ECONOMYNEXT – Sri Lankans thrown into poverty in the worst currency collapse in the history of its central bank are selling assets acquired in better times and are eating less, Rome-based World Food Program has said.
Three in 10 households were ‘food insecure’ in a household food security survey conducted by the agency in October 2022.
“Over seven in ten households are adopting food-based coping strategies such as eating less preferred food, continuing the alarming trend observed since June,” the WFP said in a Sri Lanka situation report issued in December 2022.
“Meanwhile, a staggering eight in ten households are turning to livelihood- based coping strategies such as selling productive assets, the highest observed since June.”
Sri Lanka’s central bank printed money for two years and collapsed the currency from 200 to 360 to the US dollar in 2022 putting food out of reach of the people.
According to a World Bank report Sri Lanka’s central bank was among the top 10 in the world driving up food prices by October 2022.
Reserve Bank of Zimbabwe which its deadly ‘RTGS dollar’ created 321 percent rise in food prices. Lebanon’s central bank created 203 percent food inflation and Venezuela’s central bank created 158 percent.
Central Bank of Turkey another notorious central bank which had been under pressure from the country’s President to print money to keep rates down created 99 percent inflation.
Banco Central de la República Argentina, the archetypical Latin America central on which American money doctors modelled Sri Lanka’s central bank in 1949 bank generated 92 percent food inflation.
Iran’s central bank created 84 percent inflation.
Coming in 08 place overall Sri Lanka’s central bank generated 81 percent food inflation by October.
The central bank of Sri Lanka has hiked policy rates, allowed market rates to go up and has largely stopped creating new inflation and traded goods prices are starting to ease.
The WFP said it had given relief to 1.1 million since the currency crisis began and 556,929 schoolchildren have received school meals prepared with rice supported by the agency.
Another 101,568 people had been given in-kind food assistance.
Sri Lanka farmers were hit by shortages chemical fertilizer despite a ban on agrochemicals being lifted and poultry farmers also faced shortfalls of feed and high prices amid forex shortages.
Food supplies and prices are starting to stabilize after the central bank raised rates to stop money printing but prices are almost double after the fall of the rupee. (Colombo/Dec08/2022)