The nation’s recovery from the worst economic crisis in its history could be upended by the El Nino climate phenomenon and fallout from the Middle East conflict, the International Monetary Fund (IMF) warned.
“Sri Lanka continues to face downside risks from uncertainty over the duration and intensity of the war in the Middle East, global trade policy and the impact of El Nino,” the IMF said in a statement yesterday.
Scientists say human-caused climate change can amplify its effects by making more energy and moisture available to fuel extreme weather.
Sri Lanka’s meteorology department has warned that both severe drought and heavy rain are likely to hit the country during the remainder of the year as the largely agricultural nation faces what officials call its worst-ever El Nino.
At the weekend, the Sri Lankan air force flew Buddhist monks to pray and sprinkle holy water over drought-hit areas in an attempt to encourage rain.
A drop in rainfall could also affect hydroelectricity generation and force the use of more expensive thermal power generators, officials say.
Sri Lanka has raised fuel prices by more than 50% since the US started its conflict with Iran in February.
The government has said it will continue to subsidise fuel in October, despite earlier plans to return to cost-recovery pricing.
“Safeguarding macroeconomic stability in a shock-prone environment requires unwavering commitment to prudent policies and reforms to rebuild fiscal and external buffers,” the IMF said.
The four-year IMF loan programme comes to an end in March, and authorities have yet to decide whether they want a fresh arrangement with the Washington-based institution. — AFP
