Sri Lankan economy is facing difficulties – Cabinet Minister
Health Minister Maithreepala Sirisena ( Pic:sundayobserver.lk)
A Sri Lankan Cabinet Minister today admitted that the country is facing economic difficulties, but added the issue is common for the entire world.
Minister of Health Maithreepala Sirisena says it is in this backdrop the government had to take hard decisions such as raising fuel prices and imposing a fuel surcharge on electricity bills.
Sirisena says if these hard decisions are not taken now, the country and its public will face more economic hardships within another few months or in a years time.
The Minister’s comments which were made this morning, while attending a health related function comes, as Sri Lankan economy is facing problems such as its high import bill and widening trade gap.
Sri Lanka’s trade deficit during the first eleven months of the year 2011 has widened by 111.3% to stand at a massive sum of US$ 8.835 billion.
Import expenditure during the same period has incurred a bill of US$ 18.41 billion which is a year on year increase of 53.2% thus putting pressure on the trade deficit.
This situation, prompted Sri Lanka’s Central Bank to increase its key policy rates by 50 basis points aimed at curtailing import related credit, thus helping to reduce the widening trade deficit and the current account deficit.
The country also imposed a credit ceiling on local banks to ensure that lending is contained during this year.
Last week, the Central Bank also decided to let the market decide the exchange rate.
The decision resulted in the Sri Lankan rupee depreciating to its lowest level early this week with the dollar at one point trading at Rs. 121.
