Sri Lankan Prime Minister warns of food shortages during economic crisis and lack of fertilizer

Sri Lanka’s prime minister has warned of a food shortage and has vowed that the government would buy enough fertilizer for the next planting season as a devastating economic crisis ravages the island.

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Sri Lanka faces shortages of foreign exchange, fuel, and medicines, and economic activity has slowed to a crawl. Inflation reached 29.8 percent in April, and food prices rose 46.6 percent yearly. Street protests continue, and students demand the ouster of the president and prime minister.

A decision last April by President Gotabaya Rajapaksa to ban all chemical fertilizers has drastically reduced yields; although the government has reversed the ban, no substantial imports have yet occurred.

In a series of tweets late Thursday, Prime Minister Ranil Wickremesinghe noted that the US had forecast a “world food shortage” and identified Sri Lanka and Afghanistan as “hardly affected”.

“Although there may not be time to obtain fertilizer for this Yala [May-August], seasonal measures are taken to ensure sufficient supplies for the Maha [September-March] season,” said Mr. Wickremesinghe.

“I sincerely urge everyone to accept the gravity of the…situation.”

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Sri Lanka suffers from acute foreign exchange, fuel, and medicines shortages, and economic activity has reached a standstill.

“There’s no point in talking about how hard life is,” APD Sumanavathi, a 60-year-old woman who sells fruits and vegetables at the Pettah Market in Colombo, the commercial capital, said Friday.

“I can’t predict how things will be in two months; at this rate, we may not even be there.”

A long line had formed nearby for a shop selling cooking gas cylinders, with rising prices.

“Only about 200 cylinders were delivered even though there were about 500 people,” said Mohammad Shazly, a part-time driver who said he was standing in line for the third day to cook dinner for his family of five.

“Without gas, without kerosene oil, we can do nothing.

“Last option what? Without food, we will die. That will happen one hundred percent.”

On Thursday, the central bank governor said that foreign exchange was backed by a loan from the World Bank and remittances to pay for fuel and cooking gas, but supplies have yet to pour in.

Inflation could climb to as much as 40 percent in the coming months. Still, the governor added that it was largely driven by supply-side pressures, with bank and government measures already curbing demand-side inflation.

Inflation reached 29.8 percent in April, and food prices rose 46.6 percent year-on-year.

As anger against the government spread, police fired tear gas and water cannon on Thursday to push back hundreds of student protesters in Colombo.

The protesters demand the impeachment of both the president and the prime minister.

Sri Lanka’s economic crisis is the result of the confluence of the COVID-19 pandemic plaguing the tourism-dependent economy, rising oil prices, and populist tax cuts by the government of President Rajapaksa and his brother, Mahinda, who resigned last week as Prime Minister.

Mr. Wickremesinghe, appointed Prime Minister in his place, is accused of being a frontman of the brothers.

Other factors included heavily subsidized domestic fuel prices and a decision to ban chemical fertilizer imports, which devastated the agricultural sector.

The Group of Seven Economic Powers supports efforts to provide Sri Lanka with debt relief, G7 finance leaders said in a draft communiqué from a meeting in Germany on Thursday after the country failed to pay its national debt.

P. Nandalal Weerasinghe, the central bank chief, said the debt restructuring plans were nearing completion, and he would soon submit a proposal to the cabinet.

“We are in preemptive default,” he said.

“Our position is very clear; until a debt is rescheduled, we cannot repay.”

A spokesman for the International Monetary Fund said the fund is closely monitoring developments; a virtual mission to Sri Lanka was expected to conclude technical talks on a possible loan program to the country on May 24.

Reuters