Sri Lanka declares state of emergency over food shortages amid economic crisis

·2-min read
People stand in a queue to buy kerosene oil used in cooking stoves in Colombo following Sri Lanka’s declaration of a state of emergency (AFP via Getty Images)
People stand in a queue to buy kerosene oil used in cooking stoves in Colombo following Sri Lanka’s declaration of a state of emergency (AFP via Getty Images)

Sri Lanka has declared a state of emergency after basic food supplies began running low as a foreign exchange crisis in the country sees private banks struggling to pay for imports.

Gotabaya Rajapaksa, the south Asian nation’s president, announced the measure in order to prevent the hoarding of essential items including rice and sugar.

The new ruling gives authorities the power to seize stocks of food and detain those found to be hoarding supplies.

It follows a steep rise in prices for staples such as potatoes, onions and rice and shortages of items like milk powder and cooking gas.

Import businesses have complained that there are not enough dollars to pay for foreign-made foods as the country’s foreign reserves have fallen by two-thirds over the last 18 months, to $2.8bn (£2bn) in July.

People queue outside a supermarket in Colombo. Private banks have run out of foreign exchange to finance imports (AFP via Getty Images)
People queue outside a supermarket in Colombo. Private banks have run out of foreign exchange to finance imports (AFP via Getty Images)

Sri Lanka has been suffering from a devastating economic crisis only worsened by the pandemic, which struck the tourism industry that usually provides jobs for more than 3 million people and accounts for about 12 per cent of GDP.

Its foreign exchange reserves have dwindled, hindering the country’s ability to repay large debt and forcing it to cut back on imports of farm chemicals, cars and even its staple spice, turmeric.

Toothbrush handles, strawberries, vinegar, wet wipes and sugar are also among the hundreds of foreign goods that have been banned or made subject to special licensing requirements – a move that is pushing prices up and triggering protests.

Sri Lanka’s foreign exchange reserves have fallen to barely enough to pay for three months of imports. The petroleum minister, Udaya Gammapila, recently said the country did not have enough cash to pay for oil imports either.

To conserve precious foreign exchange, the government has limited US dollar transactions but despite this, imports still outpace the country's exports of tea, rubber, seafood and garments.

Additional reporting by AP

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