ECONOMYNEXT – The United State Agency for International Development has granted 9,300 metric tonnes of fertilizer to Sri Lanka as the currency crisis hit Indian Ocean Island struggles to import agricultural inputs.
“I know that fertilizer alone will not meet all of Sri Lanka’s needs, but this assistance is just one aspect of the United States’ much greater investment in and support for the people and government of Sri Lanka at this challenging time,” U.S. Ambassador to Sri Lanka Julie Chung said in a statement.
“In total, we’ve announced over $240 million in new assistance and additional loans for small businesses over the last year – and we’ll keep at it. Assistance like today’s fertilizer demonstrates America’s goodwill and true commitment to the people of Sri Lanka.”
Sri Lanka is going through the worst currency crisis in the history of its 72 year old soft-pegged (flexible exchange rate) central bank and has been unable to import fertilizer without outside help as printed money triggered forex shortages.
The fertilizer was procured through Food and Agricultural Organization, the statement said.
When artificially low interest rates maintained through open market operations or other means of a soft-pegged central bank triggers a currency crisis, excessively high interest rates have to be imposed to stabilize the external sector.
In the process sectors like construction collapse leaving persons unemployed. When they return to their hometowns and villages it is vital for fertilizer to be available for them to cultivate family land.
Farmers are some of the first set of persons hit by a soft-peg crisis that see incomes return to some normalcy as inflation drives up food prices.
The US aid the 9,300 metric tonnes of urea fertilizer would be distributed to more than 193,000 smallholder paddy farmers in Jaffna, Mullaitivu, Mannar, Vavuniya, Anuradhapura, Trincomalee, Batticaloa, and Monaragala districts. (Colombo/Dec05/2022)