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Sri Lanka In Economy Crisis As Debt Mounts, Declares Food Emergency

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President Gotabaya Rajapaksa introduces emergency regulations to control prices of essential food items as private banks run out of foreign exchange to finance imports.

This economic emergency empowering the authorities to seize stocks of staple foods and set their prices, to contain soaring inflation after a steep devaluation of its currency due to a foreign exchange crisis.

The government has appointed a former army general as commissioner of essential services, who will have the power to seize food stocks held by traders and retailers and regulate their prices.

Sri Lanka has cut back on imports of farm chemicals, cars and even its staple spice turmeric as its foreign exchange reserves dwindle, hindering its ability to repay a mountain of debt as the South Asian Island nation struggles to recover from the pandemic.

Toothbrush handles, venetian blinds, strawberries, vinegar, wet wipes and sugar are among the hundreds of foreign-made goods that were banned or made subject to special licensing requirements meant to chip away at a trade deficit that has been deepening the country’s financial quandary for years.

Public Debt in Sri Lanka

“The authorised officers will be able to take steps to provide essential food items at concessionary rate to the public by purchasing stocks of essential food items including paddy, rice and sugar,” according to a press statement issued by Gotabaya’s media division.

“These items will be provided at government guaranteed prices or based on the customs value on imported goods to prevent market irregularities,” the statement said.

Sri Lanka’s Department of Census and Statistics said the increase in the foreign exchange rate was one of the reasons behind rising prices of many essential items over the last 12 months.

Month-on-month inflation in August rose to 6% from 5.7% in July, mainly due to high food prices, the department said.

Sri Lanka, a net importer of food and other commodities, is witnessing a surge in COVID-19 cases and deaths which has hit tourism, one of its main foreign currency earners.

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