Sri Lanka, in the midst of the economic and financial crisis, unveiled on Tuesday (January 4th) an aid program amounting to 1.1 billion dollars intended in particular for civil servants, to overcome the soaring food prices.
Read also In Sri Lanka, food prices jumped 22.1% in just one month
More than two million state employees and retirees will receive a stipend of 60,000 rupees ($ 300) this year to meet the rising cost of living.
Finance Minister Basil Rajapaksa also announced grants to encourage the cultivation of home gardens.
“
We want to encourage a large domestic farming campaign this year by inviting people to grow their food themselves,
” he said.
Agricultural yields are set to decline further following a disastrous campaign to make Sri Lanka the first nation in the world to practice 100% organic agriculture.
An unprecedented contraction of the economy
President Gotabaya Rajapaksa on Tuesday sacked a minister who had criticized the organic farming policy and demanded the ouster of the Minister of Agriculture, a close friend of the leader. Food prices rose 22.1% in December, as the country struggles to finance imports to cope with an acute shortage of basic necessities. Rising food prices last month hit a year-on-year record since the launch of the Colombo Consumer Price Index in 2013, according to the statistics department.
In general, inflation rose to 12.01% in December, again a level not seen since the start of the statistics.
The island's economy experienced an unprecedented 3.6% contraction in 2020, but the Central Bank was counting on a rebound of 4 to 5% of GDP in 2021 with the gradual reopening of the economy and the deployment of vaccination.
The Covid-19 pandemic had disastrous consequences for the island's economy, deprived of its tourist windfall, leading the government to take drastic measures to control its foreign currency reserves, including an extended import ban to many products.
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But these restrictions have also had the effect of reducing certain economic activities and causing serious shortages, exacerbated by the ban on imports of agrochemicals.
After poor harvests and strong protests by farmers, the measure was lifted in November, not without sowing discord within the ruling coalition.
Last month, a senior agriculture official who warned of the imminent risk of famine and urged the government to introduce rationing was fired hours later.