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Sri Lanka declares economic emergency to contain spike in food costs

Sri Lanka declares economic emergency to contain spike in food costs

Colombo: Sri Lanka has declared an economic emergency after a steep devaluation in the country's currency due to a foreign exchange crisis which caused a spike in food prices. The Sri Lankan rupee has fallen by 7.5 per cent against the US dollar this year.

Srilankan president Gotabaya Rajapaksa on Monday declared wide-ranging emergency measures under the public security ordinance to maintain the supply of food items such as sugar and rice at fair prices. The emergency came into effect on Tuesday.

Authorities say they will take control of the supply of basic food items, including rice and sugar, and set prices in an attempt to control rising inflation, the BBC reported.

"The authorised officers will be able to take steps to provide essential food items at a concessionary rate to the public by purchasing stocks of essential food items," the president of the island nation, Gotabaya Rajapaksa, said in a statement.

A former army general has been appointed by the government as the commissioner of essential services, with the power to seize stocks held by traders and retailers.

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

There have also been long queues outside shops due to shortages of other goods including milk powder, kerosene and cooking gas.

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

Month-on-month inflation rose to 6 per cent in August, mainly due to high food prices, the department said.

The country, which is a net importer of food and other commodities, is witnessing a surge in coronavirus cases and deaths which has hit tourism, one of the country's main foreign currency earners, the report added.

The slump in the tourism sector has caused the country's economy to shrank by a record 3.6 per cent last year. As a result, the government had imposed an import ban on vehicles and other items in March last year in an attempt to stem the outflow of foreign currencies.

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TAGS:Sri LankaEconomic emergencyInflation
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