Sri Lanka Multi-Dimensional Crisis - Humanitarian Needs and Priorities, June - Dec 2022 (Revised 31 October 2022) [EN/SI/TA]

Situation Overview

The crisis in Sri Lanka has resulted in food insecurity, threatened livelihoods, shortage of essential medical items, and rising protection concerns.

Sri Lanka continues to experience its worst economic crises since independence, deepened by increasing risk of food insecurity following reduced production over several harvest seasons. Shortages of fuel, electricity, pharmaceuticals and cooking gas, coupled with inflation and skyrocketing food prices, have severely affected the poor and most vulnerable groups and resulted in substantial humanitarian needs.

Overall Impact

Over the past years, Sri Lanka’s public debt burden has reached unsustainable levels due to large fiscal, persistent deficits, low revenue collection and the COVID-19 pandemic, which caused a steep decline in international tourism and disrupted other sources of foreign income. This has been combined with food and energy price shocks in early 2022 due to the conflict in Ukraine, which elevated global oil and food prices, further increasing commodity prices in Sri Lanka. Russia is the third-largest market for Sri Lankan tea, the country´s main export commodity, but had to significantly reduce its procurement or has struggled to pay due to sanctions on its financial system. In March 2022, the Sri Lankan Government started to impose daily electricity cuts due to the unavailability of imported fuel needed for electricity generation. One month later, the Government defaulted on most of its international debt, with inflation rates sharply increasing and currency convertibility issues affecting pricing and access to import essential commodities, including medicines and fuel. As the fuel shortages worsened, in July the Government restricted fuel usage to essential services, which incited political unrest and street protests. The Colombo Consumer Price Index (CCPI) shows that inflation has increased by 66 per cent over the year to October 2022. Moreover, food inflation is 85.6 per cent over the year to October 2022.

The economic crisis is compounded by a serious reduction in domestic food production. In its bid to make farming more environmentally sustainable, the Government banned imported chemical fertilizers in April 2021 with limited transitional arrangements and inadequate alternatives to sustain agricultural yields. While the ban was lifted in November 2021, the decision has had a disastrous impact on productivity and production in the 2021/22 Maha season, which suffered an estimated 40-50 per cent reduction. For the Yala 2022 planting season, a 50 per cent decrease in production has been reported, with crops characterized by widespread plant stunting, presence of weeds and widespread yellowish color of the paddy fields.6 Maize production has decreased by 60 per cent and can only cover 30 per cent of the country’s needs. It is estimated that only 24 per cent of the usually worked land –or 128,652 out of 524,778 hectares- has been cultivated for the Yala 2022 season. This not only has an impact on food availability in the country, but also affects livelihoods: about 2 million people, or 9 per cent of the total population in Sri Lanka are farmers, and about 40 per cent of the country’s population -representing 2.1 million households or 8.1 million people- are engaged either in agriculture or livestock production.

The significant reduction in agricultural production, together with the rising prices of fuel and basic food items have made food unaffordable for a significant part of the population. The situation is worsened by the widespread shortages of key imported commodities such as wheat flour, canned fish, milk powder and lentils.
Prices of most commodities have increased considerably since the end of 2021, and food inflation was measured at 94.9 per cent in September 2022 compared to a year before, a further increase from 93.7 per cent in August. Based on the recently concluded Crop and Food Security Assessment Mission by WFP and FAO, nationally, 6.3 million people, or 28 per cent of the population, are found to be moderately or severely food insecure. Of particular concern are 66,000 people who are severely acute food insecure, 18,000 of whom are living in the estate sector9 such as tea plantations. In total, 57.1 per cent of severely insecure people in the country are in the estate sector, and 41.6 per cent in the Central Province. Characteristics most strongly associated with moderately food insecure households include female-headed households (at 39.8 per cent), heads of household with no education (at 43.1 per cent), households of Indian Tamil ethnicity (at 50.3 per cent) and beneficiaries of the Samurdi programme10 (at 41.3 per cent). A slightly different set of characteristics are associated with severe acute food insecurity, which include the estate sector (at 2 per cent), high dependency ratio11 (at 2.3 per cent), “assistance” as the main source of income (at 1.4 per cent) and having at least one member living in the household with a disability12 (at 1.2 per cent).

Aside from assessing the food security levels of the population, the CFSAM further analyzed food and livelihood coping strategies being adopted in response to the situation. These include cutting the number of meals consumed in a day, reducing meal sizes, spending savings, and purchasing food on credit. An estimated 13.5 million, or 61.1 per cent of the population, are using food-based coping strategies, and 47.7 percent of households use livelihood coping strategies because they do not have enough food or money to buy food. About 5.3 million people, or 24 per cent of population, are reducing the number of meals, and the same percentage of the population are reducing adults’ consumption so that children can eat, with women being the last to eat in the household. The proportion of households with unacceptable diets is ten times higher compared to the end of 2021. About 8.7 million people in the country are reported as not consuming adequate diets; nearly 32.2 per cent of these households are in urban areas. The livelihood-based coping strategies that households are resorting to include spending savings, selling productive assets, reducing essential healthcare expenses, withdrawing kids from school, buying food on credit, borrowing money or pawning jewels. Once these least severe strategies are exhausted, households would likely resort to means that will have a higher negative impact on their medium long-term capacity to generate income and their food security. Informal income earners, unskilled casual laborers, and those who do not have home gardens or livestock are among the most vulnerable to food insecurity.

With the reduction in domestic agricultural production during the Yala 2022 season, the prices of food are expected to increase further and reliance on imported food will intensify. This, in turn, would continue to drive a severe reduction of food availability and food access, with negative effects on food and nutrition security during the upcoming lean season, which starts in October 2022. Unless there is a significant turnaround on field cultivation and intensified agricultural support is mobilized, the upcoming Maha 2022/2023 season will remain a challenge. Without a solid domestic production base, food insecurity will likely continue and those who will suffer the most are the poor and already vulnerable families.

The economic and food security crises are hitting on top of the effects of the COVID-19 pandemic, which reversed years of development gains and pushed an estimated 300,000 people below the poverty line in 2020 in Sri Lanka, according to the World Bank. Recent World Bank forecasts also suggest that the poverty headcount of $3.65/day13 will more than double from 13.1 per cent in 2021 to 28.2 per cent in 2023. On 1 September, the Government of Sri Lanka and the International Monetary Fund (IMF) reached a staff-level agreement for a 48-month, US$ 2.9 billion Extended Fund Facility. The agreement is subject to the approval by IMF management and the Executive Board, and to progress on reducing public debt to a sustainable level.