was not reduced.

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Two weeks ago, the Central Bank of Sri Lanka raised interest rates in an attempt to support the local currency. Its foreign exchange reserves fell to $ 2.8 billion at the end of July, from $ 7.5 billion in November 2019, when the government took control of the country. The rupee has lost more than 20% of its value against the US dollar in that same time frame, according to official data.

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