Sri Lanka Mulls Introducing Fuel Coupon System as PM Ranil Warns of Looming Food Crisis

Since January, Sri Lanka has received loans from India, China, and Japan to tackle an unprecedented economic crisis. Ranil Wickremesinghe was elected as the new Prime Minister last month after Mahinda Rajapaksa, brother of President Gotabaya Rajapaksa, stepped down following violent civilian protests against the government.

Sri Lanka requires at least $6 billion to ensure a continuous supply of essential items such as fuel and food, estimated Prime Minister Ranil Wickremesinghe, who warned citizens they may face “serious difficulties” in terms of food and energy security over the next six months.

“Some estimate that global oil prices will rise by as much as 40% by the end of this year. In this context, the idea of ​​introducing a coupon system for fuel cannot be ruled out,” Ranil Wickremesinghe said.

The prime minister has asked people to avoid “unessential travel” and “hoarding fuel and gas” until an alternative arrangement is made to import fuel.

The Indian Ocean island nation requires at least $540 million a month to import the necessary amount of oil and gas.

Wickremesinghe has also encouraged people to use fertiliser to revive the agriculture sector, which saw a 50% drop in productivity due to a sudden shift to organic farming in 2020.

“In a few months, we will have to face serious difficulties and shortages in terms of our diets. We need to import food items to meet our daily requirements. It costs about $150 million a month,” the prime minister said.

The government has secured $50 million in loans from India to ensure fertiliser availability in the next harvest season.

Sri Lanka imported over 300,000 metric tonnes of rice from January till March 2022, while for the whole year in 2020 the imports stood at 14,000 metric tonnes, which showed increased dependency on imports due to falling domestic production.

A recent study by the World Food Programme(WFP) found that 73% of participating households had reduced their food intake.

Out of the 22 million people who live in Sri Lanka, two million are dependent on farming. The government increased the taxes on several products earlier this month, vowing to increase the tariffs on goods and services to the 2019 level to boost revenues.

The Sri Lankan Prime Minister chalked out a plan to bring about economic stability by 2025 by introducing several measures that include changes in foreign policy.

“India, China and Japan are leading the list of countries that provide us with loans and assistance. Relations with these countries, which have always been strong, are now broken. Those relationships need to be rebuilt,” he said.

The island nation is reeling from a foreign exchange crisis that has left the government unable to pay for essential imports, resulting in unprecedented shortages of food, fuel and medicine.

Thousands of people have taken to the streets in protest, blaming the Rajapaksa government for mismanagement and demanding the resignation of the family members who had occupied all the crucial cabinet portfolios till April.

Prime Minister Mahinda Rajapaksa, brother of the president, was forced to resign in May following violent clashes that erupted across the country last month, killing eight and injuring over 200. President Gotabaya Rajapaksa, however, has continued to reject calls for his resignation.