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Sri Lanka declares economic emergency

  • IASbaba
  • September 2, 2021
  • 0
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Sri Lanka declares economic emergency

Part of: Prelims and GS – II – International  Relations  

Context Sri Lanka has declared an economic emergency, after a steep fall in the value of the South Asian country’s currency caused a spike in food prices.

  • The Sri Lankan rupee has fallen by 7.5 per cent against the US dollar this year.

Steps to be taken to control price rise

  • The President has promulgated emergency regulations under the Public Security Ordinance on the supply of essential goods.
  • 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.
  • 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.
    • Month-on-month inflation rose to 6% in August, mainly due to high food prices.
  • The authorised officers will take steps to provide essential food items at a concessionary rate to the public by purchasing stocks of essential food items 
  • These items will be provided at government guaranteed prices or based on the customs value on imported goods to prevent market irregularities.
  • The wide-ranging measure is also aimed at recovering credit owed to state banks by importers’=

Reasons for rising prices

  • The increase in the foreign exchange rate 
  • 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.

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