Printed on Mon Jul 04 2022 3:58:07 AM
Sri Lanka's PM warns of food shortage crisis
Sri Lanka's prime minister has warned of a food shortage as the island nation battles a devastating economic crisis and vowed the government will buy enough fertilizer for the next planting season to boost productivity.
A decision in April last year by President Gotabaya Rajapaksa to ban all chemical fertilizers drastically cut yields and although the government has reversed the ban, no substantial imports have yet taken place.
"While there may not be time to obtain fertilizer for this Yala (May-August) season, steps are being taken to ensure adequate stocks for the Maha (September-March) season," Prime Minister Ranil Wickremesinghe said in a message on Twitter late on Thursday, May 19th.
"I sincerely urge everyone to accept the gravity of the situation."
Sri Lanka is facing a dire shortage of foreign exchange, fuel and medicines, and economic activity has slowed to a crawl.
Nearby, a long queue had formed in front of a shop selling cooking gas cylinders, the prices of which have soared.
"Only about 200 cylinders were delivered, even though there were about 500 people," said Mohammad Shazly, a part-time chauffeur who said he was standing in the line for the third day to be able to cook food for a family of five.
The central bank governor said on Thursday that foreign exchange had been secured from a World Bank loan and remittances to pay for fuel and cooking gas shipments, but supplies are still to flow through.
Inflation could rise further to a staggering 40% in the next couple of months but it was being driven largely by supply-side pressures and measures by the bank and government were already reining in demand-side inflation, the governor added.
Inflation hit 29.8% in April with food prices up 46.6% year on year.
Sri Lanka's economic crisis has come from the confluence of the Covid-19 pandemic battering the tourism-reliant economy, rising oil prices and populist tax cuts by the government of President Rajapaksa and his brother, Mahinda, who resigned as prime minister last week.
Wickremesinghe, appointed prime minister in his place, is accused of being a stooge of the brothers.
Other factors have included heavily subsidized domestic prices of fuel and a decision to ban the import of chemical fertilizers, which devastated the agriculture sector.
The Group of Seven economic powers supports efforts to provide debt relief for Sri Lanka, G7 finance chiefs said on Thursday in a draft communique from a meeting in Germany after the country defaulted on its sovereign debt.
P. Nandalal Weerasinghe, the central bank chief, has said plans for a debt restructuring were almost finalized and he would be submitting a proposal to the cabinet soon.
"We are in pre-emptive default," he said. "Our position is very clear, until there is a debt restructure, we cannot repay."
A spokesperson for the International Monetary Fund said the fund was monitoring developments very closely and that a virtual mission to Sri Lanka was expected to conclude technical talks on a potential loan program to the country on May 24.
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