Sri Lanka’s cabinet of ministers has approved the Minister of Health’s request to pay pharmaceutical enterprises at the current currency rate at the time the items are processed, according to cabinet spokesman Minister Bandula Gunawardena.
Sri Lanka’s hospitals are experiencing medical and drug shortages as a result of the country’s 72-year-old intermediate regime central bank’s currency crisis.
botched float in March, the currency fell from 200 to 370 rupees.
“The health sector will be unable to function properly if these payments are not made,” Gunawardana told reporters.
Many companies used rupee rates in their tenders, expecting the exchange rate to be around 200 and then around 240, but the rupee had fallen to the point that they could no longer deliver at the old price, resulting in medical and pharmaceutical shortages.
Some pharmaceuticals have also been subjected to price limitations by the National Medical Regulatory Authority.
Critics contended that the establishment of the price control agency was a mistake by the Yahapalana administration at the time, and instead pushed for laws to limit the central bank’s money supply, which was causing currency problems.
According to a pharmaceutical industry official, private sector supply has dropped by nearly 50% in recent months due to payment delays.
“Recent price hikes have failed to mitigate the exchange loss despite large increases in the cost of gasoline, automobiles, parts, electricity, and labour,” the official stated.
“Despite the fact that they are crucial components in distribution, cold storage, and inventory, none of them have been paid.”
Banks are also refusing to grant letters of credit to importers because of currency shortages caused by money creation, which prevent them from making timely payments.
Credit had dried up due to payment delays and supplier uncertainty.
“Importers who previously had 90-120 days of credit from Indian manufacturers or suppliers will now be required to pay 115 percent of the proforma invoice’s value in advance to import,” the official added.