Sri Lanka

Market Functionality Index: Sri Lanka Economic Crisis 2022 - Assessing the functionality of selected markets for cash-based assistance

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Highlights

Spikes and instability in prices are posing threats to market functionality in Sri Lanka. Almost all markets are reporting concerns around rising and/or unstable prices. These high prices threaten to further impact food accessibility, with two in five households already spending over 75 percent of their income on food.

Other than prices, markets are relatively functional. At an aggregate level, Sri Lanka’s markets currently have a wide range of distinct products, sufficient physical availability of goods, and a resilient supply chain. While there remain variations from market to market, most market functionality dimensions are showing lower risk levels for cash-based transfers –with the exception of prices.

Several mitigation measures should be put in place to safeguard against price-related risks for cash-based transfers. These include continuing to strengthen market monitoring, and adapting to price fluctuations, such as by calculating the minimum expenditure basket, and adjusting the transfer values.

Overall market functionality remains conducive to the use of cash-based transfers, while mitigation measures are essential to keep this from deteriorating. However, markets with especially high levels of risk associated with the use of cash-based transfers must remain flexible to shift to mixed modalities and/or in-kind food assistance.