News

Queues due to social distancing, not shortages: Mohan Samaranayake

  • Govt. issues sharp retort to Al Jazeera article 
  • Says no spices shortage, other shortages being ‘dealt with’ 
  • Suggests article ‘destabilising’, ‘downright mischievous’ 

BY Buddhika Samaraweera

Following the publication of a recent article in Al Jazeera, which reported that long queues have formed outside stores in Sri Lanka due to a shortage of milk powder, kerosene oil, and cooking gas, the Government has retorted that these queues are the result of “social distancing” and not shortages. 

“Queues form outside all stores at present because of ‘social distancing’, and to suggest otherwise is downright mischievous,” Department of Government Information (DGI) Director General Mohan Samaranayake had said in a media statement issued on 4 September. 

The statement was in response to an Al Jazeera article titled “Sri Lanka declares food emergency as forex crisis worsens” published on 31 August, in which the Qatar-based global news provider had compiled a report on Sri Lanka’s economic situation. 

Responding to Al Jazeera’s report that Trade Minister Dr. Bandula Gunawardana has said some traders were hoarding stocks resulting in shortages of food items and causing inconvenience to the public, the Government had said: “True, and any right thinking person will acknowledge that the Government must respond to such a situation and deal with it.” The DGI further stated that the temporary shortages were caused by illegal actions of some traders that are currently being dealt with. 

Meanwhile, Al Jazeera had reported that Minister of Energy Udaya Gammanpila has appealed to motorists to use fuel sparingly so that the country could use its foreign exchange (Forex) to buy essential medicines and vaccines, and the Government has responded stating that Gammanpila’s request is fair in times of rising oil prices, but did not agree on the reasons behind the request. 

“In times of rising oil prices, it’s a fair request. Attributing a motive to that request which suggests a desperation, is perhaps confirmation of the deliberate attempt to cause a destabilisation of the economy,” the statement read. 

However, Gammanpila mentioned on his official Facebook page on 17 August 2021 that the country is currently in a foreign exchange crisis. “The bitter truth is that we are in a foreign exchange crisis. In the first six months of 2021, about 18% of the cost of imports was spent on fuel, and in the last six months it is likely to rise to 25%. We shall therefore use fuel sparingly to save limited foreign exchange for buying essential commodities such as medicine and vaccines,” he stated. 

Al Jazeera had also reported that the country’s economy shrank by 3.6% in 2020 due to the Covid-19 pandemic, and the Government subsequently banned imports of vehicles and other items, including edible oils and turmeric – an essential spice in local cooking – in a bid to save Forex. 

However, the statement issued by Samaranayake read that there is no shortage of any spice items as of present and that the imports of turmeric and certain other spices were discontinued, as the local farmers are able to grow all required quantities of such products. “It is true that the economy recorded a negative growth of 3.6% last year, but the story does not say that the economy will grow by an estimated 4.5% this year,” it added. 

However, in recent days, various parties, including the Opposition, have been alleging that the price of turmeric has risen sharply, despite the Government having imposed a control price. 

According to Al Jazeera, importers still say that they have not been able to source dollars to pay for the food and medicines they are allowed to buy and the Government, in response to the matter, has stated that certain importers have imported stocks of certain items far in excess of the required quantities due to certain speculations. It has also stated that exporters have also been slow to convert their Forex, on the speculation that they will be able to get a better rate for their Forex if they delay conversion. Since the pandemic struck, exporters, according to the Government, have built up Forex balances by over $ 2 billion in the hope that they could gain by a future depreciation of the rupee. 

Despite this statement issued by the Government, Laugfs Gas PLC had recently stopped importing gas and it resulted in a gas shortage in the market. At the time, Laugfs Gas PLC Chairman W.K.H. Wegapitiya said that the main reason for the decline in gas supply was the lack of sufficient dollar reserves by state banks to open letters of credit for gas imports. Subsequently, the Government had to grant its approval to a request made by the Laugfs Gas PLC to increase the price of gas. In addition, there are reports of a shortage of food items such as milk powder. 

Responding to Al Jazeera’s claims that Sri Lanka’s foreign reserves fell to $ 2.8 billion at the end of July from $ 7.5 billion in November 2019 when the incumbent Government took office, and that the rupee has lost more than 20% of its value against the US dollar in that time, the Government has claimed that Forex reserves dropped in July due to settlement of $ 2 billion of international sovereign bonds within one year. 

“However, since then, reserves have increased to $ 3.8 billion by the end of August. Sri Lanka can also access a swap of $ 1.5 billion from the People’s Bank of China, which means the available reserves are around $ 5.3 billion. With the expected inflows, there is no risk of settling all due payments. In fact, it is really the stories that are circulating in the local and international media (some possibly deliberate) which are fueling speculations,” the statement added. 

The Government has also denied Al Jazeera’s report that Sri Lanka has declared a state of emergency over food shortages as private banks have run out of foreign exchange to finance imports by claiming that “invoking emergency regulations to counter hoarding is true, but saying there is no money to finance is not true. Imports have increased by over 10% YoY this year and in the case of certain food items (particularly sugar), there has been highly excessive imports whereby inventories have been accumulated which are sufficient for over an year, on the speculation that the rupee would depreciate and massive profit could be made. After building such stocks, certain unscrupulous traders have created an artificial shortage so that they could fleece consumers and profit”, the DGI said. 

President Gotabaya Rajapaksa, on 30 August, declared emergency regulations on the provision of essential foods, with the aim of preventing market irregularities that could cause inconvenience to consumers by concealing stocks of essential food items including paddy, rice, and sugar and charging them at exorbitant prices. The relevant Gazette notification was issued by the Secretary to the President Dr. P.B. Jayasundara and subsequently Maj. Gen. M.S.P. Nivunhella was appointed as the new Commissioner General of Essential Services, who is tasked with overseeing and co-ordinating the distribution of consumer goods essential for daily needs including paddy, rice, and sugar. 

However, claiming that declaration of the Emergency Regulations relating to the provision of essential foods in accordance with the powers vested in him by Section 2 of the Public Security Ordinance by Rajapaksa is an unwarranted act, Illankai Tamil Arasu Kadchi (ITAK) MP M.A. Sumanthiran said. He added that the President’s decision could lead to a state of repression in the country, and that in any case, there was no danger of essential food supplies being disrupted to the community as at present. 

Meanwhile, responding to Al Jazeera’s report that there is a rapid increase of Covid-19-related deaths in Sri Lanka in the past few weeks, the Government has stated that while it is true, the media institution could also have claimed that Sri Lanka is currently implementing “one of the best vaccination programmes in the world”. The statement added that 99% of persons over 30 years have been given the first dose of Covid-19 vaccines and over 65% of such persons have been given both doses of it. Claiming that 99% of all persons over 30 years would have been vaccinated with both doses by mid-September 2021, the Government had predicted that the situation would improve significantly thereafter.