Over nine million people, or more than 40 percent of Sri Lanka’s 21.6 milion population, have slipped into the official poverty line due to the country’s unending economic crisis, a recent report released by a reputed UN international organisation has found.
The steepest rise in poverty levels took place after January this year, the report revealed adding that this was a very serious situation in the country,”as poorer households were the hardest hit owing to food inflation, job losses, limited fertilizer supply and drop in remittances.
According to another survey conducted by Peradeniya University, the latest changes in the tax structure – increased direct and indirect taxes – have only exacerbated the situation, affecting innumerable middle-income families and sparking murmurs of more mass discontent in Sri Lanka.
Four in every 10 households in Sri Lanka experienced a reduction in their incomes from June to December 2022, and one in every two households are currently relying on negative coping mechanisms to cope with the lack of food or money to buy it, a Food and Agriculture Organisation (FOA) report said.
In its response overview for the period of June to December 2022, the United Nations agency said the window of opportunity to support Sri Lankan farmers and their communities is narrowly time-bound.
“Immediate action to provide farmers with quality seeds, fertilizers and pesticides will enable them to protect their livelihoods and feed their communities. It is also critical to provide the most vulnerable farmers, livestock keepers and fishers with cash assistance to enable them to restore their productive assets and fast-track their recovery,” the report said.
Noting Sri Lanka is witnessing an unprecedented currency crisis, and the situation is exacerbated by political and social turmoil, the FAO report said nearly 40 percent of the population of Sri Lanka depend on agriculture as a primary source of income.
The ongoing multidimensional crisis is posing an enormous threat to their livelihoods and disrupting the national food system, it said.
Agricultural production is in a downward trend since mid-2021 due to the unavailability of fertilizers and other essential production inputs; livestock keepers are unable to access feed and basic veterinary supplies; and fishers are unable to access fuel for motorized boats.
“Consequently, the supply of food in local markets is shrinking and food inflation is soaring, reaching 90 percent in July 2022,” the report added.
Sri Lanka’s collapsing currency has pushed up the price of foods by close to 100 percent over two years with salaries not keeping pace, making it difficult for the less affluent in particular to afford basic carbohydrates and more affluent people being deprived of access to protein.
In Sri Lanka it typically takes about two years to recover from a currency crisis and real salaries to recover somewhat, analysts say.
Sri Lanka has not fully emerged from the currency crises with money still being printed in smaller volumes and a surrender requirement in place, which also creates money and alters rupee reserves of individual banks helping maintain forex shortages.
The forex shortages as well as central bank trade restrictions make it difficult to import some foods and agricultural inputs.
