Sri Lankan Parliament on Monday passed emergency regulations allowing the government to distribute essential food items directly to people at controlled prices
Sri Lankan Parliament on Monday passed emergency regulations allowing the government to distribute essential food items directly to people at controlled prices. Last week, President Gotabaya Rajapaksa imposed an economic emergency in the country as the prices of food items skyrocketed amid a nationwide lockdown.
In a statement passed after the passing of regulations, the Office of President said that the regulations would apply to the supply, selling at higher prices, and hoarding of essential food including paddy, rice, and sugar.
Last week, the president had issued emergency regulations under Public Security Ordinance and appointed a major general to oversee food distribution as the prices of goods went up and the country’s currency rupee fell in the wake of dysfunctional bond auctions and money printing.
Under the regulations, the government will have the power to ensure essential items including, paddy, rice, and sugar are sold at government-mandated prices or prices based on import costs at customs and prevent hiding of stocks. It will also allow state banks that had given credit to import goods to recover their loans.
The appointment of a military officer for the job, however, irked many in the island country, who accused the government of militarizing civil affairs, an allegation the current government has been facing since its start. The government denied these charges.
The government had also banned the import of rice, creating further supply shortfalls. But international rice and sugar prices have also risen as the US Federal Reserve printed money and drove commodity prices up. The minister said by August 13, 2021 authorities have estimated that 221,664.64 metric tons of paddy were stocked in 157 paddy stores, 177,842.97 metric tons of rice 117 rice warehouses.
The Sri Lankan economy has been facing its worst crisis in decades--something not seen even during the period of the country's three-decade-long civil war. Experts also blamed the risky policies --like banning chemical fertilizers to make the country hub of organic produces--during the troubled period.
The fiscal deterioration and rising external financing risks led agencies like Standard and Poor’s and Fitch to downgrade Sri Lanka’s credit rating in end 2020. For the same reasons, Moody’s, too, has recently placed the nation’s sovereign rating under review. This shuts off the island nation from accessing international capital markets.