Sri Lanka Economic Crisis-Debt to China Accumulates, People Scream

Jakarta

“The price of gas cylinders for cooking has almost doubled and we can’t afford it anymore,” said Niluka Dilrukshi.

The 31-year-old mother of four always cooks with gas to prepare meals for her family, but firewood is the only option.

“I used to cook fish and vegetables every day for my children. Now they can only eat vegetables and rice,” he said. “We used to eat three meals a day, now sometimes we can only eat two.”

Dilrukshi and his family live on the outskirts of Colombo, Sri Lanka. Her husband is a daily laborer but soaring prices for basic necessities, especially food, have made it difficult for them to make ends meet.

Over the past four months, the price of standard gas cylinders has increased by around 85%, from US$7.50 (approximately Rp107,000) to US$13.25 (approximately Rp189,000)

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Sri Lanka is facing an unprecedented economic crisis. Its foreign exchange reserves fell to around US$1.6 billion (around Rp 22.8 trillion) at the end of November, just enough to pay for imports for a few weeks.

Debt to China has piled up to exceed US$5 billion (Rp71.7 trillion) for the construction of various infrastructure projects, including roads, airports and ports.

As a result, the government was forced to restrict imports of several important commodities, including foodstuffs, to maintain its vital dollar reserves. This move, coupled with rising fuel and transport prices, made prices for basic necessities such as milk powder and rice much higher.

The skyrocketing cost of living is not just a problem for Sri Lanka. Several other countries in Asia, such as India and Pakistan, are also struggling with rising inflation.

The situation is very precarious in Sri Lanka, as the country relies heavily on foreign imports to feed its population. The country’s dairy industry, for example, cannot meet local demand and so imports powdered milk.

BBCAs an island nation, Sri Lanka is heavily dependent on imports for its population.

Market situation

But at the vegetable wholesale market in Colombo, dozens of shopkeepers are selling large stocks of carrots, beets, curry leaves and other vegetables. Many shoppers openly complain about soaring prices and bargain hard to get a lower price or buy in very limited quantities.

“With our current monthly salary, we can only last for two weeks because prices are going up. We have no hope for the future. Rice prices are also going up. There are long lines outside government-owned shops,” said one buyer. named Swarna.

High demand for some staple foods made Sri Lankan food prices rise by a record 21.1% last month, compared to the same time a year earlier.

Meanwhile, a 12.5% ​​increase in the price of powdered milk made the cafe owners association decide to stop selling popular menu items, such as milk tea. They said milk tea would only be offered on demand, at a higher price.

“Sri Lankans are quite sensitive to food price inflation. We see there is already a lot of negative sentiment related to these constraints,” said Deshal de Mel, economist at Verite Research. “I think it’s probably close to an intolerable point if these price increases continue.”

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Just before the New Year, the government managed to increase its foreign exchange reserves to US$3.1 billion (approximately Rp44.3 trillion) from currency exchange arrangements.

But Sri Lanka’s total external debt is estimated at more than US$45 billion (around Rp. 643 trillion) and needs to find more than US$ 6 billion (around Rp. Sri Lanka is not the only country in this position, Pakistan and the Maldives are also expected to suffer.

The pandemic and rising global fuel costs are adding to Sri Lanka’s woes. The country’s biggest income comes from tourism, but the pandemic has crippled it as international flights have been suspended.

Sri Lanka earned nearly US$4 billion (approximately Rp. 57.2 trillion) from tourism in 2019. That number is down 90% due to the pandemic.

Sri LankaBBC Pettah Markets in Colombo was once a popular tourist destination.

The government says the options are limited.

“We have to limit imports because of the pressure on the current account and also the trade deficit continues to increase due to the pandemic situation. But as a responsible government, we have to manage it,” Minister Shehan Semasinghe told the BBC.

The opposition protested the rising cost of living. “This situation has been going on for a long time. We live beyond our means. We absorb more than we make,” said Harsha De Silva, an opposition lawmaker and former economic reform minister.

To calm growing public anger over the rising cost of living, the government recently announced a US$1 billion aid package, including salary increases and pensions for government employees. The aid also includes eliminating taxes on some food and medicine, and simultaneously announcing aid for its poorest citizens.

Sri LankaChaminda Dissanayaka Last year, the cost of shipping containers from Europe to Asia rose sharply.

This was done to offset high global oil prices, which made the average cost of shipping a standard container from Europe to Asia increase from around US$2,000 (approximately Rp. 28.6 million) in 2020 to more than US$ 10,000 (approx. Rp. 143 million) year then.

The United Nations agency, Unctad, recently warned that the global economic recovery was threatened by high freight fares. Unctad estimates that small island nations such as Sri Lanka, which depend on shipping by sea, are likely to be the most affected by the surge in import prices.

Rising fuel and energy prices have a cascade effect on wholesale prices with increased transporter costs. In India, annual wholesale price-based inflation hit an all-time high of 14.2% in November.

Meanwhile in Pakistan, consumer price inflation rose to 12.3% in December, the highest in almost two years. The increase in fuel prices was blamed for the increase in food prices and other basic needs.

The latest data from the Food and Agriculture Organization (FAO) shows that the global food price index in 2021 is on average 28% higher than the previous year.

Price comparisonsBBC

“High input costs, the ongoing global pandemic and increasingly uncertain climate conditions leave little room for optimism about the return of more stable market conditions, even in 2022,” said FAO senior economist Abdolreza Abbassian.

Meanwhile, in Colombo, people like Dilrukshi, now the breadwinner, worry that if local prices rise even a little more, they will have a hard time keeping firewood burning in his kitchens.

See also Video: Sri Lanka Reports First Case of Omicron Variant

[Gambas:Video 20detik]

(ita / ita)

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