UN launch appeal for 1.7 million in Sri Lanka hardest hit by soft-peg collapse

ECONOMYNEXT – The United Nations have launched an appeal to raise 47.2 million US dollars to help 1.7 million persons hardest hit as the country’s currency collapsed from 200 to 360 to the US dollar after the central bank mis-targeted interest rates using ‘flexible’ policies.

The UN and non-governmental agencies launched a 47.2 million US dollar Humanitarian Needs and Priorities (HNP) Plan “to provide life-saving assistance to 1.7 million people worst-hit by the economic crisis over a four-month period, from June to September,” the agency said.

“Multiple factors are impacting Sri Lanka’s food security situation; if we don’t act now, many families will be unable to meet their basic food needs,” UN Resident Coordinator in Sri Lanka Hanaa Singer-Hamdy said in a statement.

There was an “urgent need to prevent a humanitarian crisis later in the year, while bridging efforts towards development and socio-economic interventions.”

Sri Lanka which earns a billion US dollars a month in exports and earns about 600 million US dollars in remittances, about half of which are coming to the recipients through unofficial channels boosting family incomes cannot find 25 million US dollars for medicines due to price controls and a broken peg.

“Sri Lanka’s once-strong healthcare system is now in jeopardy, livelihoods are suffering and the most vulnerable are facing the greatest impact,” Hanaa Singer-Hamdy said.

“Now is the time for the international community to show solidarity with the people of Sri Lanka.

“The UN and humanitarian partners are calling on donors, the private sector and individuals to urgently support this plan to provide life-saving assistance to the women, men, and children most affected by the crisis and thus prevent a deterioration of humanitarian needs in the country.”

“Sri Lanka, formerly an upper-middle income country, is facing its worst economic crisis since independence,” the UN said.

“In May, food inflation stood at 57.4 per cent, while shortages of key food items, as well as fuel for cooking, transport, and industry, remain widespread, with ongoing daily power outages.”

Sri Lanka is facing the fate of many developing countries with economists who have rejected the classical economic principle of sound money and embraced the mercantilist principle of mis-using people’s money for stimulus or export promotion by destroying real wages.