General

Previously, the epidemic continued to impact the economy, and later, the United States released a large amount of money printing, which caused inflation in many countries around the world. Sri Lanka’s economy has been in a severe recession, and the road to economic recovery does not seem to be easy under repeated and difficult epidemics.

As the government is facing a severe financial crisis, the Sri Lankan government has decided to strictly limit state spending. Finance Minister Basil Rajapaksa told the cabinet that due to the severe economic crisis caused by the new crown epidemic, the country's income has fallen sharply, and even current expenditures are not enough.

Rapid increase in cases, extension of curfew

According to the Russian Satellite News Agency, Sri Lankan government spokesman Keheliya Rambukwella announced that the government has extended the current curfew on the island by one week in response to the rapid increase in the number of new crown cases in the country.

Rambuwella tweeted: “The curfew currently imposed by Sri Lanka due to the new crown epidemic will last until 4 a.m. on September 6.”

Minister Ramesh Pathirana, a joint spokesperson for the Sri Lankan cabinet, said recently that the cabinet meeting held did not make a decision on the extension of the blockade. He said that the Sri Lankan government is acting on the advice of WHO, medical experts and local medical experts.

According to the latest data from the Ministry of Health of Sri Lanka, the country has a total of 451,000 confirmed cases of new crown infection.

According to reports, with the spread of the epidemic caused by the delta strain, Sri Lanka has added more than 200 new crown deaths in a single day, causing many people in the country to choose to use "paper coffins."

Serious economic crisis, implement emergency control

The Minister of Finance of Sri Lanka informed the Cabinet that due to vaccinations, additional expenditures from the health sector and the provision of relief allowances, this year’s current expenditure may exceed the estimated amount.

The Ministry of Finance has instructed the secretaries of various ministries and commissions to suspend projects such as building construction and building renovations, which have not yet started despite funding. The government also decided to suspend recruitment for all state services.

The Ministry of Finance also notified the secretaries of various departments to submit a detailed report describing the money that can be saved by restricting expenditures.

On August 31, local time, as domestic private banks ran out of foreign exchange needed for imports, Sri Lanka declared a state of emergency due to food shortages.

According to Agence France-Presse, Sri Lanka is currently experiencing a severe economic crisis. President Gotabaya Rajapaksa said that emergency regulations have been enacted to prohibit the hoarding of sugar, rice and other essential foods.

Rajapaksa also appointed a senior military officer as the "Basic Services Commissioner" to coordinate the supply of rice, sugar and other consumer goods.

This decision was made to prevent basic commodities such as rice, rice and sugar from being sold at high prices and stockpiling.

Prior to this, the prices of foods such as sugar, rice, onions and potatoes in Sri Lanka have risen sharply, and due to shortages of powdered milk, kerosene and gas, there have been long queues outside the shops.

The picture below shows the rising trend of prices in Sri Lanka:

At the same time, Sri Lanka’s Energy Minister Udaya Gammanpila called on drivers to save fuel so that the country can use the saved foreign exchange to purchase essential medicines and vaccines.

The rupee depreciates further against the U.S. dollar

Sri Lanka’s Finance Minister S.R. Attygalle said that Sri Lanka’s foreign exchange reserves have been strengthened due to an inflow of US$787 million from the International Monetary Fund (IMF) and a swap arrangement of US$150 million from the Central Bank of Bangladesh.

According to the Central Bank of Sri Lanka, the Sri Lankan rupee further depreciated against the U.S. dollar, and the latter’s selling exchange rate reached an all-time high of 204.89 rupees.

As of the end of July 2021, Sri Lanka’s foreign exchange reserves have fallen to US$2.8 billion (approximately RMB 18.1 billion). In November 2019, when Sri Lanka’s current government came to power, Sri Lanka’s foreign exchange reserves were US$7.5 billion (approximately 48.5 billion yuan).

Compared with that time, the exchange rate of the Sri Lankan rupee against the US dollar has also fallen by more than 20%. The Central Bank of Sri Lanka has raised interest rates in an attempt to boost the rupee.

In March last year, in order to save foreign exchange, the Sri Lankan government announced that it would ban the import of automobiles, cooking oil, and turmeric root powder, which is indispensable in local cooking. However, importers still stated that they could not get enough US dollars to buy food that was allowed to be imported. And medicines.

It is reported that due to the impact of the epidemic, Sri Lanka's economy will shrink by 3.6% in 2020, a record.

Finally, I remind friends who have shipping plans in the near future to be sure to collect money first, and beware of running out of money and goods!