Sri Lanka unveils relief package as food prices soar

COLOMBO: Sri Lanka unveiled a $1.1 billion targeted relief package on Tuesday to help consumers pay soaring food costs as an economic crisis bites.

The island’s tourism-dependent economy was hammered by the pandemic and rampant shortages have left its people struggling to buy essential goods.

Supermarkets have been rationing milk powder, sugar, lentils and other essentials, with food prices rising by a record 22 per cent last month.

More than two million state employees and pensioners will be given a living allowance of Rs60,000 ($300) this year to deal with the rising cost of living.

Finance Minister Basil Rajapaksa also announced subsidies for home gardens, with crop yields expected to fall further after a disastrous campaign to make Sri Lanka the world’s first 100 per cent organic farming nation.

“We want to encourage a big homegrown agriculture drive this year by encouraging people to grow their own food,” he said.

Rajapaksa did not say how the government would finance the package of Rs229 billion ($1.14 billion), which comes two months after the unveiling of a drastic austerity budget designed to rein in a runaway deficit.

Last year’s ban on agrochemical imports worsened food shortages by causing crop failures and prompting farmers to leave nearly a third of the island’s agricultural fields dormant.

The policy was lifted after protests by the farmers but its consequences have sparked discord in Sri Lanka’s ruling coalition.

On Tuesday, President Gotabaya Rajapaksa sacked a minister who had criticised the organic farming drive and called for the removal of the agriculture minister, a close ally of the leader.

Last month, a top agriculture official warned that Sri Lanka could face a famine and urged the government to implement food rationing. He was fired hours later.

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