In April last year, President Gotabaya Rajapaksa’s decision to ban all chemical fertilizers severely reduced crop yields, and although the government lifted the ban, no significant imports have yet been made.
“While there may not be time to get fertilizer for the Yala (May-August) season, steps are being taken to ensure adequate stocks for the Maha (September-March) season,” Prime Minister Ranil Wickremesinghe said in a late Twitter message. Thursday.
4.2 Upcoming Food Deficit (C): Although there may not be time to get fertilizer this Yala season, the steps are … https://t.co/OklyW2efCL
– Ranil Wickremesinghe (RW_UNP) 1652973480000
“I sincerely urge everyone to accept the gravity of the situation.”
Rajapaksa on Friday appointed nine new members to the cabinet, including the serious health, trade and tourism ministries. However, he did not name a finance minister and could retain the portfolio in Bikram Singh.
Tourism-dependent Sri Lanka has experienced severe shortages of foreign exchange, energy and medicine, and economic activity has slowed.
“There’s no point in talking about how hard life is,” said APD Sumanabhathi, 60, who sells fruits and vegetables at Pettah Market in Colombo, the commercial capital. “I can’t predict what will happen in two months. At this rate, we can’t stay here.”
Nearby, a long line was formed in front of the shop selling cooking gas cylinders, the price of which increased from Rs 2,675 in April to about Rs 5,000 ($ 14).
“About 200 cylinders were distributed despite the presence of about 500 people,” said Mohammad Shazli, a part-time driver, waiting in line for a third day to cook for his family of five.
“Without gas, we can’t do anything without kerosene oil,” he said. “What’s the last option? We’re dying without food. One hundred percent will happen.”
The central bank governor said on Thursday that foreign exchange has been secured from World Bank loans and remittances for fuel and cooking gas shipments, but supplies are still flowing.
Inflation is expected to rise to 40% in the next few months, but is largely driven by supply-side pressures, and banks and governments are already controlling demand-side inflation, the governor said.
Inflation was 29.8% in April and food prices rose 46.6% year on year.
G7 relief support
Police in riot gear stormed a rally on Thursday, removing hundreds of protesters by truck. Protesters are demanding the resignation of the president as well as the prime minister.
The economic crisis has been fueled by the Covid-19 epidemic, which was overturned by President Rajapaksa and his brother Mahinda’s government, who resigned as prime minister last week, and the combination of rising oil prices and populist tax cuts.
Critics have accused Prime Minister-elect Bikram Singh of being a fanatic of the brothers, a charge he denies.
Other factors include the high price of subsidized fuels and the decision to ban the import of chemical fertilizers.
Group of Seven economic powers support debt relief efforts for Sri Lanka, Group Finance chiefs said Thursday in a draft statement from a meeting in Germany after Sri Lanka defaulted on its sovereign debt.
Central Bank Chief P. Nandalal Warasinghe said the debt restructuring plan was almost finalized and he would soon submit a proposal to the cabinet.
“We’re in pre-emptive default,” he said. “Our position is very clear. Until the debt is restructured, we will not be able to repay.”
A spokesman for the International Monetary Fund said it was closely monitoring developments and that a virtual mission in Sri Lanka was expected to conclude technical talks on May 24 on a possible lending program.