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Sri Lanka stares at food shortage amid persistent fertilizer crunch; G7 extends support for debt relief

The United States government has forecast a global food shortage and identified Sri Lanka and Afghanistan as two countries that are likely to be badly hit by the crisis.

May 20, 2022
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Crisis-hit Sri Lanka is likely to face continued food shortage this year as well, Prime Minister Ranil Wickremesinghe warned, as its agriculture yield is unlikely to increase amid the persistent fertilizer shortage. Last year’s ban on chemical fertilizer that crippled farm production was lifted last month.

Faced with a severe foreign exchange crisis, the government has been struggling to pay for imports such as medicines, food, fuel, and others. The ban on chemical fertilizers was reversed by the government last month in an attempt to boost the agricultural yield.

"While there may not be time to obtain fertilizer for this Yala (May-August) season, steps are being taken to ensure adequate stocks for the Maha (September-March) season," Prime Minister Ranil Wickremesinghe said on Twitter. "I sincerely urge everyone to accept the gravity of the ... situation."

The United States government has forecast a global food shortage and identified Sri Lanka and Afghanistan as two countries that are likely to be badly hit by the crisis.

Meanwhile, the Group of Seven economic powers (G 7) has extended its support to provide debt relief for Sri Lanka, the finance chiefs of the grouping said on Thursday in a draft communique. Wickremesinghe welcomed the announcement.

On fuel crisis, the government has announced that they have secured supplies which will last until Mid-June, after the World Bank agreed to allow the government to use part of its fund, originally meant for the import of medicine, to pay for fuel imports.

On Thursday, the International Monetary Fund (IMF), said that it was monitoring political and economic developments in the country. The lender also announced that the technical level talks will be completed by 24 May. The assistance from the IMF and the debt restructuring plan will provide huge relief to the country.

Colombo also defaulted on its external loan repayment obligation on Thursday, for the first time in its history, after it missed the 30-day grace period provided to pay the interest on two of its loans.

The country’s debt restructuring talks are almost completed, said Central Bank Governor P Nandalal Weerasinghe, and added that a draft proposal would soon be submitted to the cabinet.

(SAM)

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