Sri Lanka's economic crisis worsens as the South Asian country has declared an economic emergency, owing to being unable to curb inflation. The worsening food crisis triggered the decision, allowing the authorities to seize stocks of staple foods and set their prices.

President Gotabaya Rajapaksa on Monday declared an emergency under the public security ordinance with effect from midnight to maintain supply of food items at fair prices. The regulations will prevent hoarding to essential food items such as sugar and rice.

"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. These items will be provided at government guaranteed prices or based on the customs value on imported goods to prevent market irregularities," according to a press statement issued by Gotabaya's media division.

Flag of Sri Lanka

For this, the government has appointed a former army general as commissioner of essential services, granting him the power to seize food stocks held by retailers and traders and regulate the prices.

Due to the high demand and shortage of essentials, long queues could be seen outside shops. Milk power, kerosene is in high shortage.

SL rupee tanks

Gotabaya Rajapaksa
Gotabaya RajapaksaReuters

The steep fall in the value of Sri Lankan rupee due to a foreign exchange crisis is the reason behind the spike in food prices. The private banks ran out of foreign exchange to finance imports, creating a massive shortage of food items. The currency has plunged 7.5 percent against the US dollar this year.

Due to the high food prices, the month-on-month inflation rose to 6 percent in August, BBC reported. The tourism dip also contributed to SL's dwindling economy, which shrank by a record 3.6 percent last year.

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