Sri Lanka imposes emergency as prices of staples rise amid foreign currency crisis

The government has empowered authorities to seize stocks of food and set their prices

Sri Lanka has declared a state of emergency over food shortages after private banks ran out of foreign exchange to finance imports. AFP

Sri Lanka has declared an economic emergency empowering authorities to seize stocks of staple foods and set their prices in a bid to contain inflation after a steep devaluation of its currency due to a foreign exchange crisis.

The president of the island nation, Gotabaya Rajapaksa, on Monday declared an emergency under the public security ordinance to maintain the supply of food items such as sugar and rice at fair prices. The emergency came into effect from midnight.

The government has appointed a former army general as commissioner of essential services, who will have the power to seize food stocks held by traders and retailers and regulate their prices.

"The authorised officers will be able to take steps to provide essential food items at concessionary rate to the public by purchasing stocks of essential food items including paddy, rice and sugar," according to Mr Rajapaksa's media office.

"These items will be provided at government guaranteed prices or based on the customs value on imported goods to prevent market irregularities."

Sri Lanka's Department of Census and Statistics said the increase in the foreign exchange rate was one of the reasons behind the increase in the prices of many essential items over the past 12 months.

Month-on-month inflation in August rose to 6 per cent, from 5.7 per cent in July, mainly due to high food prices, the department said.

Sri Lanka, a net importer of food and other commodities, is witnessing a surge in Covid-19 cases and deaths, which has hit tourism, one of its main foreign currency earners.