Rising crude oil price will negatively affect Sri Lanka’s economy
Sri Lanka is now facing trouble over rising crude oil prices over the past few months. This would drive up the country’s oil import bill and price of other import products such as fertilizer and chemicals and in turn increase budget deficit. On April 22, 2010, global crude price reached $83.25 per barrel which is slightly lower compared to the price in previous week but almost double compared to $44 per barrel in the same time last year.
Earlier this year, K.D. Ranasinghe, Director, Research Department, Central Bank of Sri Lanka, predicted that average oil price would be around US $82.50 and for the first three months it remained below $80 and sometime declined to $70. $82.50 is the import price of Ceylon Petroleum Corporation (CPC) and it imports crude oil from Iran which is a few dollar cheaper compared to the Brent crude oil. The price of oil is depending on how fast the global economy recovers. If the global crude oil price rises, then Central Bank would have to make some adjustment in the local prices. At present, no major price adjustment is required.