Lanka's Worst Economic Crisis Since March, Battling High Food Inflation

01 December 2022

Sri Lanka went through a tough economic crisis in March this year, sending the prices of several commodities up. The government of Sri Lanka imported items from other countries and even took credit from China. The value of Sri Lankan currency (Sri Lankan Rupee) also depreciated in March against the United States Dollar for the first time. Food price inflation has increased to a percentage of over 85 in October 2022, as per sources.

Shortage Of Reserves & Commodities

The South-Asian country came across a shortage of foreign exchange reserves and a shortage of many items imported from other countries. Citizens had to stand in long queues for days to get fuel, cooking gas and food items.

Below are the yearly imports of Sri Lanka, following the year before the pandemic struck the world in 2019, during the pandemic in 2020, and after the pandemic started to settle down in some countries in 2021.

Ban On Importations

The imports for the commodities were higher in 2021, but now Sri Lanka was importing more this year, leading to a further increase in the imbalance of imports inflow. The ban on various non-standard imports was banned by the government of Sri Lanka to limit imports.

A few weeks back, the Sri Lankan government banned the importation of numerous items such as perfumes, after-shave, freezers & other similar equipment, and more commodities. However, this move was withdrawn, later on, a week back.

The importation of commodities meant higher liabilities for Sri Lanka to pay the countries for imports. As a result, the imports were further decreasing this year frequently. Below-shown data represents monthly imports of Sri Lanka for 2022 so far, as per availability of Sri Lanka imports 2022.

Imports Initiate

So far, the Sri Lankan government is proposing the plan on importing the Russian crude oil at discounted prices. In November, the government of Sri Lanka also permitted the importers of milk powder to use open accounts in order to bring down the shortage of food commodities.

In 2022, according to the availability of Sri Lanka’s import data, the top importing partners for Sri Lanka are—South Korea ($158.73 million), followed by Switzerland ($99.52 million), Brazil ($13.87 million), Norway ($14.48 million), and Argentina ($2.36 million).

The government is seeking initiative to arrange finances to import what they need in order to grapple with the ongoing shortage of required commodities in the country. Essential commodities such as rice, wheat, sugar, flour, onions, and more are being imported through an open account.