More

    COVID-19, food shortage and inflation could bankrupt Sri Lanka

    HealthCOVID-19COVID-19, food shortage and inflation could bankrupt Sri Lanka
    - Advertisment -

    COVID-19, food shortage and inflation could bankrupt Sri Lanka

    Food shortage and inflation are causing distress and the government has barely any foreign exchange reserves to import food – especially as agricultural productivity has fallen.

    Sri Lankan writer Basil Fernando today shared two poignant tales. The first from Anuradhapura is about a man asking the owner of a small shop for two raw papayas from the shop owner’s garden to feed his starving children.

    In another instance, a family used up their last savings to purchase 200 grams of flour. The family’s breadwinner is bedridden they have no money to buy medicines.

    The Sri Lankan media is not telling any of these stories.

    - Advertisement -

    On Monday, thousands, led by the country’s main opposition political party, the United People’s Force demonstrated in Colombo, blaming President Gotabaya Rajapaksa’s government for the economic crisis.

    “Reports of how people, particularly those from the lowest income groups, are coping with the present situation are not brought to the surface,” Fernando says.

    Sri Lanka is staring at bankruptcy and a widespread food crisis is engulfing the country together with a steady rise in inflation. Consumer prices reached 12.1 per cent year-on-year in December of 2021. This has been the highest inflation rate the country has witnessed since 2008 due to a record 22.1 per cent rise in price of food products in the space of one month.

    Food price inflation in December touched 22.1 per cent, up from 17.5 per cent in November.

    Foreign exchange reserves too have been dwindling. With just $1.5 billion in foreign reserves, the country will only be able to pay for a month’s imports. Sri Lanka is negotiating with China, its largest international lender for help. Simultaneously, a US$ 787 million of special drawing rights (SDR) from the IMF and a currency swap arrangement to the tune of US$ 150 million from Bangladesh’s Central Bank has not helped ease the price of food essentials, either.

    Sri Lanka finance minister Basil Rajapaksa has also held discussion with S Jaishankar, India’s foreign minister over a virtual meeting on Saturday.

    Crisis precipitated by COVID-19

    According to the US-based Trading Economics, “The cash-strapped economy is struggling to finance urgent imports to tackle an acute shortage of essentials in the country leading to rationing of food by supermarkets for quite a few months now.”

    End-August 2021, Sri Lanka had declared a food emergency as banks reported that their foreign funds had depleted.

    The crisis is the result of a cocktail of mishaps, primarily COVID-19 that hit its tourism economy. The economy diminished, shrinking by 3.6 per cent in 2020. This was the worst in 73 years.

    As agricultural input prices went through the roof, the government mandated an overnight shift to organic agriculture without consulting farmer groups. This has led to a bad harvest, resulting in run-away inflation. The country’s agricultural sector too has been experiencing the effects of changing climate and natural disasters.

    Besides, the garment manufactures too have been hit hard by COVID-19 and there are hardly any export orders.

    In 2020, IMF predicted a negative growth of 0.5 per cent for Sri Lanka and the government faced the challenges of reducing the fiscal deficit even as there were domestic and foreign debts to be serviced.

    In the meanwhile, 30-something Fathima Aroos tells her two young children that this is the month of Ramadan and that they are supposed to fast.

    She can’t feed the children three meals a day due to galloping food price.

    “This way, we can manage with a plain porridge after we break our fast and rice soaked in water and onion for suhoor (the early morning meal),” she says. “It keeps the children quiet.”

    - Advertisement -

    LEAVE A REPLY

    Please enter your comment!
    Please enter your name here

    Latest news

    India Among Six Most Affected Countries by Extreme Weather Events

    The long-term assessment of the CRI 2025, covering data from 1993 to 2022, places India as the sixth most affected country globally due to extreme weather events. Over this period, India reported a staggering loss of 80,000 lives and economic damages amounting to $200 billion.

    Calculated, Coordinated Crackdown – UN Report Uncovers Systematic Repression in Bangladesh Protests

    The mass mobilisation saw participation from people across different backgrounds, including women and children. Faced with this growing opposition, the former government resorted to increasingly violent means to maintain power. The UN report describes a deliberate strategy orchestrated at the highest levels of the former administration.

    Adani Green Energy Withdraws from $1 Billion Wind Power Project in Sri Lanka

    There has been a raging debate in Sri Lanka on the deal, citing it as an expensive deal. The earlier government had agreed to purchase power from Adani’s 484-megawatt wind power project at a rate of 8.26 US cents per unit under a 20-year power purchase agreement.

    IMF Chief Reaffirms Support for Pakistan’s Reforms in Meeting with Shehbaz Sharif

    Georgieva praised Pakistan’s efforts in implementing the IMF-supported program, acknowledging the country’s improving economic performance with rising growth and declining inflation. She recognized Pakistan’s economic recovery and noted that it is on a positive trajectory.
    - Advertisement -

    In the Lok Sabha: Government Reports Significant Progress on Agriculture Infrastructure Fund

    Eligible projects include warehouses, silos, cold chains, logistics facilities, and smart precision agriculture infrastructure. Loan applicants must contribute at least 10 per cent of the project cost, and an entity can apply for up to 25 projects, each eligible for a loan of up to Rs. 2 crore.

    In the Lok Sabha: Over 68,000 Lakes Constructed as Part of Mission Amrit Sarovar

    With the successful completion of more than 68,000 Sarovars ahead of schedule, the government has now launched the second phase of Mission Amrit Sarovar. This phase will emphasise ensuring sustainable water availability and climate resilience, with community participation (Jan Bhagidari) being the core focus.

    Must read

    India Among Six Most Affected Countries by Extreme Weather Events

    The long-term assessment of the CRI 2025, covering data from 1993 to 2022, places India as the sixth most affected country globally due to extreme weather events. Over this period, India reported a staggering loss of 80,000 lives and economic damages amounting to $200 billion.

    Calculated, Coordinated Crackdown – UN Report Uncovers Systematic Repression in Bangladesh Protests

    The mass mobilisation saw participation from people across different backgrounds, including women and children. Faced with this growing opposition, the former government resorted to increasingly violent means to maintain power. The UN report describes a deliberate strategy orchestrated at the highest levels of the former administration.
    - Advertisement -

    More from the sectionRELATED
    Recommended to you