Colombo, August 3:
The millions of dollars of foreign funds that has flowed into Sri Lanka since last yearâ€™s tsunami has helped stabilise the countryâ€™s economy, the International Monetary Fund (IMF) said â€” but also produced an undesirable side effect: surging inflation.
In an annual review of Sri Lankaâ€™s economic performance released in Washington, the IMF said foreign aid has steadied Sri Lankaâ€™s economic outlook in the wake of the December 26 tsunami, which killed 31,000 people in the country and affected a million others. But the foreign aid also has caused prices to rise. A loaf of bread that cost 10 cents has gone up to 12 to 13 cents. A kg of mutton has gone up by 50 cents. Inflation this year is expected to climb to an annual rate of 14 per cent, nearly twice the rate in 2004.