Shortages pushing prices higher for consumer goods in Sri Lanka

Sri Lanka has cut back on imports of farm chemicals, cars and even its staple spice turmeric as its foreign exchange reserves dwindle, hindering its ability to repay a mountain of debt as the South Asian island nation struggles to recover from the pandemic, according to The Associated Press.

Toothbrush handles, venetian blinds, strawberries, vinegar, wet wipes and sugar are among the hundreds of foreign-made goods that were banned or made subject to special licensing requirements meant to chip away at a trade deficit that has been deepening the country’s financial quandary for years, , according to The Associated Press.

Shortages are pushing prices higher for many consumer goods, from bread to construction materials to gasoline, triggering protests among Sri Lankans fed up with the prolonged crisis.

Thusitha Vipulanayake ran out of motorcycles to sell in August 2020.

Usually able to sell at least 30 a month, and a dozen motorized trishaws, he now gets by selling bottled, locally grown turmeric paste and LED lightbulbs.

“This is something we never expected,” Vipulanayake told The Associated Press as he sat at his empty motorcycle showroom along a road outside Colombo.

Sri Lanka was in trouble before the pandemic struck, laying low a tourism industry that is a vital source of foreign exchange earnings.

It normally provides jobs for more than 3 million people and accounts for about 5% of GDP.

Visitors already were staying away after deadly suicide bombings on Easter Day 2019 killed more than 250 people.

But efforts to revive the industry are falling flat as the country endures another wave of COVID-19 infections.

Now, the country’s foreign exchange reserves have dwindled to barely enough to pay for three months of imports at a time when big repayments of its foreign debts are falling due, straining its financial system.

The Petroleum Minister, Udaya Gammanpilla, recently said the country lacked enough cash to pay for oil imports.

To conserve precious foreign exchange, the government has limited U.S. dollar transactions. Despite the limits imposed last year, imports still outpace the country’s exports of tea, rubber, seafood and garments.

“The condition of the economy is in dire straits, there is no doubt about it” said Muttukrishna Sarvananthan, head of the economic research group Point Pedro Institute of Development.