Sri Lanka It's Happening

January 6, 2005

It's hard to believe that a disaster which resulted in more than 150,000 deaths can be a boon for anyone, but all around us you can see people profiting from it, none more than the government of Sri Lanka.

Just one month ago, inflation appeared set to spiral out of control and the GDP was set to slide into the doldrums. The stock market was heading southwards and so was the foreign currency reserves.

Just two weeks ago the one US dollar was worth over 105 Sri Lankan Rupees. Then the tsunami struck and the international community rallied to our rescue. Their monetary contributions are of course in foreighn currencies. As a result of which the reserves whave suddenly improved and the dollar has depreciated by more than 5% over the last week to settle and 99+ rupees to the dollar.

Through out the past year the dollar was losing ground against the other currencies but not so against the rupee. Similarly over the last couple of weeks the dollar has been gaining ground against the euro and sterling etc but losing ground against the rupee. This strengthening of the Rupee is obviously no thanks to the SL government but thanks entirely to our donors.

Now there is talk that the debt repayments might be deffered. Imagine if that happens the country will be positively awash with foreign currency. It remains to be seen if this goverment which is clueless about economics can put these funds to good use. The last time we recieved a substantial aid packaged it was poured into the drain.

Posted by raditha at January 6, 2005 2:05 AM