Colombo: Amid its worst economic crisis in memory, Sri Lanka has been bit by severe shortages of essentials like food, medicine, milk powder, cooking gas and fuel, with people waiting in long queues to get petrol, diesel. Residents are enduring daily power cuts due to a shortage of fuel to operate the generating plants and dry weather has sapped hydropower capacity. The Central Bank allowed the local currency to free float earlier this month, causing a sharp increase in prices.
Prices for essential food items skyrocket as economic crisis deepens:
Due to inflation, there has been a huge jump in the prices of food and drinks in the island nation. People have to wait in queues for hours to buy food groceries.
Cost of rice there has reached 500 Sri Lankan rupees per kg. 400 grams of milk powder is available for Rs 790 in Sri Lanka.
Price of milk powder jumped by Rs 250 over the last three days. The price of one kg of sugar in Sri Lanka has reached Rs 290.
Food shortage, unemployment force Sri Lankans to flee to India
The repercussions of Sri Lanka’s economic crisis are being felt on the coastal parts of southern India, especially Tamil Nadu, with Tamil refugees from the northern part of the island nation heading to the southern state.
On Tuesday, 16 Sri Lankan nationals, all Tamils from the Jaffna and Mannar regions in the north, reached Tamil Nadu in two batches. According to reports, Intelligence officers in Tamil Nadu have obtained information that “around 2,000 refugees” are likely to arrive in the coming weeks.
Why is Sri Lanka in an economic crisis?
Sri Lanka’s economy depends heavily on tourism and trade and the pandemic has been disastrous, with the government estimating a loss of $14 billion over the last two years. The economy is estimated to have contracted by 1.5 % in July- September 2021, according to the central bank.
With a $7 billion debt obligation for 2022, Sri Lanka is badly in need of foreign currency with dwindling reserves and massive debts to pay. Sri Lanka’s foreign reserves are shrinking partly because of construction projects built with Chinese loans that are not making money.
Sri Lanka’s Opposition accuses government of misusing $1 billion loan facility extended by India:
Sri Lanka’s Opposition party Samagi Jana Balawegaya (SJB or United People’s Force) on Tuesday accused President Gotabaya Rajapaksa government of misusing the USD one billion loan facility extended by India as part of its financial assistance to help the island nation deal with its economic crisis.
I say with responsibility that SLPP is trying to set up home shops in 14,000 villages to do their political work by misusing this Indian assistance,” main opposition leader Sajith Premadasa said in Parliament.
This is shameful, the money is meant to provide relief to people who are languishing in long queues,” Premadasa said, referring to long lines at fuel stations and scarcity of essentials faced by the people.