Sri Lanka opens rice trade to import ‘deflation ‘and reduce prices

Mar 28, 2008 (LBO) – Sri Lanka has removed a special tax on rice and allowed any private trader to import rice, the information ministry said as the government tried to import ‘deflation’ in to the country. . “With the intention of easing the burden of the people, the Government has decided to sanction the duty-free import of rice..,” the department of government information said in a statement posted on its website.

Rice Measure

The decision was taken after an emergency meeting President Mahinda Rajapakse had with consumer affairs minister Bandula Gunewardene and agriculture minister Maithripala Sirisena and senior officials, the statement said.

Consumer inflation in Sri Lanka’s capital Colombo was 21.6 percent in February 2008 measured by a controversial new index from which an entire expenditure group has been dropped.

Economic analyst say imports will help moderate the price index as global inflation is lower than that of the island.

Sri Lanka’s inflation has been much higher than her neighbours and well-managed countries elsewhere. Domestically produced foodstuffs that are not easily traded, which monetary economists call ‘non-tradables’ have led price increases.