Sri Lanka Announces a Food Crisis Because of Deteriorating Forex-Wikipedia of Finance

Sri Lanka Announces a Food Crisis Because of Deteriorating Forex


Sri Lanka pronounced a state crisis because of the foreign exchange crisis. Private financial institutions are running out of foreign currencies to fund imports. The country is currently in a severe economic crisis and President Gotabaya Rajapaksa has declared that he has issued emergency regulations to combat the hoarding of sugar, rice, or other essential foods.

These regulations grant officials broad powers to seize food stocks owned by traders and to arrest those who keep essential food in their possession. They also allow the government to employ the controlled pricing. Rajapaksa appointed a top Army officer as the Commissioner General for Essential Services in order to coordinate the supply and distribution of rice, sugar, and other consumer goods.

Sri Lanka Announces a Food Crisis Because of Deteriorating Forex

This move came after sharp rises in prices for sugar, rice, and onions, as well as long queues outside shops due to shortages of cooking gas, milk powder, and kerosene oil. Despite the fact that the country is under a 16-day curfew from next Monday, COVID-19 cases increasing, the curfew will not be lifted until then.

Bandula Gunawardena, Trade Minister, stated that some traders were hoarding stock, which led to shortages in food items and inconvenience for the public.

While the government has increased penalties against food hoarding, shortages are occurring as the country of 21 million battles the fierce coronavirus wave which is claiming more than 200 lives each day.

To protect the foreign currencies, the economy shrunk by a record 3.6% in 2020 because of the pandemic. The government also banned the import of edible oils and turmeric in March 2017. Importers claim that they have not been able to find the dollars necessary to purchase the food and medicine they want.

With an end goal to help the local currency, the Central Bank of Sri Lanka raised loan fees fourteen days prior. As per bank information, Sri Lanka’s foreign reserves dropped to $2.8bn at July’s end, from $7.5bn in November 2019, when the public authority had just assumed office. The rupee lost over 20% against the US dollar during that period. The downturn seriously hurt Forex trading in Sri Lanka as over speculations, investors held distance from falling rupee. But there was nothing the government could do to resolve the issue quickly.

Udaya Gammanpila, Energy Minister, has asked motorists to reduce their fuel consumption so that the country can buy essential medicines with its foreign currency. An aide to the President has warned that fuel restriction may be implemented by the end of the year unless consumption is reduced. Over the next four- to five years, Sri Lanka’s foreign debt servicing will reach $4 billion to $5 Billion. Sri Lanka has secured a loan of $250 million from Bangladesh and cash injections similar to those from India, China, and South Korea.

How Covid-19 is making it worse

There is a huge impact of Covid-19 on savings and household family income across globe. In Sri Lanka, COVID-19 deaths have been on the rise in recent weeks. There has been an increase of more than 200 deaths per day and more than 4,500 cases daily reported in the last 10 days. Official figures show that Sri Lanka has reported 8,991 COVID-related deaths since the outbreak.

Sri Lankan authorities tightened coronavirus regulations Friday after reports of Covid patients being killed while waiting to be admitted to overcrowded hospitals. Due to the increasing health crisis, the government declared that public and state ceremonies were prohibited until September 1. Public servants were previously asked to report to work on Monday, but this order was revoked by bosses and they are now able to choose who reports to duty on-site. New curbs are needed after coronavirus infections and deaths have doubled in the past week, compared to a month ago.

Thilakshani maduwanthi, a Sri Lankan television anchor, shared online images of the Colombo South state hospital. The photos showed three patients sharing one bed. She stated that two patients had died before her and that overworked staff was treating people underneath trees because the hospital couldn’t handle the influx.

Although private gatherings are not banned, the government has placed greater restrictions on their attendance. Funerals will now be limited to 25 mourners, down from 150. Weddings will also be reduced to 150 from 500.

Sri Lanka relaxed Covid restrictions as the government increased its vaccination program. Just somewhat more than 10 million of the 21 million residents have gotten around one shot. As of Thursday, 2.67 million had both.

Despite vaccination campaigns, the daily infection rate has increased to about 2,500 per day, with the daily death rate at 80. According to official data, Sri Lanka has seen 4,817 deaths from coronavirus and nearly 325,000 infections. Experts believe the real number is higher.

After April’s relaxation of restrictions to allow celebrations of the traditional Sinhala New Year and Tamil New Year, the government allowed the new wave. Regulations were once again tightened in May, and relaxed again on July 10.

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