CURRENT AFFAIRS

Detailed explanation-1: -Sri Lanka declared a state of emergency over food shortages on August 31, 2021 after private banks in the country ran out of foreign exchange to finance imports.

Detailed explanation-2: -The island nation of Sri Lanka has declared food emergency and an economic emergency, under an ordinance.

Detailed explanation-3: -Why in News. Recently, Sri Lankan President, has declared an economic emergency to contain rising food prices, a depreciating currency, and rapidly depleting forex reserves. The emergency was declared under the Public Security Ordinance on the supply of essential goods.

Detailed explanation-4: -The local value of Sri Lanka’s substantial foreign currency debts has surged, causing the government to default in May. A weaker currency has pushed inflation to around 50%. And the continued lack of foreign currency – reserves stand at less than $1bn – has led to a shortage of vital imports of food and fuel.

Detailed explanation-5: -According to W. A. Wijewardena, a former Deputy Governor of the Central Bank of Sri Lanka, the country was a long way into an economic crisis in 2015. The government that came into power in 2015 knew this and had been warned by the Institute of Policy Studies of Sri Lanka about a number of risks.