COVID-19: Sri Lanka Parliament approves emergency regulations to keep food prices stable

The Sri Lankan Parliament passed emergency regulations proposed by President Gotabaya Rajapaksa on August 31 to control commodity prices and prevent stockpiling. The regulations were approved with 132 votes in favour and 51 votes against.

The president's action was challenged by the opposition parties under Section 2 of the Public Security Ordinance. “The purported declaration of a state of emergency has been made in bad faith, with the ulterior motive of further wrongfully restricting the fundamental rights of the citizenry and moving further in direction of authoritarianism," the main Opposition party, Samagi Jana Balawegaya charged.

Following a sharp drop in the value of the country's currency due to a jump in food costs, president Rajapaksa declared an economic emergency last week to limit skyrocketing inflation. The government selected a former army general as commissioner of essential services, with the authority to seize and regulate food inventories held by traders and retailers.

According to the Agri Minister, Mahindananda Aluthgamage, emergency restrictions were created to combat the food mafia. The government disputed that the current import restrictions were causing food scarcity. According to the government, under the new legislation, hoarders were raided and vital commodities were removed in order to provide help to the people amid the present pandemic.

The emergency measure came after dramatic price increases for sugar, rice, onions, and potatoes, as well as long lines outside stores due to milk powder, kerosene oil, and cooking gas shortages. Importers owed credit to state banks, and the broad policy was intended to help them collect it.

Prices of most necessary products were surging in the run-up to the emergency restrictions because of the declining local currency and high worldwide market prices caused by the COVID-19 pandemic. Traders were criticised by the government for hoarding. This year, the Sri Lankan rupee has lost approximately 7.5% of its value against the US dollar. Sri Lanka's Central Bank recently raised interest rates in an effort to support the local currency.

Sri Lanka's foreign reserves fell to USD 2.8 billion at the end of July from USD 7.5 billion when the government took office in November 2019, according to bank data, and the rupee has lost more than 20% of its value versus the US dollar in that period. Sri Lanka, a net importer of food and other goods, is experiencing an increase in COVID-19 cases and deaths, which is affecting tourism, one of the country's key sources of foreign currency.

Sri Lanka's economy dropped by a record 3.6% last year, owing in part to a drop in tourist numbers. Due to an increase in COVID-19 instances, the country is currently under curfew until next week. According to Johns Hopkins University, the Coronavirus has claimed the lives of 10,140 people in Sri Lanka, with 462,767 verified cases.

(With inputs from PTI)

Picture Credit: Gotabaya Rajapaksa-Facebook/PTI