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Economic emergency declared in Sri Lanka as forex crisis worsens

Colombo: Sri Lankan President Gotabaya Rajapaksa declared an economic emergency in the island nation. The decision was taken to to contain inflation rate after a steep fall in the value of the country’s currency caused a spike in food prices.

The government also appointed a former army general as Commissioner General of Essential Services. He will have the power to seize food stocks held by traders and retailers and regulate their prices.

‘The president has promulgated emergency regulations under the Public Security Ordinance on the supply of essential goods’, said presidential spokesman Kingsley Ratnayake.

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The country is witnessing a sharp surge in the prices of sugar, rice, onions, potatoes and other essentials. Long queues are formed outside stores because of shortages of milk powder, kerosene oil and cooking gas. The government has also increased penalties for food hoarding.

The Sri Lankan rupee has fallen by 7.5% against the US dollar this year. Sri Lanka’s foreign exchange reserves fell to US dollar 2.8 billion at the end of July. The Central Bank of Sri Lanka recently increased interest rates to support the local currency.

Sri Lanka’s economy shrank by a record 3.6% last year. The country is currently under a 16-day curfew until Monday because of a jump in COVID-19 cases.


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