Inflation rate of 17.2% is never a healthy one for any economy. Unfortunately, Sri Lanka had this inflation in October 2006. This high rate came despite the fact that the price of oil in the international market has eased off somewhat in the recent weeks. Lanka Business Online reported:
“Some economists had been warning that Sri Lanka's inflation would continue to rise despite falling oil prices because of excessive money printing to finance the budget deficit.
They point out that Sri Lanka's balance of payments is also under pressure for the same reason.
Central Bank credit to the government in terms of treasury bill purchases alone had risen from about 20 billion rupees in February to 63 billion in October.”
The ongoing civil war is hurting the economy of the country very badly. This is another indication of the negative impact of the civil war. High inflation rate is never a good thing for any country. It slowly destroys the discipline of an economy. I wish that the international community puts serious pressure on both the sides to end the bloody civil war.
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Posted by: Windsor Exports | March 28, 2008 4:42 AM | Permalink to Comment