Sri Lanka It's Happening

May 7, 2008

If Zimbabwe has galloping inflation our could at least be called cantering inflation. Our beloved minister of finance president Gotabaya Mahinda and Mr 10% are hell bent on making sure of overtaking Zimbabwe.

They have reached their first milestone - a new record figure of 30% inflation. That means unless an employee get's at an annual increment of at least 45% he is not growing at the job. The sad truth is that most companies only give out about 15-25% as increments. Worse still most companies don't have performance based evaluations so even high performers don't really get increments that will allow them to keep up with the rising prices.

The very rich don't have it any easier. Bank interest rates on deposits is as low as 15% so the real value of your money declines by 15% each year. In the past many people have tried putting their money in foreign currency accounts. They have been hit hard by the dollar's constant decline. Only the Euro seems to be moving upwards, but the central bank is doing it's damnedest to keep the exchange rate artificially low.

You could try investing in the stock market but the dividend yield is pathetic and the indices have been steadily declining since the date of the last presidential election.

You could try putting your money into real estate except that for the first time in 15 years land prices in and around Colombo have declined. You could put your money into a new business venture but right now people don't have money for anything but essential items so you are unlikely to succeed.

Of course you could start a business selling essential items like rice, but then the government will introduce a price control to make sure that all your accumulated profits are wiped off in a day.

Posted by raditha at May 7, 2008 3:12 AM