Sri Lanka declares food emergency as forex crisis worsens

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Workers unload essential food products at a wholesale market in Colombo, Sri Lanka [Chamila Karunarathne/EPA]

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 Sri Lankan rupee has fallen by 7.5% against the US dollar this year.

The wide-ranging emergency measures came into effect on Tuesday.

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.

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

The Country’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% 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.

Partly as a result of the slump in tourist numbers, Sri Lanka’s economy shrank by a record 3.6% last year.

Earlier this month, Sri Lanka became the first country in the region to raise interest rates in an attempt to shore up its currency and help ease the inflationary pressure of the high cost of imports.

Sri Lanka is currently under a 16-day curfew until Monday because of a jump in Covid-19 cases.