Sept 10, Colombo: State Minister of Money and Capital Market and State Enterprise Reforms, Ajith Nivard Cabraal in an interview with BBC has said that there was no food crisis in Sri Lanka to come out from.
“Like other countries of the world Sri Lanka too faces challenges. They can be overcome through prudent policies. The country’s economic growth rate this year will be 4.5 percent,” Mr. Cabraal said.
Following is the full interview:
Why has the government denied there is a food shortage while a food emergency has been declared to address the same issue?
The country has sufficient stocks of all food items and there is no shortage whatsoever.
However, some unscrupulous traders had mischievously hoarded stocks of several food
items in order to create an artificial shortage and profit by such exercise. Naturally
therefore, government had to take the necessary steps to deal with the situation.
Could you explain how declaring emergency could bring down food prices?
The creation of an artificial shortage by unscrupulous elements will obviously lead to
increases in prices of those items. If, however, there are laws and regulations to deal with
such situations and punish the culprits, it would be a deterrent to those elements to create
a situation which leads to higher prices.
Does the government foresee a food shortage in future?
Could details be provided on how much inventory is available in Sri Lanka on rice,
fuel, sugar, kerosene oil, LPG, wheat flour and other essential items?
The government can give a categorical and firm assurance that all essential items would be
readily available at all times. Food security and Law & Order are two of the top most priorities of the government, and hence the government considers the availability of all
essentials as a vital part of its functions.
The government's overnight implementation of going 100% organic is being seen as
a threat to the country’s food security. What was the rationale behind the
implementation during the pandemic and overnight?
The government’s decision of growing 100% organic food has been discussed for more
than 10 years, in the face of the massive increase in kidney-related and other diseases in
the country. The need to change over to organic food cultivation had also been referred to,
in the manifesto of President Gotabaya Rajapaksa. In implementing this strategy, the
government is well aware that there would be challenges, and already, many challenges
have been addressed while special teams are working to deal with those that are emerging.
The outcomes so far have been reasonably satisfactory with many stakeholders in the
different processes adjusting well. Therefore, the government is confident that this vital
transition to organic cultivation would take place quite smoothly. As with any major
change, there are pockets of resistance and various groups continue to lobby against this
decision. Such resistance has sometimes been picked up by various local and international
agencies and used to convey a more-than-actual resistance.
What steps did the government take to ensure there is adequate supply of
compost or other organic fertilizer after chemical fertilizers were banned in April?
The government has already carefully assessed the requirement of compost and other
fertilizer and the necessary steps have been taken to provide such fertilizer in consultation
with the relevant stakeholders.
Many economic experts have pointed out that the country is running short of foreign
exchange and a lot of it is going towards debt settlement. What would be the
government's response to this?
Sri Lanka has successfully managed its reserves and forex cash flows so as to be able to
settle its maturing forex debts as well as ensure the adequate supply of all essential
imported goods and services. However, due to the non-availability of tourism receipts
consequent to the Covid pandemic, a corresponding adjustment in the forex outflows
including the stopping of imports of vehicles, had to be done. That would be a temporary
measure which would necessarily be restored upon the resumption of tourism. The
government has also pursued new ways and means of promoting non-debt inflows which
is now gaining traction, and that too would hold the country in good stead.
Many economists say only solution for government to come out from the present
crisis is to go to the IMF. Will Sri Lanka go for IMF? If not, could you explain why?
Some economists think the IMF is the panacea for all economic ills, while others can only
see a crisis, but no solutions. From the time the new government came into office in late
2019, these economists seem to be fixated on an IMF solution only. They fail to understand
that the IMF can't bring 2.5 million tourists who would deliver inflows of USD 4.5 million
or increase worker’s remittances or increase gem exports, etc. Nevertheless, the
government has assessed the challenge and has already developed a realistic plan which
deals with the pandemic-hit economic problems, including debt, reserves and investment.
Those plans are now being implemented and the government is confident that with the
effective implementation of those plans, the current weaknesses would be addressed. In
these circumstances, there is no need for Sri Lanka to go to the IMF and thereby cause
unnecessary pain to its lenders and investors.
How long does the government think it will take to come out of this situation of food
and economic crisis?
It is reiterated that there is no food crisis, and accordingly there is no crisis to come out
from. Further, this year, Sri Lanka will record an economic growth of over 4.5%. Inflation
is in mid-single digits. Every single debt instalment has been paid on time. Of the Covid-
vulnerable population, 99% have been vaccinated with the first dose while 65% have
received the second. Exports and remittances are rising. The banking system is vibrant and
stable. New Laws for the Securities and Exchange Commission and Colombo Port City have
been passed recently, which will encourage future investment. Interest rates are at
reasonable levels. The LKR has faced challenges, but is now stabilizing. Therefore, whilst it
is true that Sri Lanka is facing economic challenges just like all other countries, the situation
is being managed satisfactorily. In that background, it is sometimes strange that some
international news agencies tend to exaggerate the situation in emerging nations and try
to portray those countries as being in crisis or stressed out or in a debt trap, or in financial
difficulty. Sadly, such agencies fail to acknowledge the vast improvements that are taking
place in countries such as Sri Lanka, even in the midst of this global pandemic.