By Aanya Wipulasena
Colombo, Feb 8 (EFE).- Financial crisis is deepening in Sri Lanka amid a worsening dollar crunch that has triggered shortages of essential goods and inflation rising to record levels as coffers dry up in the import-dependent country.
As Sri Lankan foreign exchange reserves dip fast, importers struggle to pay their bills.
The Central Bank of Sri Lanka said its foreign exchange reserves had fallen to $2.36 million.
Hundreds of containers carrying essential commodities, including food and medicine, are stuck on coasts and could not be released due to unpaid bills, pushing families to the limit.
Importers are hoping for an intervention from President Gotabaya Rajapaksa’s government to get the containers released, said G Rajendran, head of the Essential Food Commodities, Importers and Traders Association.
“There is a backlog of containers carrying essential goods. The president has promised to clear all containers soon. He may instruct the (central bank) to release dollars to commercial banks.”
In a bid to preserve the fast-depleting foreign currency reserves, the Sri Lankan government imposed temporary import suspensions on a range of goods in 2020.
The move had a rippling effect, and prices skyrocketed.
Early this year, the price of a 50-kg cement bag increased by 100 Sri Lankan rupees ($0.49).
Fuel prices increased at least two times, with a liter of petrol selling at 184 SLR and a liter of diesel at 124 SLR.
Local vegetable and fruit production, affected by bad weather conditions and a now-lifted chemical fertilizer ban, decreased, causing prices to spike.
Statistics by the Central Bank of Sri Lanka show carrot prices have more than doubled to around 500 SLR compared to last year.
Amid all the gloom, the second-hand car market is booming.
A 2020 Toyota CHR was priced at over 15 million SLR, a 2014 Toyota Prius around 8 million SLR, and a 2002 Honda Civic was at more than 4 million SLR.
Many like Lahiru S have abandoned their plans to buy new vehicles.
“Prices have gone up so much that it does not make sense to buy a car anymore. The (vehicle) I bought in 2019 for Rs. 2.1 million is worth over Rs. 3.5 million,” Lahiru said.
In a bid to lessen the impact of the crisis, the government rolled out a relief package of 229 billion SLR early this year.
It included a 5,000 SLR monthly allowances for government workers and an incentive scheme for gardening to encourage people to grow their food.
However, economists warned it was a cosmetic treatment for a wound that runs deeper.