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Sri Lanka imposes emergency regulations as food shortage crisis strikes

Sri Lanka's president Gotabaya Rajapaksa has imposed emergency regulations this week as the country’s private banks ran out of foreign exchange reserves to finance imports and a food shortage crisis strikes.

The regulations enable officials to seize food stocks held by traders, to arrest people accused of hoarding essential food, and for the government to fix controlled prices.

The latest declaration from Rajapaksa comes as basic food items such as sugar, rice, bread, onions and potatoes face rising prices on the island. Food shortages have already been reported in various regions, with items such as milk powder, kerosene oil and cooking gas reportedly in short supply and long queues forming, even as the island remains under a COVID-19 related lockdown.

Image courtesy of Sunday Times

Sri Lanka has been facing an almost unprecedented economic crisis, which has seen several international credit agencies downgrade the island’s rating and steadily piling international debt. Meanwhile, the island’s economy shrank by a record 3.6 percent in 2020 and in March last year, the government banned imports of vehicles and other items, including edible oils and turmeric, an essential spice in local cooking, in a bid to save foreign exchange. The AP reported earlier this year that items such as toothbrush handles, venetian blinds, strawberries, vinegar, wet wipes and sugar are also amongst the hundreds of foreign-made goods that were either entirely banned or made subject to special licensing requirements.

Sri Lanka’s foreign reserves have also plummeted from $7.5 bn in November 2019 to $2.8 bn at the end of July. Meanwhile, the rupee has lost over 20% of its value against the US dollar across this period.

The island's daily COVID death toll has also surpassed 200, despite the 16-day lockdown. Since the start of the pandemic, More than 9,000 people have died from the virus.

As part of these reforms, Rajapaksa has appointed army general MDSP Niwunhella to the position of Commissioner General of Essential Services, to coordinate the supply of paddy, rice, sugar and other consumer goods – an appointment that marks even further the militarisation of the Sri Lankan state.

Photo of Army Commander Shavendra Silva and General Niwunhella

Reports had emerged earlier this week that the government was considering food rationing after Sri Lankan Trade Minister, Bandula Gunawardena, accused some traders of hoarding stocks and blamed them for the shortages.

As inflation continues to rise, Sri Lanka’s efforts to stem the crisis have fallen flat. For example, Economy Next reported that a 50 billion rupees bond auction failed to draw buyers “due to controlled ceiling yields and 92 percent of the offer was unsold”.

Tamil National Alliance (TNA) parliamentarian has slammed the government’s decision as “unwarranted” warning that it could lead to “a state of repression”.

Read more from Al Jazeera here.

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