COLOMBO (Reuters) – Sri Lanka’s prime minister has warned of a food shortage as the island nation battles a devastating economic crisis and promised the government would buy enough fertilizer for the next planting season to help increase harvests.
A decision last April by President Gotabaya Rajapaksa to ban all chemical fertilizers has drastically reduced crop yields, and although the government has reversed the ban, no substantial imports have yet taken place.
“Although there may not be time to get fertilizer for this yala (May-August), measures are taken to ensure sufficient stocks for the Maha (September-March),” Prime Minister Ranil Wickremesinghe said in a Twitter post late Thursday.
“I sincerely urge everyone to accept the seriousness of the…situation.”
Rajapaksa on Friday appointed nine new cabinet members, including those from the critical health, trade and tourism ministries. But he has not appointed a finance minister and the portfolio is expected to be retained by Wickremesinghe.
Sri Lanka, which depends on tourism, faces severe shortages of foreign exchange, fuel and medicine, and economic activity has slowed at a frantic pace.
“There is no point in talking about the harshness of life,” said APD Sumanavathi, a 60-year-old woman selling fruits and vegetables in Pettah market in Colombo, the commercial capital. “I can’t predict how things will be in two months. At this rate, we might not even be here.”
Nearby, a long queue had formed outside a shop selling cooking gas cylinders, the prices of which soared to nearly 5,000 rupees ($14) from 2,675 rupees in April.
“Only about 200 bottles were delivered, when there were about 500 people,” said Mohammad Shazly, a part-time driver in the queue for the third day hoping to cook for his family from five persons.
“Without gas, without kerosene, we can’t do anything,” he said. “Last option what? Without food, we will die. It will happen one hundred percent.”
The central bank governor said Thursday that foreign exchange had been secured through a World Bank loan and remittances to pay for fuel and cooking gas shipments, but supplies had yet to arrive. been conveyed.
Inflation could reach a staggering 40% over the next two months, but it was largely driven by supply pressures, and bank and government measures were already dampening inflation on the supply side. request, the governor said.
Inflation reached 29.8% in April and food prices rose 46.6% year-on-year.
As anger against the government spreads, police fired tear gas and water cannons to repel hundreds of student protesters in Colombo on Thursday. The demonstrators demand the ousting of the president as well as the prime minister.
The economic crisis was born out of the confluence of the COVID-19 pandemic hitting tourism, rising oil prices and populist tax cuts by the government of President Rajapaksa and his brother Mahinda, who resigned from his post. Prime Minister’s post last week.
Critics accuse Wickremesinghe, appointed Prime Minister in his place, of being a servant of the brothers, an accusation he denies.
Other factors include heavily subsidized domestic fuel prices and the decision to ban imports of chemical fertilizers.
The economic powers of the Group of Seven back efforts to relieve Sri Lanka’s debt, the group’s finance chiefs said on Thursday in a draft statement from a meeting in Germany after Sri Lanka defaulted on its debt. sovereign.
Central bank chief P. Nandalal Weerasinghe said debt restructuring plans were almost finalized and he would submit a proposal to the cabinet soon.
“We are in preemptive default,” he said. “Our position is very clear: as long as there is no debt restructuring, we cannot repay.”
A spokesperson for the International Monetary Fund said it was monitoring developments very closely and that a virtual mission to Sri Lanka was due to conclude technical talks on a possible loan program on May 24.