News reports on Sri Lanka being on the brink of an acute food crisis triggered by a rapidly dwindling foreign exchange base was debunked by a top official of the government when the Sunday Observer Business made inquiries on the veracity of media reports last week.
“There is absolutely no shortage of food in Sri Lanka and organised dissemination of fake news locally and internationally of a food shortage is highly mischievous,” said State Minister of Finance and Capital Market Development, Ajith Nivard Cabraal. He said the artificial shortage of sugar created by unscrupulous hoarders has already been dealt with under the law.
The Department of Information stated in a media release last week that certain local and foreign media reports of a food shortage in the country are baseless. It stated there was no basis to the reports and added that the country is not facing any food shortage currently and that the lack of essential food items in the market was due to traders hoarding stocks. On the scarcity of dollars to import essential food products, the State Minister of Finance said last week that the receipt of the International Monetary Fund (IMF) allocation, the Chinese loan and the swap arrangement with Bangladesh Central Bank would boost the country’s liquidity status and stabilise the foreign exchange market.
Sri Lankan reserves strengthened by receiving USD 787 million from IMF and a further USD 150 million from Bangladesh Central Bank as a swap arrangement while a further RMB 2000 Mn (around USD 300 Mn) from China Development Bank to be received shortly.
Sri Lanka’s gross official reserves dropped to 2,833.5 million US dollars in July 2021, from 4,060 million in June after a billion US dollar bond and some other accounts were repaid in July, official data show.
Headline inflation, as measured by the year-onyear (Y-o-Y) change in the Colombo Consumer Price Index (CCPI, 2013=100) , increased to 6.0 percent in August from 5.7 percent in July 2021.
This was driven by monthly increases of prices of items in both Food and Non-food categories. Subsequently, Food inflation (Y-o-Y) increased to 11.5 percent in August 2021 from 11.0 per cent in July 2021, while Non-food inflation (Y-o-Y) increased to 3.5 percent in August 2021 from 3.2 percent in July 2021.
However, according to official data Sri Lanka’s debt for the remainder of the year and next year is around USD 2 billion according to statistics.
The government imposed emergency regulations under the Public Security Ordinance on the supply of essential goods to seize hoarded stocks and handover the same to state entities for distribution at reasonable prices.
President Gotabaya Rajapaksa said last week that emergency regulations were invoked to counter the hoarding of sugar, rice and other essential foods.